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 expand upon its deep technical focus in order to help its customers achieve their strategic and transformational outcomes.

AWS has been actively growing its sales organization in most regions, particularly outside the United States. Sellers include both inside sales (telesales) and ﬁeld-based sellers. Customer success management is primarily centered on the technical support capabilities of its engineering teams in helping architect solutions and migrate customers onto the AWS platform, as well as working with customers on continual improvement and increased service consumption.

Like its sales approach, the AWS support capabilities demonstrate a consistent and deep technical competence. AWS recruits and trains its support professionals with the expectation that AWS support will be able to resolve any technology issue. AWS provides support using online resources (including regularly updated AWS online documentation) as well as blog posts and new feature guidance to reduce the need for customers to contact AWS support directly. AWS also provides dashboards, APIs and a trusted advisor online service to assist customers in identifying potential deployment issues before they arise.

For customers who wish to work directly with an AWS support expert, there are three support plans above basic: Developer, Business and Enterprise. Each support level is distinguished by an increasing level of access to support resources and decreasing response times.

AWS customers opting for the Enterprise support agreement have access to a designated technical account manager (TAM) who will not only provide direct support, but will also monitor the customer’s environment and assist with usage optimization. Enterprise support customers have access to a “Support Concierge” for billing and account inquiries and receive an architectural review by AWS solution architects to ensure incorporation of AWS best practices. Additionally, AWS Infrastructure Event Management is a structured program that helps customers plan for and manage through large-scale events, such as product launches or seasonal volume increases.

In addition to AWS-focused support programs, AWS also provides integrated support experiences with key partners in support of key applications, such as SAP running on AWS. In this example, AWS support engineers are deployed in key regions and aligned with SAP support resources to ensure a seamless experience for joint AWS-SAP customers.

Pricing Structure: Positive

Amazon’s pricing structure is rated as Positive. The AWS pricing philosophy is based on the on- demand, pay-as-you-go model where customers pay only for the services they use, for the time the services are used. AWS does not require long-term contracts, although discounts are applied when

Gartner, Inc. | 722718 Page 5/33 customers make commitments for usage or spending over time. Volume discounts are also applied.

AWS provides a holistic approach to pricing including both standard and negotiated pricing models. AWS effectively pioneered prepurchasing discounts common to cloud purchasing best practices today including Amazon EC2 Reserved Instances (RIs) and committed spending plans (AWS Savings Plans). AWS also supports an on-demand (ad hoc) consumption model through Amazon EC2 Spot Instances, where customers pay a variable rate for unused EC2 capacity. Spot Instances can provide signiﬁcant savings over standard consumption if the customer is willing to operate in an unpredictable environment.

AWS Savings Plans allow customers to gain lower per unit costs in exchange for a commitment to use a specific volume of services for a period of one or three years. EC2 Instance Savings Plans are applicable to a selected EC2 Instance family (for example, M5) within a selected region (such as U.S. East) at the same price as Standard RIs. Compute Savings Plans are applicable across EC2, AWS Fargate and AWS Lambda and are region-agnostic with the same savings as convertible RIs. The AWS Savings Plan pricing models (EC2 and Compute) provide the same savings as EC2 RIs in exchange for a monetary commitment, instead of making commitments to specific instance configurations.

Despite its progressive pricing structure, cost optimization in AWS is a complex and potentially time-consuming exercise. While AWS provides some free tools, such as AWS Cost Explorer, to help customers understand their options and model the economics of their choices, most enterprise and digital-native customers will need more than the AWS-native cost management capabilities. There is a strong third-party cloud service expense management (CSEM) market (see “How to Identify Solutions for Managing Costs in Public Cloud IaaS”), but such tools often come at signiﬁcant additional cost, as most of these tools are licensed based on a percentage of the customer’s AWS spend.

AWS offers usage discounts to customers spending more than $250,000 annually via the Private Pricing program and Enterprise Discount Plans (EDPs). Discount terms are based on the strategic relationship between the customer and AWS, which will be characterized in terms of the total amount of committed spending, the growth potential of the customer (such as startups), or the strategic importance of the customer (such as highly visible brand names). AWS favors organizations making signiﬁcant ﬁnancial commitments and those customers with notable potential for future growth. Eligible customers can expect pricing discounts to be negotiated with AWS directly. Customer commitments and corresponding discounts are applied over the term of the contract. Discounts are typically indexed based on the standard pricing schedule, which means that if the regular prices change, the discounts are applied to the new standard prices. This ensures the discounts associated with Private Pricing are always the best discounts available to customers. (See “A Sourcing Executive’s Guide to Negotiating With AWS, 2020: Part 3 — Pricing.”)

Gartner, Inc. | 722718 Page 6/33 Overall, the AWS pricing models are sufficiently flexible to allow organizations to find a procurement strategy that works for their unique situation. Discounts structures are generally standardized making it easier for customers to determine whether or not they have the right plan in place. The complexity of AWS pricing is manifest in the dynamic nature of cloud and the opacity of some of the billing constructs. For example, there are dozens of “usage type groups” just for EC2, Amazon DynamoDB and Amazon Simple Storage Service (S3) and there are aggregated meters such as a “data processing unit” for some services that cannot be understood without knowing the underlying manner in which that service consumes compute, input/output (I/O) and other resources as it operates.

When organizations have trouble with AWS pricing (and costs), it’s usually because of a lack of understanding of how cloud pricing models work. This is not unique to AWS, but it is common among the hyperscale public cloud providers. Pricing and cost issues can generally be addressed with the use of AWS (or third-party) cost management tools that provide cost visibility (monitoring and reporting), governance, optimization, forecasting and entitlement management.

Technology/Methodology: Strong

Amazon is rated Strong in its technology/methodology. Amazon is a technology-driven company that uses technology innovations and disruptive business models to create new markets or transform existing markets. Structured, organized and managed according to 14 leadership principles, Amazon continually pushes for new approaches to problem solving. 3 Key among these leadership principles is “customer obsession,” which drives Amazon to develop product/service capabilities and operating models structured around the customer experience.

AWS is an example of technology capabilities that were originally designed to support the highly variable IT needs of the Amazon e-commerce business, and then made available to customers. AWS is the market leader in the combined cloud infrastructure and platform services market (see “Solution Criteria for Cloud Integrated IaaS and PaaS” and “Market Share: IT Services, Worldwide 2019”). AWS continues to sustain its high level of technical innovation and feature expansion, introducing thousands of new services and features annually. AWS’s extensive portfolio, deep stable of independent software vendor (ISV) customers, a curated partner program (APN Partner Programs), extensive knowledge transfer programs (AWS Training and Certiﬁcation) and key commerce enablers (AWS Marketplace) add up to a strategic cloud services platform. AWS is not just a point provider of services, but more of a platform, continually industrializing new capabilities into that platform. Hence buying into AWS is like buying into innovation at scale.

