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Vendor Rating: Amazon Vendor Rating: Amazon Published 7 July 2020 - ID G00722718 - 55 min read By Analysts Ed Anderson, Mike Dorosh, Rita Sallam, Adam Woodyer, Jason Daigler, Bern Elliot, David Wright, Patrick Connaughton, Yefim Natis, Mark Paine, Thomas Murphy, Sandeep Unni, Steve Riley, Peter Havart-Simkin, Craig Lowery Initiatives:Sourcing, Procurement and Vendor Management Leaders Amazon’s technology-driven growth continues to disrupt and reshape markets. Amazon Web Services leads in cloud market share bolstered by an aggressive pace of innovation. Market shifts will challenge Amazon to adapt its disruptive models and continue high rates of growth. Overall Rating Figure 1. Vendor Rating for Amazon Overall Rating: Strong Amazon is a multifaceted conglomerate consisting of business interests in e-commerce, cloud computing, digital content delivery, retail and grocery, as well as extensive logistics resources including fulfillment centers, shipping and delivery. Amazon leverages the power of technology to disrupt traditional markets and deliver its unique customer experiences. Amazon Web Services Gartner, Inc. | 722718 Page 1/33 (AWS), the Amazon cloud computing powerhouse, demonstrates the power that disruptive technology can have on a market. Through 2019, AWS continued as the cloud market share leader with annual revenue exceeding $35 billion in 2019 and a run rate of $41 billion in 2020. 1,2 Amazon is culturally wired to deliver an aggressive pace of innovation, driven by expanding customer and vertical industry requirements. Cross-leverage between Amazon’s e-commerce and cloud businesses support a foundation of efficiency, dynamic operations, adaptability and innovation. While the e-commerce and retail businesses drive revenue growth, AWS drives profitability, allowing Amazon to invest in business initiatives that keep it at the forefront of its respective markets. Overall, we rate Amazon as Strong due to its consistent delivery of capabilities and customer value. While many have tried to replicate the Amazon models, Amazon stands alone in its ability to continually sustain such a high rate of innovation and market expansion. AWS continues as the market share leader in the cloud infrastructure and platform services markets. As AWS revenue increases, its growth rates are declining. Despite this, AWS still adds more revenue each quarter than any of its competitors. Key cloud trends such as multicloud and hybrid are helping AWS’s competitors find a space in the market to compete and grow revenue, challenging AWS’s dominant market position. AWS delivers services across multiple industries and in countries and regions around the world. While much of AWS’s initial growth came from early technology adopters, developers and startups, AWS growth is now driven by expanding use cases including the migration of traditional enterprise data centers and associated workloads to cloud. AWS usage is evident in basic data center migration as well as strategic business transformation initiatives. Many organizations appreciate the disruptive and transformational approach of Amazon overall and look to emulate the Amazon model using AWS as a foundation. Some organizations worry about the encroachment of Amazon business models to their respective industry segment, which sometimes results in AWS prospects seeking to work with one of AWS’s competitors. Amazon innovations are frequent catalysts for advancements in Amazon’s broader business concerns. These innovations typically flow freely between the cloud and e-commerce businesses. Examples such as artificial intelligence (AI) including speech recognition, bot technology, translation and virtual personal assistant (VPA) technology are offered as part of the AWS platform, and leveraged heavily in support of Amazon’s broader businesses. The synergy in technology and the shared computing foundation benefits all aspects of Amazon’s business. Amazon continues to explore new opportunities in an array of new markets as wide ranging as pharmacy (mail delivery of prescription medicines through PillPack acquisition in 2018) home automation (through Ring, Alexa and an increasingly growing ecosystem), home routers and mesh networking (through the eero acquisition in 2019) and autonomous vehicles (through its stake in Rivian in 2019). Gartner, Inc. | 722718 Page 2/33 The detailed ratings included in this research primarily focus on Amazon Web Services, unless otherwise noted. Recommendation for CIOs and IT leaders: ■ Learn from the Amazon model of digitalization as a leading example of the power of a technology-driven approach. Emulate Amazon’s agility in pursuing new market opportunities and responding to competitive threats by incorporating digital processes into business execution. Recommendations for CIOs and