Jeff Bezos’s decision to step down as Amazon chief executive means almost an entire generation of Big Tech founder/CEOs have been replaced: Google’s Larry Page, Microsoft’s Bill Gates and Apple’s Steve Jobs. In each case, successors have shepherded market capitalisations to new peaks. Andy Jassy, Amazon’s new boss, stands a good chance of doing the same.
Mr Bezos moves to a new role as executive chairman at a high point. The $1.7tn business he created has capped off a pandemic-fuelled ecommerce boom by reporting fourth-quarter sales up 44 per cent to $125.6bn — a record for the holiday period.
Do not expect the business model of the so-called “everything store” to change under new management. Mr Jassy has been with Amazon for 24 years, joining straight out of Harvard Business School. He is both loyal employee and successful business developer. Under his management, Amazon’s cloud services have transformed from a sideline renting out spare server capacity into a vast new industry. Amazon Web Services is a profit powerhouse generating over half of group operating income, while contributing just 10 per cent of sales in the last period.
But its growth is slowing. When Amazon broke out AWS revenues for the first time in 2015 it revealed quarterly revenue up by about 50 per cent on the previous year. In the latest quarter, sales rose 28 per cent. Rivals are stepping up the competition. AWS remains market leader but Google Cloud just reported sales up almost 50 per cent.
Add that to the menu items Mr Jassy will have to tackle on his extremely large plate. Amazon is expanding in all directions at once. Pharmaceuticals is a potential trillion-dollar business. Drones could cut delivery times to mere minutes but risk antagonising cities. Amazon’s 150m plus Prime membership base is key to raising average online spending. But subscribers must be kept happy with expensive baubles like TV streaming services. Other concerns include a growing unionisation movement among Amazon’s 1.3m employees and the threat from watchful antitrust crusaders.
Who could blame Mr Bezos for slipping off the yoke of future antitrust hearings? He has opted for a role that will allow him to oversee the business and spend more time on passion projects such as space flight company Blue Origin. Facebook’s Mark Zuckerberg must be wondering when it is his turn.
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