AWS has introduced a number of programs and methodologies to enhance the adoption, successful use, and optimization of workloads deployed using cloud services, and shares many of

Gartner, Inc. | 722718 Page 7/33 its best practices with customers and partners. Some examples of AWS programs intended to facilitate the successful adoption and expanded use of cloud services include:

■ AWS Migration Acceleration Program (MAP) — Facilitate migration to AWS cloud services

■ AWS Well-Architected — Guidance for cloud architects to build optimal infrastructure for cloud applications

■ AWS Prescriptive Guidance — Strategies, guides and patterns for cloud usage

AWS provides extensive documentation for its cloud service offerings including user guides, API references, tutorials, software development kits (SDKs) and toolkits, as well as other general resources such as white papers and customer case studies. Other customer enablement services include a variety of direct and indirect support resources to help organizations obtain the help they need for successful adoption of AWS technologies:

■ AWS Support — AWS break-ﬁx, problem resolution and proactive guidance

■ AWS IQ — On-demand help from AWS Certiﬁed third-party experts

■ AWS Training and Certification — Training, education and skills certiﬁcation

■ AWS Professional Services — Cloud design, evaluation, migration, deployment and optimization services

■ AWS Managed Services — Ongoing cloud managed services

Overall, the AWS approach to providing the technical resources along with a full complement of supporting resources renders the AWS offerings attractive to AWS customers. However, the AWS portfolio is extensive and continues to grow. The expansive set of offerings and inconsistent naming make it challenging for organizations to fully understand and appreciate the full breadth of capabilities offered by AWS. As the most complete cloud infrastructure and platform offering, AWS has a capability for almost every need. However, ﬁnding those capabilities can sometimes prove challenging.

Strategy: Strong

Amazon is rated Strong for its strategy and vision. It is a technology-driven powerhouse with an extreme focus on customer needs and behaviors. Amazon embraces challenges and ambitiously seeks opportunities to disrupt existing models and markets through innovation and execution at a massive scale. Amazon has little regard for industry boundaries and seeks growth through

Gartner, Inc. | 722718 Page 8/33 complementary and adjacent markets. This approach has established Amazon as one of the world’s most valuable companies.

AWS’s strategy is an expression of the general Amazon approach; driven by a hyper focus on customer needs and providing the features and functions that drive innovation, reduce friction in technology adoption, and produce meaningful transformation in the way its customers operate.

The AWS approach has been grounded in strong technology capabilities. As such, the AWS offerings have been popular with technologically astute buyers such as developers, architects, IT operators and so on. The early adopter period of cloud computing saw AWS grow rapidly by attracting a technical audience craving something new. AWS successfully capitalized on these opportunities and not only drove rapid growth of emerging cloud markets, but also transformed application development best practices, increased the use of open source technologies, and helped popularize combined development and operations (DevOps) best practices.

The early adopter period of cloud computing is now over. Cloud technologies have become mainstream and organizations of all types, across all parts of the world are now embracing cloud solutions, including those from AWS. As the markets mature, however, there has been a change in the nature of new buyers of cloud services. This is essentially a bimodal shift. Earlier in the adoption cycle, buyers were primarily agility-focused buyers, closely aligned with the line of business and focused on the exploitation of innovative technology in order to drive competitive advantages for their business. Now, new adopters are primarily efﬁciency-focused buyers in central IT organizations, focused on the use of cloud services to reduce costs. The market shift opens the doors to AWS’s competitors, who are often strategically well-entrenched with these buyers from both a technology and a relationship perspective. AWS’s marketing messages, which have been focused on digital transformation and innovation, may not resonate to the same extent with this risk-averse and technologically conservative new audience.

AWS is demonstrating shifts in its approach, which has traditionally been grounded in, and exclusively delivered from its centralized cloud data centers (referred to by AWS as “Regions”). AWS has embraced partners offering technologies complementary to the AWS cloud offerings such as VMware and Microsoft solutions. Using a distributed cloud approach, AWS is extending its services outside of its data centers into its customers’ data centers through AWS Outposts. Other offerings such as AWS Local Zones and AWS Wavelength further extend the reach of AWS services to locations outside AWS Regions. To optimize the performance of AWS systems, AWS has developed the AWS Nitro System as a hardware platform to support AWS services, such as EC2.

AWS has a clear opportunity to demonstrate directional thought leadership on near and longer term futures of technology, markets and opportunities, while helping its customers envision the implications of the shift from traditional technology approaches to embrace the transformative opportunities created by cloud. As a market leader, AWS not only has an opportunity to lead this vision, but also the obligation to guide its customers through the transformation. To help with this daunting responsibility, AWS has actively embraced partners, including consultancies, system

Gartner, Inc. | 722718 Page 9/33 integrators, resellers, ISVs and managed service providers. AWS’s partners help extend the reach of AWS offerings and bring the needed vision for the business solutions (and outcomes) made possible by AWS technologies. However, AWS’s continual expansion of capabilities potentially puts it at odds with partners as evidenced by the development of hardware platforms, software solutions and new services from AWS.

Amazon’s and AWS’s future success will be established through continued obsession on customer needs — including their technology needs today and their need for transformative business results in the future.

Corporate Viability: Strong

Amazon’s business model is predicated on using innovation to provide access to products and solutions for customers globally. The company’s scale and focus on price to value has enabled it to continually take a share of its served markets and reinvest for growth into new and adjacent markets. The strength of its revenue growth and cash ﬂow generation have enabled the continuation of this business model. Additionally, the strength of the company’s ecosystem beneﬁts countless partners and threatens competitors in Amazon’s current businesses.

The pace of innovation has not just provided for its ecosystem and threatened competition, but also continues to push the company into new markets and industries. The resulting product, solution and customer diversiﬁcation, provides the company with sustainability across business cycles. Business objectives and results are strongly aligned with customer and investor demands. There is no question regarding the viability of Amazon’s business.

Financial: Variable Amazon’s financial rating, based on Amazon’s aggregate business, is Variable as of 31 December 2019. This rating is based on Gartner’s Financial Statement Scorecard methodology, which measures growth, financial strength, liquidity and profitability (see Note 1 and Figure 2).

Figure 2. Financial Statement Scorecard: Amazon, December 2019

Gartner, Inc. | 722718 Page 10/33 Gartner’s approach to assessing the financial rating is based on historical performance. Given the unprecedented financial impact associated with COVID-19, the future financial health of Amazon is difficult to estimate. It will be important to monitor ongoing developments and the resulting impacts to Amazon’s financial results.

Amazon’s financial rating of Variable is in contrast to its corporate viability rating of Strong. While Gartner’s Financial Statement Scorecard methodology enables a consistent analysis of vendors across technology markets, Amazon is a unique company. With a significant portion of revenue generated from retail and the associated margin profile and liquidity dynamics, Amazon’s rating of Variable is not entirely representative of its overall strength and viability. The company’s ability to quickly generate cash from operations and reinvest to exploit new addressable market opportunities, helps deliver continued growth and sustainable customer value.

Although Amazon’s ﬁnancial rating is Variable, AWS customers should not be concerned. The AWS business on its own is strong and Amazon continues to make investments to ensure its long-term viability.

For fiscal 4Q19, Amazon reported revenue of $280.5 billion on a trailing 12-month basis, up 20.5% on a year-over-year basis. Cash flow from operations for the trailing 12 months increased 25% to $38.5 billion. Free cash flow increased 33% in the same period to $25.8 billion.

