- Amazon’s development consistently leads to and enables Jeff Bezos’ Space project.
- Amazon & Blue Origin duet constitutes a key to forming a strategic advantage of Amazon itself in this Space conquering project.
The goal of the series is to clarify perspectives of strategy making in XXI century. To sum up the line of thought discussed previously, the dynamism of VUCA (Volatility, Uncertainty, Complexity, Ambiguity) makes nowadays difficult to purse a steadfast strategy. Even the Too Big to Fail or the Big Tech companies do not have comfortable assurances of strategic advantage. Still, folk from business cannot resist striving for seemingly impossible. Here is the case of Amazon’s strategy for achieving an unbeatable strategic advantage.
The news has recently broken out – Jeff Bezos is stepping down as CEO of Amazon. The official reason is that Jeff is going to concentrate on the development of his Space-oriented Blue Origin company. The unofficial one – it is the fulfilment of his long-life dream, a maturely conceived mission to save humanity.
My argument here is that Blue Origin is the key to achieving Amazon’s strategic advantage. Jeff owns both companies. Moreover, Jeff has been selling billions of dollars in Amazon stock to help finance Blue Origin. This has enabled Blue Origin to follow a methodical, long-term plan without needing to generate much revenue in the short term. Just as Elon Musk’s Space X ventures into the Space robustly to win over contracts from NASA and survive, Jeff prefers a rather secure way. Just as Blue Origin’s motto proclaims: Gradatim Ferociter (step by step, ferociously).
After twenty years of patient development the strategy pays out. In May 2020, Blue Origin was awarded $1 billion from NASA to produce initial designs for a human-landing system for the Artemis 3 mission, which aims to land humans on the moon in 2024. Moreover, NASA also greenlighted Blue Origin for future Earth observation missions, planetary expeditions, and satellite launches with its New Glenn rocket.
As there is no reason to doubt strategic consistency of Jeff, it is certain that there must be a place for Amazon itself in the Jeff’s space mission. Which is …? Indeed, a billion-worth question …
In the beginning, there was this boy who, at his grandpa’s estate, was reading ferociously science fiction books about conquering the Space. Then, there was a Princeton university graduate in electrical engineering and computer science, who kept his cherished dream of Space conqueror as the hidden powerful motive behind his daring business undertakings.
Finally, in May 1997, Amazon went public as eCommerce company. It started with books – these customary carriers of knowledge. In the next stage of its development, Amazon expanded its product line with kinds of goods for comfortable human existence such as DVDs, CDs, software, also beauty and health products, gourmet food, groceries, jewellery, toys, consumer electronics, etc.
Further development embraced (i) a direct delivery with Amazon Fresh, (ii) the acquisition of the retailer Whole Foods Market with over 400 stores, (iii) innovative chain of groceries Amazon Go. With the expansion of markets and volume trades, there came a need for own logistics company, namely, Amazon Maritime. More to that, in order to increase appeal of the brand, the enterprise of content developing came to the fore (Amazon Studio, Amazon Publishing, Amazon Games, etc.), consistently, enforced with distribution channels, namely, Prime Video, Amazon Music, Twitch, and other subsidiaries: Kindle e-readers, Fire tablets, Fire TV, and Echo devices.
Tech innovation is intrinsic to eCommerce business. As early as 2002, Amazon Web Services was launched with the perspective to create Amazon’s retail computing infrastructure. Now AWS occupies a dominant 32% of all cloud computing market in 2020 Q4 (Source: Canalys estimates, February 2021) with revenue of $12.7 billion for Q4 2020, compared to $9.95 billion for Q4 2019 (Source: ParkMyCloud). It is well ahead of its rivals: Microsoft’s Azure with 20% of market share, Google’ss Cloud – 7%, Alibaba’s Cloud – 6%.
To generate innovative technologies for search and advertising, in 2003 Amazon established A9.com company. Later, in 2015, with the goal of the future – AI, machine learning, deep learning, etc. – AWS acquired Annapurna Labs, an Israel-based microelectronics company.
Then came the grand endeavour to conquer the Space: Kuiper Systems and Blue Origin projects. The first one aims at delivering fast, affordable broadband through a constellation of 3,236 low Earth orbit satellites. The latter (though not an Amazon’s subsidiary, but of the same owner) is destined to pursue the glorious vision for humanity as presented by Jeff Bezos himself on May 9, 2019. Jeff underpins the necessity of the human conquest of space with the increasing number of humans, hence, significant energy shortages and immense pollution problems. Certainly, as he himself acknowledges, it is a vision for the next generations to achieve as the vision engulfs gigantic space colonies with 1 million people living on them. The difference between Jeff’s vision and Musks’ life-on-Mars project is practical. According to Jeff, vicinity to the earth enables ‘normal’ communication with one-day trip from the space colony to Earth. Compare with the 7 months long trip to Mars!
Here lies the key to the establishment of Amazon’s strategic advantage. It comes with the question: how is the space colonies going to be built? As a matter of fact, U.S. private companies, such as Space X and Blue Origin, is already leading the space race. It is not going to change as the private initiative has already accumulated a necessary acumen and know-how to enable projects of such a scale. NASA might assume a role of collaborator and supervisor of national interest in the project. For now, there is a fundamental need to create a basic infrastructure of the space industry to enable all kinds of companies to join the Project.
Here is the crux, strategic advantage will be established in the process of creation of such an infrastructure OWNED by Amazon and Blue Origin, likely, supervised and participated in by the U.S. Government.
Remember, Amazon did not start from scratch. There was an infrastructure already in place: transportation, electronic payment systems, telecommunication, it all existed already. As to the space industry, there is no infrastructure for all-embracing space projects. Doubtless, Jeff intends to be at the centre of the process with Blue Origin and Amazon inclusively as both companies will constitute a complete value chain for such a project of scale.
As Jeff says, ‘We are going to build a road to space’.
Here is an actual prove of the process in question. Amazon Web Services is already providing ground infrastructure for companies to process and analyse data from satellites and is now looking to attract new customers by offering more customized services such as cloud-based satellite operations and mission control. Moreover, AWS is now developing a new service for startups that would be akin to full-service consulting, using partner companies to help startups accelerate their entrance into the space market. As Clinton Crosier, director of aerospace and satellite solutions at AWS, puts it: “AWS is moving into space in a very big way”. “We built a team of experts from across every facet of the space industry: from satellite and spacecraft design to launch operations to on-orbit operations and satellite command and control to space exploration.” (Source: spacenews.com, February 9, 2021)
Amazon stands to Blue Origin as a reliable rear-garde to an audacious avant-garde. Amazon – Blue Origin duet is a kind of riverbed for many big and small boats to cluster and follow the stream. It sounds like a sure strategic advantage in the human endeavour of conquering the space.