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Amazon and AWS paths converge amid product buys, releases

As Amazon's retail side turns toward consumer-oriented AI devices, its AWS subsidiary is linked more directly to the parent company's business objectives -- a win for enterprises.

Amazon and AWS have generally maintained separate profiles and agendas within the company. But a clear separation...

of Amazon's retail and businesses is blurring, as the business continues to thrive and the parent company increasingly aligns to AWS' tech-oriented direction.

In 2015, Amazon broke out AWS' numbers separately from the rest of the business, and the success of its public cloud arm is clear: Sales are now $3.7 billion per quarter, and it contributes nearly all of the company's $1 billion operating income.

But the distinction between Amazon and AWS, which itself blurs the lines between platform, software and infrastructure as a service, is fading. Some newer AWS capabilities connect back to the host retail company, as Amazon experiments with different technologies to target new consumer markets, such as smart devices and media, and improve its retail business.

"About a year ago, I would've felt really comfortable saying there is the retail business, and there is AWS," said Meaghan McGrath, analyst at Technology Business Research Inc., based in Hampton, N.H. "While they share some of the same infrastructure -- that is how AWS was born -- there were still some very clear lines [of differentiation]."

As Amazon endeavors to become more profitable across different markets, and as its cash-cow AWS becomes more robust and appeals to more use cases, the Amazon and AWS trajectories could align, and more overlaps are inevitable, she said.

Amazon's blurring lines serve as something of a polar opposite to one of its fiercest cloud rivals, Google Cloud Platform, which has struggled to differentiate its cloud business from other holdings, McGrath said.

"Google is sort of the perfect mirror image as a company that has had a much harder time distinctly decoupling its enterprise cloud services with its other tangential businesses," she said. "[Google has] been moving in that direction, but I don't think they're ever going to make the clean break because of what we're seeing with Amazon now."

Amazon and AWS objectives meet upstream

The AWS IoT Button has the same design of the Amazon Dash Button, so developers can code unique commands to interact with smart objects. Amazon Lumberyard is a platform for video game developers, including those working on games for Amazon Game Studios.

Recent additions to Amazon business productivity tools also shorten the divide. Amazon Chime runs on AWS software, but carries little of its branding as a video conferencing communications service. Amazon Connect opens up call-center capabilities that integrate with AWS tools.

And as Amazon ventures further into online streaming media, recent AWS acquisitions seem applicable across both AWS cloud and its media wings. Elemental Technologies -- rolled out as AWS Elemental -- is a software-defined service for media and entertainment customers' content and delivery workflows; Thinkbox Software is a render management software provider. Both could benefit Amazon Studios, the company's movie and TV business, as well as expand AWS capabilities.

Alexa, the voice recognition software behind the Amazon Echo smart home, has been opened up to developers as part of a suite of artificial intelligence (AI) services. And the new Amazon Echo Look hands-free camera and style assistant uses AWS' machine learning capabilities to provide wardrobe feedback to consumers. The ways in which developers use those AI tools could influence how Amazon adapts the Echo in the future.

Amazon has also increasingly turned to AWS' computing capabilities in its retail strategy.

"They continue to advance their AI technology for intelligently deciding how to ship goods," said Mike Russell, CTO of Curiosity, an educational media content provider based in Chicago, and a former software development manager at Amazon.com. "Their back-end processing is probably the most advanced part of what they do -- their fulfillment services. That incredibly advanced AI they built determines the best way to get you products."

Russell's team at Amazon.com was one of the first to use Elastic Compute Cloud (EC2) internally for production applications. And Amazon executives pushed the pace of innovation to regularly develop features for internal use, in addition to those offered to customers. "That was the first time I got to see how Amazon's technical initiatives were starting to merge with its business needs," he said.

Diverging paths a plus for customers

A few years ago, Amazon-related technologies like Fire and Echo didn't quite overlap into areas for AWS customers. Today, however, more enterprises accept Amazon's technology push, which includes drones and other smart devices, said David Linthicum, senior vice president at Boston-based Cloud Technology Partners and a TechTarget contributor.

Within AWS, there's a danger of too much focus on consumer products and not what enterprises really want.

"They could ... dilute their brand in terms of being pure-play IT, if they buy or build too many things that are off core strategy," Linthicum said. "However, I don't see them doing that."

Curiosity turns to both Amazon and AWS

As a side project, Curiosity built an Alexa skill to provide spoken-word content through the Amazon Echo. Once an end user enables the skill and interacts with the device, Alexa calls an API hosted in AWS, with the user's speech transcribed to text. AWS Lambda functions direct the request to the appropriate content and return it to the end user. To build the Alexa skill, Curiosity CTO Mike Russell's team familiarized itself with Lambda, one of several AWS pathways for an enterprise to connect with users through Alexa.

"That was really exciting to build an app based on speech recognition that interacts with a fairly sophisticated back end," Russell said. But Curiosity's primary audience comes from its mobile application, so Alexa development is on the back burner for the company's six-person engineering staff.

Russell said he sees more potential for the Alexa service itself, such as more direct marketing for retail products within Alexa skills. As an example, he mentioned how a Curiosity topic -- such as chemistry -- could feature a brief interruption from an Amazon retailer selling a children's chemistry set.

Russell's team at Curiosity uses about a dozen services from AWS' portfolio, including EC2 instances in an Amazon Virtual Private Cloud, Simple Storage Service for large file assets, Amazon CloudFront as a content delivery network and Amazon Simple Queue Service.

"A lot of what we built, we deploy and host ourselves on AWS," Russell said. "We try to build in a layer between us and AWS, so maybe one day we could host our applications in a different way. That said, I have no intention of leaving AWS anytime soon."

And Russell, too, envisions Amazon integrating more deeply with AWS, which serves to benefit enterprises looking for more content platforms.

"I can certainly picture a world where some of their consumer services, especially around shopping, are going to be integrated with their computing services," he said. "It only makes sense that the AWS part of the business is merging with the consumer side."

David Carty is the site editor for SearchAWS. Contact him at dcarty@techtarget.com.

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