Amazon generated 26% operating margin in its AWS segment on a trailing 12-month basis, down from 29% during the same period a year ago. While AWS generates strong margins, net margin for

Gartner, Inc. | 722718 Page 11/33 Amazon on a consolidated basis, was just 4.1%, as the company’s retail operations bring the company average down.

While net margin is a necessary component of Gartner’s financial rating methodology and helps drive the rating, the strength of Amazon’s business model is driven by free cash flow. Significant cash flow and ongoing growth at Amazon attracts investors, partners and lenders. Moreover, the strength of its cash conversion cycle means that its high revenue growth amplifies free cash available for investing, which is not evident from evaluating generally accepted accounting principles (GAAP) profitability. While the company continues to improve operations and grow its business, this performance is offset by the margin profile of the retail business, which ultimately drives a Variable rating using Gartner’s methodology.

Additional Analyst Insights Amazon Consumer Marketplaces Amazon is a leading online retailer and marketplace operator, especially in the U.S., which is the second largest digital commerce market in the world. Amazon operates regional websites in 20 countries, its latest, Amazon.sg for Singapore, launched in October 2019. 4

Amazon also operates physical stores in the U.S. and holds a stake in More, India’s fourth largest supermarket chain. Amazon’s store footprint includes locations speciﬁcally catering to books (Amazon Books), curated customer favorites (Amazon 4-star), check-out-free shopping experiences, (Amazon Go and Amazon Go Grocery), and frequently updated top brands (Amazon Pop Up). 5 A new grocery store concept was conﬁrmed in November 2019, which will be separate from Whole Foods Market stores and Amazon Go Grocery.

Within its 20 consumer websites, Amazon acts as both a retailer — where it sources products from brands and manufacturers and sells its own 45 private label brands — and as a third-party marketplace operator. This is where more than a million small and medium-sized businesses sell products directly to consumers leveraging Amazon’s worldwide commerce infrastructure and logistics network for delivery.

Amazon’s consumer marketplaces draw a massive amount of trafﬁc by leveraging investments in search and afﬁliate marketing. It is estimated that Amazon.com in the U.S. grew 25.3% in 2019 with total sales of over $220 billion, which makes it the largest digital commerce site in the U.S. by a wide margin, accounting for approximately 36% of all U.S. digital commerce in 2019. 6

Amazon also offers grocery delivery from Whole Foods Market and Amazon Fresh, which is now free for Amazon Prime members. With more than 150 million paid members worldwide, Amazon’s Prime membership program offers unlimited free one-day delivery, and free same-day delivery to members in thousands of cities and towns across 46 major metropolitan areas in the U.S. The Amazon Prime Now grocery delivery service has also been launched in the U.K., in partnership with the U.K. retailer Morrisons. Amazon also owns Zappos.com, an online footwear and clothing retailer.

Gartner, Inc. | 722718 Page 12/33 Despite its leading market position, Amazon faces competitive challenges from other online marketplaces and digital commerce sites offered by brands, manufacturers and retailers. This includes an increasingly popular business model whereby retailers and distributors transform their own digital commerce sites into enterprise marketplaces allowing third-party sellers to offer products directly to buyers.

Amazon’s digital commerce initiatives are generally seen as best-in-class, both from an online perspective (site usability, product findability, ease of check-out) and from a fulfillment and logistics perspective. Amazon operates 110 fulfillment centers in the U.S. and 185 worldwide, making it the most expansive logistics network of any online seller. 7 Amazon has a Delivery Service Partner program where individuals can deliver packages locally, leveraging Amazon for training, technology and support. 8

Amazon Business Amazon has extended the consumer-facing marketplace model it pioneered on Amazon.com to serve businesses of all sizes and across industries, including healthcare, education and government organizations. These groups have many purchasers across departments, all able to operate within one Amazon Business multiuser account.

Amazon Business was launched in 2015 and provides a marketplace for businesses to sell to other businesses. Amazon Business offers hundreds of millions of products and a broad range of categories that are business-speciﬁc, including maintenance, repair and operations, IT, and ofﬁce supplies.

Amazon Business includes additional functionality that is common for B2B transactions, such as purchase approval workflows, bulk pricing, bulk/pallet delivery, consolidated invoicing, tax-exempt purchasing and integration with purchasing systems through the PunchOut (commerce Extensible Markup Language [cXML]) standard. Amazon Business has also established a program where suppliers can submit their credentials for certification, such as those for minority-owned businesses and women-owned businesses. This is an important feature for buying organizations to quickly find certified suppliers. Amazon Business has added more advanced features for procurement, such as spend analytics and guided buying based on purchasing policies. Amazon Business is currently available in nine countries — the United States, Canada, the United Kingdom, Germany, India, Japan, France, Italy and Spain.

Amazon Business already enjoys a significant customer base of individuals who have opened a business account, often because they want the ease of ordering, stock availability and shipping notifications that they get in their consumer accounts. Organizations purchasing through an Amazon Business account can also take advantage of Business Prime, which is similar to consumer Prime in that it offers added convenience and value to a free account. Business Prime is designed for Amazon Business customers who want unlimited fast, free shipping for all purchasers on their account. In addition, Amazon Business has other benefits that provide control and convenience in the procurement experience, such as visual reporting dashboards, extended

Gartner, Inc. | 722718 Page 13/33 payment terms, and customizable controls for purchasing policy management and enforcement. The combination of selection and procurement features has become sufﬁcient to serve as the sole buying channel for tail spend of some organizations.

Despite rapid adoption, an open marketplace concept goes against standard procurement practices to negotiate and enforce strategic supply agreements for higher-value spend categories. There are other limitations as well — inadequate support for prenegotiated contract pricing, lost rebates that other sources of supply (such as purchasing cards [p-cards]) may offer and no single global marketplace.

Amazon Devices Amazon’s portfolio of consumer devices interfaces with and drives its ecosystem of connectivity and automation solutions, using data to create a more intimate and personalized customer experience. The Echo family of virtual personal assistant (VPA)-enabled devices provides voice interfaces with a variety of systems. Other devices, such as Kindle E-readers, Fire TV Sticks and Fire Tablets contribute to Amazon’s immersive ecosystem and serve as delivery tools for Amazon digital content, such as e-books, Amazon Studios original movies and TV programming, Amazon Music services, as well as other third-party content and services.

Eero (a home Wi-Fi system) and Ring (a home security system), further extends Amazon capabilities to support connected home solutions. Further enhanced by an ecosystem of third-party offerings, integrated with Amazon technologies, Amazon provides the building blocks of smart home solutions.

Amazon Go Amazon’s branded check-out free store — Amazon Go — launched in January 2018. Since its launch, the Go stores have expanded to over two dozen locations across the U.S. in Seattle, Chicago, San Francisco and New York City. Amazon Go’s check-out-free shopping experience is made possible using technologies such as computer vision, sensor fusion and deep learning. “Just Walk Out” technology automatically detects when products are taken from or returned to shelves and keeps track of products in a virtual cart. Consumers can walk in, grab what they want, walk out and be charged for purchases automatically on exit.

