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The Amazon's digital platform strategy: lessons for operators from Amazon Web Services

The Amazon's digital platform strategy: lessons for operators from Amazon Web Services

Operators should understand the benefits of transforming into full digital economy ecosystem enablers to remain competitive. This strategy report examines Amazon's successful platform strategy and what operators can learn from it.


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Executive summary
Increasing competition will make it challenging for operators to become digital service providers
Amazon's platform-centric strategy provides valuable insights for operators
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AMAZON'S PLATFORM-CENTRIC DIGITAL ECOSYSTEM
Amazon Web Services is one of the three main elements of Amazon's strategy
Amazon's successful business model hinges on a cloud-based platform-as-a-service digital ecosystem
The development of AWS required a mandate from Amazon's CEO, and a focus on internal interoperability
AWS's evolution anticipated wider industry trends
ADVANTAGES OF A PLATFORM-CENTRIC BUSINESS MODEL
Operators should understand why a platform business model fits well with their core capabilities and may help them succeed
Digital platforms change the nature of competition, and help to transfer innovation risk to third parties
Digital platforms enhance operators' strategic focus, and prevent incurring a costly 'strategy tax'
Digital platforms co-exist with, and enhance, an organisation's core business
KEY LESSONS FROM AMAZON'S STRATEGY
Amazon has unique characteristics, but operators can nevertheless derive valuable lessons from its experience
Lessons from Amazon: Focus on customers, and build a compelling ecosystem of complementary services
Lessons from Amazon: Platforms enable incremental feature development, allowing the operator to rapidly respond to competition
ABOUT THE AUTHOR AND ANALYSYS MASON
Figures
Figure 1: The three elements of Amazon's platform and digital ecosystem strategy
Figure 2: A digital innovation platform and its opportunities for telcos
Figure 3: Amazon Web Services' net sales and operating income, worldwide, 2Q 2014–2Q 2015
Figure 4: The three elements of Amazon's strategy
Figure 5: Key statistics for Amazon Web Services
Figure 6: Characteristics of in-house innovation and platform-enabled services
Figure 7: Chronology of Amazon Web Services , major milestones and features launched
Figure 8: Amazon Web Services' net sales and operating income, worldwide, 2Q 2014–2Q 2015
Figure 9: Operator advantages derived from executing platform business models
Figure 10: Net profit margins of selected Internet companies, worldwide, 4Q 2011–4Q 20141
Figure 11: Amazon's 'flywheel' depicting the company's self-reinforcing strategy

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