IT leaders using or considering AWS: ■ When pursuing digital business outcomes, consider the AWS infrastructure and platform offerings as your digital technology foundation. When using AWS, embrace the full capabilities of the AWS platform to modernize data centers and applications, using cloud-native models and operations. ■ Exploit Amazon innovations, typically exposed through AWS services, including data and analytics, artificial intelligence, distributed cloud, edge computing and the Internet of Things (IoT). Use AWS innovations to modernize operating processes and solutions. ■ Adapt your organizational operating models to align with the dynamic, digital operating models espoused by the AWS cloud services including dynamic cost management, governance, application life cycle management and innovation. Detailed Rating Product/Service: Strong Amazon’s product and service offerings maintain a Strong rating. Amazon’s offerings are driven by its relentless focus on innovation and market disruption. The high rate of innovation is fully unveiled at the annual AWS re:Invent event, which provides a forum for announcing new AWS features and capabilities. Beyond the AWS cloud services, Amazon continues to deliver many offerings for consumers and businesses, including devices such as Echo and other Alexa-enabled devices, Fire Tablets, Fire TV, Kindle E-readers, Ring and others. Although most Amazon devices serve the consumer market, Amazon also provides business services through offerings such as Alexa for Business, which allows employees to use Alexa as a type of intelligent virtual personal assistant. Gartner, Inc. | 722718 Page 3/33 Amazon’s customer obsession and value-oriented product design principles is a core factor in its strength in products and services. Amazon uses a methodology where product design starts with the customer perspective, expressed as a mock press release to convey the impact of the product on customers, and then uses a work-back methodology to define the product. Amazon Go, was conceived in precisely this way, identifying the use case value first and subsequently defining the technology enablers. AWS Outposts is another example where Amazon took direct customer input to design an offering that extends the capabilities of its centralized public cloud services to the customers’ premises. Rapid product innovation can also lead to complexity in the product portfolio, as exhibited by the extensive number of separate and distinct AWS services. The numerous AWS features help organizations select the technologies services that best match their requirements, however too many options can also present complexity challenges in navigating the extensive portfolio. AWS has been addressing these complexity issues by aggregating capabilities in structured deliverables, such as AWS Compute Optimizer and Amazon Elastic Compute Cloud (EC2) instance discovery, which help to simplify the selection or help customers right size their EC2 instances. This complexity issue is not unique to Amazon and is shared by all competitive cloud providers. In fact, one might see the growth in complexity as an indicator of the fast pace of innovation and intensity to keep up with an ever growing and evolving set of customer needs. Support/Account Management: Positive Our Positive rating for Amazon support/account management is limited to the AWS capabilities and not the broader Amazon businesses including devices or e-commerce offerings. The AWS account management approach is structured on a foundation of technical expertise through all levels of the sales organization. AWS sales approaches are tuned in order to engage technologists including architects, developers and IT operations leaders. The AWS value proposition is based on position of technology completeness, innovation, maturity and competitive superiority. As such, the account management process is optimized to ensure the AWS technology capabilities lead customer discussions throughout the sales process, which ensures a smooth progression from initial engagement, through the evaluation stages (including piloting/proof of concepts) and eventual deployment. In contrast, the AWS sales approach is often less effective in engaging less technical and risk- averse audiences evaluating cloud solutions, particularly as an extension or complement to traditional IT environments. When strategic engagements are required, AWS makes use of its consultancy, system integration and managed service provider partners, who bring business perspectives and vertical industry expertise. To date, the AWS methodology has worked well in Gartner, Inc. | 722718 Page 4/33 meeting the demands of its customer base, as demonstrated by many successful engagements and high rate of customer retention. Moving forward, AWS must
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