Earlier this year, Amazon launched a larger footprint store with its Just Walk Out technology called Amazon Go Grocery. Amazon has also unveiled formal plans to offer Just Walk Out technology to other retailers, airport locations and sports arenas.

Analytics AWS offers Amazon QuickSight, a cloud-based analytics and business intelligence (BI) service for performing ad hoc analysis including via augmented analytics and publishing interactive dashboards at extremely large scale for both stand-alone and embedded use cases. Amazon QuickSight comes with ML Insights, a built-in suggestion engine that automatically reviews

Gartner, Inc. | 722718 Page 14/33 underlying data to expose anomalies, forecasts or top-mover analyses. Its AutoGraph feature automatically provides users with recommended visualizations and customizable natural language autonarratives.

The QuickSight platform ingests data from a variety of on-premises and cloud-based data sources into its parallel, in-memory calculation engine, SPICE. Integration with Amazon SageMaker for building predictive dashboards is also available.

In a highly priced competitive analytics and BI market, pricing for Amazon QuickSight includes a pay-per-session model for content consumers, which eliminates charges for inactive users and provides a maximum monthly charge on high-activity users. This usage-based pricing makes Amazon QuickSight competitive and ﬂexible for both embedded BI use cases and enterprise deployments.

Amazon QuickSight should be of interest to organizations using AWS for data management. Users leverage the security associated with the AWS environment, including encrypting data in transit as well as at rest in SPICE when using Amazon QuickSight. The Amazon QuickSight management console is a web-based portal that enables administrators to manage SPICE capacity, add/remove users, adjust Amazon Simple Storage Service (S3)/Amazon Athena permissions, or monitor resources. All Amazon QuickSight Management Console data is available in AWS CloudTrail, allowing authors to make customized reports.

Amazon QuickSight supports in-database processing using existing analytic/relational data sources such as Amazon Redshift, Snowﬂake, Amazon Athena, Microsoft SQL Server and more, as well as its own in-memory engine, SPICE.

However, from a functional standpoint, AWS’s analytics offering is immature in relation to the established products in the market for modern analytics and business intelligence (ABI) platforms.

Artiﬁcial Intelligence and Machine Learning AWS combines a broad and capable AI portfolio with high visibility in the business and consumer sectors. Its visibility in the business sector is due partly to its storage and computing solutions; its visibility in the consumer sector is due to Amazon’s online retail business and Alexa AI product.

AWS offers a comprehensive set of AI and machine learning (ML) services and APIs, including support for the language and vision service areas, which are further supported by Amazon’s SageMaker ML services for developers and data scientists. The solution was rated as a Leader in our most recent “Magic Quadrant for Cloud AI Developer Services.”

AI capabilities, including ML, are presented for consumption by three different audiences:

1. Developers without ML experience

2. Developers and data scientists with ML experience

Gartner, Inc. | 722718 Page 15/33 3. Applied scientists and researchers

AI Services for Developers These are services designed to be useful to AI application developers, including developers without speciﬁc machine learning experience. These services, many of which originated from Amazon’s e- commerce business, are offered as APIs and are grouped into service areas:

■ Vision, which includes Amazon Rekognition and Amazon Textract. Rekognition allows image and video analysis. It can identify objects, people, text, scenes, faces as well as other objects. Textract performs advanced optical character recognition (OCR) allowing the extraction of text from scanned images, retaining the structure so that, for instance, keyword pairs in a form or tabular data can be extracted.

■ Speech, which includes Amazon Polly and Amazon Transcribe. Amazon Polly uses speech synthesis to turn text into natural sounding speech with different personas. Transcribe offers speech-to-text (STT) through automatic speech recognition (ASR) capabilities.

■ Natural language, which includes Amazon Comprehend and Amazon Comprehend Medical and Amazon Translate. Comprehend is a natural language processing (NLP) service that uses machine learning to ﬁnd insights and relationships in text. It can perform text and sentiment analysis. Translate supports translations in 54 languages.

■ Chatbots, which includes the Amazon Lex solution, offers virtual assistant frameworks and dialogue management for building conversational interfaces to applications using voice and text.

■ Forecasting, which includes the Amazon Forecast solution, offers a fully managed service that uses ML to deliver forecasts. It combines data series data with independent variables.

■ Personalization and recommendation, which comprises the Amazon Personalize solution, offers a ML service that allows developers to create individualized recommendations for customers.

■ Enterprise search, with Amazon Kendra providing a ML-powered service to improve search results to natural language queries.

ML Services for Developers and Data Scientists The Amazon SageMaker services allow organizations to develop custom AI solutions using their own data. With Amazon SageMaker, data scientists and developers can build and train machine learning models, and then directly deploy them into a production-ready hosted environment. It provides an integrated Jupyter authoring notebook instance for access to data sources for exploration and analysis. SageMaker Studio is an integrated development environment (IDE enabling end-to-end ML workﬂows. SageMaker also provides common machine learning algorithms. Deployment options are available for edge, cloud and on-premises.

Gartner, Inc. | 722718 Page 16/33 Amazon SageMaker Ground Truth is a fully managed data labeling service that makes it easy to build training datasets for machine learning. Beginners can get started with SageMaker Autopilot which automatically generates a model from the customer’s data. Further, beginners can also get started with prebuilt solutions for common use cases.

ML Frameworks for Applied Scientists and Researchers This lowest layer of the AWS ML Stack enables detailed control over projects. It includes the more popular frameworks and infrastructures (including TensorFlow and a recently-announced partnership with Facebook for PyTorch), multiple ways to customize models and control hardware, including CPUs, graphics processing units (GPUs), custom application-speciﬁc integrated circuits (ASICs), ﬁeld-programmable gate arrays (FPGAs), and elastic inference capabilities.

Cloud Infrastructure and Platform Cloud Infrastructure Services Amazon Web Services (AWS) essentially created the cloud infrastructure as a service (IaaS) market with the 2006 introduction of its Elastic Compute Cloud (EC2), and continues to offer an industry- leading combination of cloud infrastructure and platform services (see “Magic Quadrant for Cloud Infrastructure as a Service, Worldwide”). Due to its broad feature set, the resilience and maturity of its platform, and because it meets most customer requirements for security and regulatory compliance, AWS continues to be the leading choice for most organizations migrating and/or modernizing legacy enterprise applications into the public cloud.

AWS is also the market share leader in platform as a service (PaaS)-based application deployments and is a strong choice for organizations pursuing digital business initiatives. Due to its extensive capabilities, AWS is popular with developers building new applications, or deploying applications from one of AWS’s partners, including customer-facing applications, data and analytics, mobile applications and IoT.

