What’s Next for Jeff Bezos and Amazon?

Amazon founder Jeff Bezos is stepping down from the CEO role, handing it over to his long-time trusted executive Andy Jassy, who until now was heading the company’s cloud division – Amazon Web Services (AWS). The question floating in everyone’s mind is: ‘What’s next for Jeff Bezos and Amazon?’ It appears that nobody except possibly Bezos, Jassy, and a handful of others in the inner circle have some clue about what happens next. However, here are some key takeaways from the announcement.

Jeff Bezos isn’t Retiring

Even though Bezos is stepping down from the CEO position; that doesn’t mean that he is retiring. In an email to Amazon employees published online, the billionaire said he would continue to serve as executive chairman while focusing on philanthropy and his other companies, including Blue Origin and the Washington Post.

In the Exec Chair role, I intend to focus my energies and attention on new products and early initiatives. I’ve never had more energy, and this isn’t about retiring. Andy is well known inside the company and has been at Amazon almost as long as I have,” Bezos wrote.

“Being the CEO of Amazon is a deep responsibility, and it’s consuming. When you have a responsibility like that, it’s hard to put attention on anything else,” he added.

Charlie O’Shea, lead retail analyst at Moody’s Investors Services, said, “Bezos’ departure and replacement with Jassy would be an “absolutely seamless transition.”

“He’s going to be still very much involved in the overall strategy of the company; he’s the largest shareholder. There are a whole lot of things that will keep him wedded to this company,” he said in a recent interview.

Big Techs are fine without their founders

Bezos’ move indicates a familiar trend that most big tech founders – Bill Gates, Steve Jobs, Larry Page and Sergey Brin – have moved on to start the next chapters in their lives (except for Facebook that’s still run by its founder).

According to Jayanth Kolla, chief analyst at Convergence Catalyst, “People like Bezos and Bill Gates continue to exert a huge influence over the companies they’ve founded, and their unprecedented wealth permits them to continue to exert a huge influence over the rest of the world.”

“Having said that, most of Big Tech becomes so ‘Big’ and entrenched that it no longer needs the men who made it. “You can see the performance of Google or Alphabet, Apple, and Microsoft once their CEOs stopped running the companies day to day. They continue to grow under the reigns of efficient and trusted executives, whether its about Sundar Pichai, Satya Nadella or Tim Cook,” he said.

In fact, investors, at the very least, have learned to live with Big Tech companies run by someone other than their founders and they are doing absolutely fine.

Amazon’s cloud vs., Amazon’s retail

The shakeup however is a big deal for Amazon’s internal and external stakeholders. Not only Bezos, but Jeff Wilke, head of Amazon’s consumer business also announced he would retire in 2021.

“That left Jassy as not the only candidate but clearly the most likely Amazon executive to succeed Bezos,” tech historian and author of ‘Code’ Margaret O’Mara tweets.

The cloud computing market is expected to grow phenomenally in the coming years as the pandemic has accelerated enterprise cloud adoption, and AWS is a powerhouse within the company, driving a lot of profitability.

Jassy’s appointment suggests Amazon wants its cloud unit to become a bigger part of the overall business. It generates 12% of the company’s revenue but 60% of operating profit. In contrast, Amazon’s retail operations have long struggled to make a profit given the enormous, unrelenting cost of building infrastructure like distribution centers, and of ensuring fast delivery and competitive prices.

“It’s possible the company’s cloud business could get additional attention,” Bloomberg Intelligence wrote in a research note about Bezos stepping down.

Nonetheless, Amazon will continue to be a dominant retail powerhouse, believe analysts. As few companies have the scale and technological capacity like Amazon that has made it increasingly customer and partner centric.

However, the most interesting question that’s left to be answered is, who will replace Jassy as the new head of AWS, because that will be an incredibly important job.

What will happen to India?

The India growth story for Amazon is indeed compelling. Amazon has doubled down on the India market in recent years and has committed investments worth $6.5 billion in the country to date. Amazon also opened its largest campus in the world in Hyderabad.

While cloud contributes to a chunk of Amazon’s revenue, Bezos is extremely bullish on the country’s ecommerce. According to Forrester Research, Flipkart had 31.9% market share, making it the largest online retailer in India. But, Amazon India isn’t far behind with a 31.2% market share.

Despite this momentum, Amazon is facing mounting challenges in the country, especially regulatory hurdles. According to Kolla, while predatory pricing or deep discounting has been an ongoing issue between the Indian government and ecommerce companies, trade associations and online sellers have also time and again criticized the ecommerce platform of selling products at near-cost prices to boost sales volumes.

The implementation of FDI rules also impacted the trade relations between the US and India government. Besides, Amazon’s involvement in the ongoing court tussle with Future Group and Reliance Industries has also made it difficult for not only for the tech behemoths but for the entire ecommerce ecosystem.

And just as Amazon gets interim relief on Tuesday, with Delhi High Court directing Future Retail to maintain status quo on the deal with Reliance, the news of Bezos stepping down surfaced, giving rise to more speculations.

“In the “ego battle” between the two billionaires, especially once Reliance strikes back, one can expect more intense drama in this space. So, while it’s currently advantage Amazon, the battle is far from over,” said Kolla, who believes that despite challenges, Amazon may continue to grow and evolve in the most unpredictable ways. And we need to watch this space.”