At the cloud infrastructure level, AWS offers its services through a global network of data centers in 24 geographic regions in 18 countries around the world, with multiple availability zones (AZs) in each region. These regions and AZs offer a comprehensive set of cloud infrastructure services spanning compute, networking, storage, security, management and customer service. In Gartner’s 270-point “Solution Criteria for Cloud Integrated IaaS and PaaS,” AWS led all competitors with an overall IaaS and PaaS solution score of 88 out of 100. 9

In 2020, AWS is expanding the breadth and depth of its cloud infrastructure offerings in three ways:

1. With the introduction of AWS Local Zones, AWS Outposts and AWS Wavelength, AWS has signaled its intent to offer customers a continuum of AWS-managed deployment locations stretching from the public cloud to the metro edge, further into private customer data centers and telecom provider access networks.

Gartner, Inc. | 722718 Page 17/33 2. With custom hardware innovations such as the AWS Graviton2 Arm-based processor, the Inferentia chip and ASIC layer enhancements such as the Nitro Security Chip used in Nitro Enclaves, AWS is seeking to build a cost-performance advantage into the core of its platform that can be leveraged directly by its customers.

3. Amazon continues to selectively leverage cloud assets from different parts of its vast portfolio to solve targeted customer problems. For example, the Alexa voice platform is now integrated with the AWS IoT Core platform to bring interactive voice response (IVR) capabilities to a host of new IoT-related use cases.

As it works to expand into hybrid cloud and distributed cloud markets, AWS may face competitive and operational challenges it has not previously encountered. Its ﬂagship hybrid cloud offering, AWS Outposts, is not suitable for all hybrid cloud use cases although available in most regions it is not yet available in all.

Cloud Platform Services AWS offers a rich portfolio of higher-level developer platform services, including support for many open source projects. In addition to its market leading position in cloud database platform services (Amazon Relational Database Service [RDS], Aurora, DynamoDB), AWS has well-implemented services for many platform capabilities, including:

■ API management (Amazon API Gateway)

■ Event brokering (Amazon EventBridge, MQ, Simple Notiﬁcation Service [SNS], Simple Queue Service [SQS])

■ Analytics (Amazon Athena, CloudSearch, Kinesis)

■ IoT (AWS IoT Greengrass, AWS IoT Core, Device Management, Analytics)

■ Professional development operations (AWS CodeBuild, Cloud9, CodeStar, X-Ray)

AWS has developed most of its services in-house, though ﬂexibly adopting an open-source approach according to customer needs (for example PostgreSQL, Kubernetes) or contributing its code to many open source foundations (for example Cloud Native Computing Foundation [CNCF], Apache, GraphQL foundations). Although typically innovating around common platform capabilities like DBMS or analytics, there are also examples of AWS leading the cloud platform market in a new direction. Its introduction of AWS Lambda created the architecture and business model of serverless computing, now copied and advanced by all major cloud platform providers.

Notably, AWS lacked support for data integration services until just recently announcing in April 2020 Amazon AppFlow, to begin to address this shortcoming. Integration is central to enterprise computing and being late to recognize this market is an indicator of some misalignment of the company’s vision and the mainstream enterprise priorities.

Gartner, Inc. | 722718 Page 18/33 Mainstream organizations look for relief from dependence on advanced technical skills and greater focus on business-led application design, but low-code is barely present in AWS platform services (although AWS has partners that ﬁll this need). Most mainstream organizations prefer buying solutions to building them. Lack of business applications in AWS portfolio denies the company an opportunity to deliver to its customers’ business capabilities, which can be consumed as application building blocks for fast and safe assembly of application experience — instead of the slow and expensive direct coding.

Despite the large, innovative and growing collection of platform capabilities, AWS faces some strategic challenges in the enterprise computing market. From its inception, the company’s focus has been — and remains — on professional developers in startups, software vendors or advanced enterprises’ central IT organizations. Its platform has significant capabilities (more than 150 different separately named and priced services), however they may appear complex and fragmented to organizations without the technical insight to design the required platform assemblies. AWS platform services are popular with its target customers, particularly those that embrace the flexibility offered by the diverse collection of services available from AWS. However, many organizations in the growing segment of mainstream cloud adoption and those that may lack advanced technical skills, often prefer a more prescriptive and simplified approach.

Data Management AWS has a diverse collection of DBMS offerings. AWS data management services are offered as database platform as a service (dbPaaS) and are delivered through multiple cloud service offerings (see “Differentiating Between Amazon Web Services’ Database Offerings”).

Operational DBMS:

■ The Amazon Relational Database Service (RDS) family (PostgreSQL, MySQL, MariaDB, Microsoft SQL Server and Oracle Database)

■ Amazon Aurora (PostgreSQL and MySQL compatible relational dbPaaS)

■ Amazon DynamoDB (a document and key-value nonrelational database)

■ Amazon Neptune (a graph dbPaaS)

■ Amazon ElastiCache (an in-memory data store)

■ Amazon DocumentDB (a document store database with MongoDB compatibility)

■ Amazon Keyspaces (for Apache Cassandra)

■ Amazon Timestream (a time series DBMS)

■ Amazon Quantum Ledger Database (QLDB) (a ledger database)

Gartner, Inc. | 722718 Page 19/33 Analytic DBMS:

■ Amazon Redshift (a data warehouse dbPaaS)

■ Amazon Athena (an interactive query service integrated with Amazon Simple Storage Service [S3])

■ Amazon Elastic MapReduce (EMR) (a managed service for Apache Spark, Apache Hive, Presto, Apache Hadoop and other frameworks)

If any of these dbPaaS offerings don’t meet a customer’s needs then traditional database software offerings can be installed as software running on Amazon EC2.

AWS also provides the means to collect, process and analyze data in motion such as video and data streams with the Amazon Kinesis family, which includes:

■ Amazon Kinesis Video Streams

■ Amazon Kinesis Data Streams

■ Amazon Kinesis Data Firehose

■ Amazon Kinesis Data Analytics

■ Amazon Managed Streaming for Apache Kafka

The dbPaaS offerings from AWS are optimized for use in the AWS cloud and as such, AWS does not offer a stand-alone on-premises database solution (although Amazon RDS managed databases can be deployed in on-premises VMware environments or AWS Outposts). Many AWS customers run AWS dbPaaS as part of their hybrid environment. AWS offers APIs for many on- premises DBMS offerings, allowing customers to integrate AWS dbPaaS with on-premises databases as an alternative to the hybrid use case.

To assist customers with migration of existing databases (on-premises or in the cloud) to AWS database offerings, AWS offers the AWS Database Migration Service. This service allows for migrating both the data and the applications from multiple different DBMSs to Amazon RDS, Amazon Aurora and Amazon Redshift, as well as the Schema Migration Tool for moving database schemas from one DBMS to another. Although no migration service can perform 100% of the migration, these services are useful for organizations making the move to AWS data management services.

Developer Programs and Tools The strength of AWS’s market presence is in its developer outreach. AWS offers a wide range of SDKs and IDE toolkits to support developers in more than a dozen languages, as well as

Gartner, Inc. | 722718 Page 20/33 infrastructure-as-code tools (like CloudFormation) to help developers provision infrastructure programmatically. While AWS has tools, it is the core essential components such as Cloud9 IDE or the AWS CodePipeline that provide a complete code-to-cloud delivery chain for AWS applications. AWS realizes organizations will generally have built their own toolchain and want richer capabilities for managing these workstreams. As a result of this, AWS also hosts several other DevOps toolchains such as GitLab, GitHub and Atlassian. Also, because of the overall adoption of the platform, AWS is widely supported by all major DevOps tools. In addition to supporting the key developer toolchains, AWS pursues extensive activities to ensure developers understand and take advantage of the AWS platform. This includes user groups, conferences (with AWS Developer Lounge), the “AWS Heroes” program (expert advocates), training, early access programs, hackathons and peer-to-peer community days.

Internet of Things AWS continues to make progress in the development of its IoT capabilities extending from strong markets such as consumer and commercial IoT into industrial IoT (IIoT). The latter is a challenge for most IT vendors as the operational technology (OT) environment is considerably different to IT environments with signiﬁcant industrial OEMs present with a long term installed base of heavy assets. OT domain expertise is needed to address this effectively along with a strong partner channel that has the necessary expertise and access to the industrial markets. AWS is building both for all markets.

The overall architecture of the AWS approach to IoT has not changed and is based on three planes:

1. The device software plane, connecting devices and operating at the edge.

2. The connectivity and control services plane, ingesting data and managing and securing devices.

3. The analytics services plane, with analytics extracting value from IoT data.

AWS continues to regard these as mutually interacting services and not simply a hierarchy of layers. This strategy also leverages its extensive cloud infrastructure and analytics and AI/ML resources to provide a basis for end-to-end IoT-enabled solutions, which also capitalize on AWS’s wide range of other peer cloud services (such as Kinesis, SageMaker, Lambda, Elasticsearch, among others). As the market moves away from technology-driven platform approaches to IoT- based, business outcome-driven applications (from proof of concept [POC] to proof of value [POV]), AWS, with its business understanding and strengths, is well-positioned to capitalize on the opportunities created.

AWS announced new features and capabilities at re:Invent 2019, such as the monitoring capability added to AWS IoT SiteWise via a SaaS feature designed for operating technology customers; container support and data stream management for AWS IoT Greengrass; configurable endpoints, fleet provisioning and Alexa support for AWS IoT Core; as well as secure tunneling for AWS IoT Device Management. The combination of current IoT capabilities represent an improvement in addressing the IIoT market segment. Gartner, Inc. | 722718 Page 21/33 To date, AWS has not delivered full on-premises deployments for IIoT without cloud dependencies (although services can work in offline mode). Recent announcements have provided that opportunity with products such as AWS Outposts and AWS Snowball Edge with Greengrass container support. AWS Outposts is a cloud-tethered solution requiring regular connectivity to the central AWS cloud service, while Snowball Edge can operate without persistent connectivity.

To help address speciﬁc IoT project requirements, AWS IoT employs partnerships. Some examples include:

■ Intel, NXP and Microchip Technology for IoT starter kits

■ Lenovo, Bosch and Sercomm for IoT gateways, sensors and cameras

■ AT&T and Verizon for IoT device connectivity and connectivity management

■ C3.ai, Hitachi Vantara and Siemens (IoT platforms and IIoT markets)

■ Decisyon and Splunk for IoT analytics

■ Accenture, Deloitte and TensorIoT for system integration

Despite AWS’s fast pace of development in providing IoT capabilities in the cloud, AWS’s intentional agnostic approach to supporting enterprise applications does leave AWS at a disadvantage. The market is moving rapidly toward value-based, IoT-enabled solutions for applications such as asset performance management (APM). Enterprises are also increasingly demanding clear business value with short project paybacks, which is made difﬁcult by an overly complex pricing structure. Furthermore, AWS has a rich set of capabilities, but many customers lack the skills or the time to develop the skills, in order to use AWS to its fullest. As such, the AWS partner network and ecosystem is fundamental to success in these segments which must be driven on a microvertical and domain expertise basis.

Marketplace The AWS Marketplace helps customers discover, acquire, and provision software and services designed for the AWS platform. The curated catalog itself hosts over 7,000 listings from 1,500 ISV partners and has shown tremendous innovation in digital marketplace services. AWS Marketplace is not only a growth engine for AWS, but also an expedited path for AWS customers seeking AWS- compatible solutions.

Key features of the AWS Marketplace include:

■ Enterprise Contract for AWS Marketplace and Standard Contract for AWS Marketplace allow buyers and sellers to quickly align on contractual requirements and accelerate transactions. Procurement System Integration allows for seamless software subscription and centralized approval workﬂows through procurement tools such as Coupa.

Gartner, Inc. | 722718 Page 22/33 ■ Private Marketplace enables individual organizations to have custom-made views of their preapproved products, deﬁne user permissions and leverage their existing ISV agreements.

■ Private Offers enable buyers to secure custom pricing and terms with an ISV (Seller Private Offers) or consulting partner (Consulting Partner Private Offers) and improve transaction ﬂexibility.

■ Cost allocation and tagging integrates with AWS Cost Explorer and AWS Budgets, increasing usage and spend visibility as well as enabling cloud budget management.

In addition, AWS Marketplace has introduced several specialized marketplaces, such as AWS Marketplace for Containers and AWS for Machine Learning, providing centralized buying experiences for these specialized services.

In November 2019, AWS Data Exchange was introduced, as part of the AWS Marketplace family, to facilitate the discovery and consumption of third-party data in the cloud. AWS customers can subscribe to third-party data and incorporate the use of the data in their applications, analytics and machine learning models. The AWS Data Exchange API can be used to load data direction into Amazon S3 where it can then be analyzed through a variety of AWS analytics and machine learning services. Datasets are prevalidated by AWS and include more than 120 qualiﬁed data providers.

Media and Entertainment Services AWS continues to lead in delivering self-service scalable media workflow services to media- focused customers. AWS acquired software and hardware encoding platforms with the acquisition of Elemental Technologies (now AWS Elemental) in 2015 and has since integrated these technologies into the AWS Media Services, retaining the Elemental brand for its media-specific cloud services and appliance products. When combined with Amazon CloudFront, Amazon’s content delivery network, these offerings provide ingest, encoding, packaging and delivery of media at scale for both live and on-demand workflows.

AWS also offers a range of solutions for content creation, including video rendering, editing and production workloads, with services that follow from the 2017 acquisition of Thinkbox. AWS capabilities in media and entertainment extend from content ingestion through delivery, providing TV broadcasters, cable companies and digital brands full, end-to-end workﬂow solutions.

AWS offers services, ready-to-deploy media solutions and third-party offerings through AWS Marketplace for supply chain applications, networking, broadcast playout, machine learning and security. This is in addition to AWS Partner Network integrations for asset management, monetization, user experience, and tools to enhance content and workﬂows. Similar to other AWS cloud services, services for media and entertainment are self-serve offerings that customers use to design, build and operate their own solutions. Alternatively, AWS customers may contract with a consulting partner or AWS Professional Services to build and implement customized solutions.

Gartner, Inc. | 722718 Page 23/33 Gartner clients report AWS’s reluctance to support service customization, which can extend sales and deployment cycles.

Partner Programs The AWS Partner Network (APN) is a robust partner community and program comprising two partnership tracks — technology and consulting partners. Technology partners are typically ISVs that have developed intellectual property (IP) and have hosted their application on the AWS public cloud that often include the offering in AWS Marketplace. Consultancy partners are businesses that provide services to design, implement and/or manage AWS cloud deployments. AWS has put in place requirements for partners to join the program to ensure quality of skills and products deployed on AWS. There are also tiering levels for partners. The higher the partner is in the partnering tier, the deeper the expertise the partner has in the AWS environment and the deeper the resource commitment they receive from AWS.

At a base level, technology partners are required to obtain technical skills as well as demonstrate experience of deploying their technology in an AWS environment. In addition, partners must demonstrate a focus on customer satisfaction through referenceable case studies and positive customer satisfaction responses. There are two tiers or competency levels for technology partners — Select and Advanced. The Advanced tier has more stringent membership requirements for partners signifying greater capabilities than the Select tier.

Consulting partners are also required to demonstrate knowledge, experience and high customer satisfaction of their AWS consulting capabilities. There are three tiers or levels for consulting partners — Select, Advanced and Premier. AWS Premier partners are also audited by a third-party to validate capabilities.

Both technology and consulting partners can also demonstrate specialized capabilities to their potential customers by participating in specialization programs such as:

■ AWS Competency (consulting and technology partner expertise in specialized solutions, workloads or industries)

■ AWS Service Delivery (consulting partner proﬁciency in speciﬁc AWS services)

■ AWS Service Ready (technology partner proﬁciency in AWS service integrations)

■ AWS Managed Service Provider (consulting partner expertise to plan, design, migrate, build, run and optimize AWS workloads)

Organizations looking for AWS partners with AWS expertise or applications hosted on AWS can use two websites to ﬁnd them — the partner locator or the AWS Marketplace.

Security

Gartner, Inc. | 722718 Page 24/33 AWS is a well-established tier-1 CSP. AWS provides well-managed services with excellent security postures (see “How to Evaluate Cloud Service Provider Security”). AWS has undergone numerous global, North American, Asia/Paciﬁc, and European third-party security and privacy evaluations. Gartner’s position is that AWS is a secure service.

Security in the cloud is a shared responsibility, therefore AWS subscribers should focus their attention on correctly conﬁguring the breadth of security controls available in AWS. It is exactly this breadth, however, that confounds those new to AWS. For example, customers can choose from:

■ Five tools for identity and access management and directory services:

■ AWS Identity and Access Management (IAM)

■ Amazon Cognito

■ AWS Resource Access Manager

■ AWS Directory Service

■ AWS Single Sign-On

■ Four tools for encryption, key and secrets management:

■ AWS Certiﬁcate Manager

■ AWS CloudHSM

■ AWS Key Management Service

■ AWS Secrets Manager

■ Three tools for assessing workload security posture and investigating events:

■ Amazon Detective

■ Amazon Inspector

■ AWS Security Hub

Gartner clients often express bewilderment at this array of options and struggle to understand where to begin.

Beyond the options available from AWS, an extensive ecosystem of security partners offer a wide range of third-party products and services, some of which build on and extend AWS native controls.

Gartner, Inc. | 722718 Page 25/33 AWS’s various services possess strong default security positions. Resources (such as virtual machines and storage buckets) are closed to the outside world when ﬁrst provisioned. Conﬁguring useful access controls that open resources to authorized parties require expertise in AWS IAM. IAM policies are expressed as JSON code. AWS also provides a visual policy editor for customers that prefer not to write JSON.

Indeed, misconfiguration represents the most common form of cloud security failure known to Gartner. Over time, Amazon has recognized the potential challenge of misconfiguration and now offers governance tools to help manage and reduce configuration mistakes (AWS Trusted Advisor), configuration drift (AWS Config), account sprawl (AWS Control Tower) and policy implementation (AWS Organizations). AWS Security Hub provides a comprehensive view of the security state in AWS and AWS Foundational Security Best Practices. Third-party cloud security posture management (CSPM) tools are also well-suited for detecting and eliminating misconfigurations, among other forms of security risk. Organizations investing in cloud services and incorporating these tools into their daily operational processes are well-positioned to use AWS services securely.

Services In most technology companies, professional and managed services are separated from product service and support. With AWS, the line between product support and professional and managed services are blurred. AWS combines these functions into a single organization — AWS Customer Enablement. In addition to AWS IQ and Training and Certiﬁcation, this organization includes three key service areas:

1. AWS Customer Support provides tools and expertise to optimize the performance, risk and cost of using AWS to ensure customer success. It goes beyond traditional support expectations of resolving customer platform issues (basic support) by also providing “how to” advice when customers simply need help solving different aspects of their solution (premium support). In effect, the premium support tiers (Developer, Business and Enterprise) provide some services one would typically ﬁnd in a more traditional professional services organization.

2. AWS Professional Services provides over 100 packaged offerings that help to accelerate speciﬁc business outcomes in six core areas — migration, security and infrastructure, advisory, emerging technologies, modernization, and industry/verticals. These offerings are designed to address more advanced “how to” scenarios than premium support. Each offering is an all- inclusive solution that delivers AWS best practices from real-world engagements using a standardized methodology. AWS Professional Services are usually delivered in conjunction with a member of the AWS Partner Network.

3. AWS Managed Services (AMS) is designed to help customers migrate more traditional workloads into AWS and take over day-to-day management, so the customer can focus more of their time on transformation and modernization in other parts of their portfolio. For this reason, AMS is not a cloud managed services provider in the way that Gartner deﬁnes the market. (See “Magic Quadrant for Public Cloud Infrastructure Professional and Managed Services,

Gartner, Inc. | 722718 Page 26/33 Worldwide.”) It is more appropriate to think of the service as automated infrastructure as a service, with an emphasis on compliance-sensitive workloads requiring ITIL-like change management and cost management controls.

These three divisions work together to solve customer problems. For example, it is common for an AWS Enterprise Support customer to use AWS Professional Services to instantiate a solution, then use the premium support entitlements to make adjustments and enhancements to that solution during the operational phase. This is consistent with Gartner’s observation of a larger industry trend in which “ongoing professional services” are a new requirement of cloud-invested organizations on cloud service providers.

Acronym Key and Glossary Terms

ABI analytics and business intelligence

AI artiﬁcial intelligence

AMS AWS Managed Services (Amazon Web Services)

API application programming interface

APM asset performance management

APN AWS Partner Network (Amazon Web Services)

ASIC application-speciﬁc integrated circuit

ASR automatic speech recognition

AWS Amazon Web Services

AZ availability zone

B2B business-to-business

BI business intelligence

CIO chief information ofﬁcer

CNCF Cloud Native Computing Foundation

Gartner, Inc. | 722718 Page 27/33 CPU central processing unit

CSEM cloud service expense management

CSPM cloud security posture management

cXML commerce Extensible Markup Language

DBMS database management system

dbPaaS database platform as a service

EC2 Elastic Compute Cloud

EDP Enterprise Discount Plans (Amazon Web Services)

EMR Elastic MapReduce (Amazon)

FPGA ﬁeld-programmable gate array

GAAP generally accepted accounting principles

GPU graphics processing unit

I/O input/output

IaaS infrastructure as a service

IAM Identity and Access Management (Amazon Web Services)

IDE integrated development environment

IIoT industrial Internet of Things

IoT Internet of Things

IP intellectual property

Gartner, Inc. | 722718 Page 28/33 ISV independent software vendor

ITIL Information Technology Infrastructure Library

IVR interactive voice response

JSON JavaScript Object Notation

MAP Migration Acceleration Program (Amazon Web Services)

ML machine learning

NLP natural language processing

OCR optical character recognition

OEM original equipment manufacturer

OT operational technology

PaaS platform as a service

p-card purchasing card

POC proof of concept

POV proof of value

QLDB Quantum Ledger Database (Amazon)

RDS Relational Database Service (Amazon Web Services)

RI Reserved Instance (Amazon Web Services)

S3 Simple Storage Service

SaaS software as a service

Gartner, Inc. | 722718 Page 29/33 SDK software development kit

SNS Simple Notiﬁcation Service (Amazon Web Services)

SPICE super-fast, parallel, in-memory calculation engine

SQS Simple Queue Service (Amazon)

STT speech-to-text

TAM technical account manager

VPA virtual personal assistant

Wi-Fi Wireless Fidelity

Evidence 1 “Amazon.com Form 10-K,” 31 December 2019.

2 “Amazon.com, Inc. (AMZN) Q1 2020 Results — Earnings Call Transcript,” Seeking Alpha.

3 “Our Leadership Principles,” Amazon.

4 “Amazon Launches Amazon.sg, Offering All Customers in Singapore More Ways to Shop and Millions of Products to Choose From — On Desktop and Mobile,” Amazon, 8 October 2019.

5 “Amazon Physical Stores Locations,” Amazon.

6 J. Young, “U.S. E-Commerce Sales Grow 14.9% in 2019,” Digital Commerce 360, 19 February 2020.

7 “Amazon Fulﬁllment: Our Fulﬁllment Centers,” Amazon.

8 “Amazon Logistics,” Amazon.

9 “Solution Scorecard for Amazon Web Services IaaS, July 2019.”

Note 1: Gartner’s Financial Statement Scorecard for Public Companies Gartner’s Vendor Financial Statement Scorecard methodology measures a combination of growth, profitability and liquidity based on a company’s financial results from public financial statements according to generally accepted accounting principles (GAAP). Gartner uses a standard

Gartner, Inc. | 722718 Page 30/33 methodology to derive its vendor ﬁnancial statement scorecard to provide a like-for-like view among a pool of more than 750 vendors using publicly available ﬁnancial information. The four basic criteria are:

1. Revenue growth (trailing twelve-month year-over-year revenue growth).

2. Proﬁtability (trailing 12-month GAAP net proﬁt margin) with net income as a percentage of revenue.

3. Balance sheet liquidity (current ratio) as current assets divided by modiﬁed current liabilities (which adjusts for the presence of deferred revenue).

4. Cash ﬂow based on the trailing 12 months of cash ﬂow from operations as a percentage of the trailing 12 months of revenue.

5. For companies with large amounts of net debt, a ﬁfth criterion, net debt divided by trailing 12- month cash ﬂow from operations, is incorporated.

Gartner’s policy is to use ﬁnancials based on GAAP in calculating the ratios needed for the Vendor Financial Statement Scorecard (see “Understanding the Methodology Behind Gartner’s Financial Statement Scorecard for Public Companies”).

Company Overview Amazon Headquarters: Seattle, Washington, U.S.

www.amazon.com

Amazon is a multinational conglomerate with business interests in e-commerce, cloud computing, digital media and entertainment, content streaming, grocery and retail. Amazon has an extensive network of fulﬁllment centers along with distribution and delivery capabilities. Amazon leverages technology, such as cloud computing and artiﬁcial intelligence, to innovate and disrupt existing markets, as evidenced by its market-leading cloud computing business, Amazon Web Services (AWS).

Overall Rating Definitions

Strong Is viewed as a provider of strategic products, services or solutions: ■ Customers: Continue with planned investments.

■ Potential customers: Consider this vendor a strong choice for strategic investments.

Gartner, Inc. | 722718 Page 31/33 Positive Demonstrates strength in specific areas, but execution in one or more areas may still be developing or inconsistent with other areas of performance: ■ Customers: Continue planned investments.

■ Potential customers: Consider this vendor a viable choice for strategic or tactical investments, while planning for known limitations.

Variable Shows potential in specific areas though still variable in more than one of the required categories: ■ Customers: Consider the short- and long-term impact of possible changes in status.

■ Potential customers: Plan for and be aware of issues and opportunities related to the evolution and maturity of this vendor.

Caution Faces challenges in multiple required categories and execution is inconsistent: ■ Customers: Understand challenges in relevant areas, and develop contingency plans based on risk tolerance and possible business impact.

■ Potential customers: Account for the vendor's challenges as part of due diligence.

Weak Has difficulty responding to problems in multiple areas: ■ Customers: Execute risk mitigation plans and contingency options.

■ Potential customers: Consider this vendor only for tactical investment with short-term, rapid payback.

Document Revision History Vendor Rating: Amazon - 6 February 2019

Vendor Rating: Amazon - 30 January 2017

Vendor Rating: Amazon - 6 January 2016

Vendor Rating: Amazon - 31 December 2014

Recommended by the Authors Innovation Case Study Spotlight Series: Amazon’s Go-To Innovation Techniques Amazon’s Impact on Digital Commerce in 2019 Amazon Versus Alibaba Versus Your Enterprise

Gartner, Inc. | 722718 Page 32/33 Magic Quadrant for Cloud Infrastructure as a Service, Worldwide SWOT: Amazon Web Services, Worldwide How to Bring the Public Cloud On-Premises With AWS Outposts, Azure Stack and Google Anthos Four Things to Know About VMware Cloud on AWS When Cloud Meets COVID-19, Opportunities and Threats Emerge

Recommended For You Promoting Psychological Safety to Further Innovation Strategic Planning: 3 Critical Pitfalls and How to Avoid Them Digital Goldman Sachs: Five Lessons from Goldman Sachs and What They Could Herald for Business

Open Source Change: Driving Organizational Change in the Digital Era Value Stories to Tell About Your Digital Initiatives

© 2020 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. and its affiliates. This publication may not be reproduced or distributed in any form without Gartner's prior written permission. It consists of the opinions of Gartner's research organization, which should not be construed as statements of fact. While the information contained in this publication has been obtained from sources believed to be reliable, Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Although Gartner research may address legal and financial issues, Gartner does not provide legal or investment advice and its research should not be construed or used as such. Your access and use of this publication are governed by Gartner’s Usage Policy. Gartner prides itself on its reputation for independence and objectivity. Its research is produced independently by its research organization without input or influence from any third party. For further information, see "Guiding Principles on Independence and Objectivity."

About Gartner Careers Newsroom Policies Privacy Policy Contact Us Site Index Help Get the App

Gartner, Inc. | 722718 Page 33/33