Low prices. Wide selection. Hard-to-beat convenience.
They have been crucial keys to Amazon’s e-commerce dominance for the past two decades.
Now the tech titan seems to be doubling down on this winning playbook to borrow pieces of it to advance its new AI strategy. Amazon Web Services Division which focuses on low prices and wide selection.
To be clear, it will be a long time before the business world judges the effectiveness and financial stability of Amazon’s approach. But, if successful, the game plan will go a long way toward both quieting critics who argue that Amazon is playing catch-up in the AI wars, while also positioning the company as one of the world’s most powerful and influential technology corporations in the future. There is also evidence of standing as one. The coming decade
Amazon executives are unveiling key pieces of their AI strategy this week at their flagship AWS Re:Invent conference in Las Vegas. A key element is a new portfolio of in-house-built foundation models, known as FMs or LLMs, Nova, which can handle text, image and video queries respectively.
Amazon’s launch of a new class of its own AI models may, on the surface, be confusing because the company already Invested $8 billion in AnthropicCreator of the popular Cloud family of General AI models. But, as my partner Sharon Goldman recently notedAmazon is betting that there will “never be one tool” — or AI model — to rule them all. In short, Amazon believes that enterprises want options in models, whether from Amazon, Anthropic, or other tech giants like Meta.
Amazon originally started pushing the idea of offering a choice of AI models to business customers through a single API when its AWS division introduced a service called Amazon Bedrock last year. Through Bedrock, business customers can choose from a relatively limited selection of AI models—but a selection nonetheless—to train for their needs and to serve as a foundation for their own general AI applications.
On Wednesday, Amazon doubled down on the strategy by announcing Bedrock Marketplace, which offers a total of 100 AI models. LLMs on the market come from a host of different companies, some designed for specific purposes.
“Finding and evaluating these models can be challenging and expensive,” Amazon said in its blog post announcing the marketplace. “You need to discover them in different services, create abstractions to use them in your applications, and build complex security and governance layers. Amazon Bedrock Marketplace addresses these challenges by providing a single interface to access both specialized and general-purpose products. [foundation models]”
Turning to Amazon’s e-commerce business, a key component is the Amazon Marketplace, where hundreds of thousands of External merchants list products For sale which makes up 60% of all goods sold by Amazon. Amazon also fulfills a selection of these marketplace sales by selling its own inventory of goods, including some under its own brand names when a particular product category or price point is not filled by marketplace sellers or Amazon’s brand partners. is going
Similarly, Amazon is offering businesses an enterprise AI version of the marketplace that can only be imagined to expand in the future. (It’s also worth noting that Amazon’s core AWS business offers a marketplace of more than 10,000 software tools that cover categories from cybersecurity to data analytics.)
Low prices have also been another hallmark of Amazon’s retail business. Amazon aggressively matches other retailers’ prices, and throws two massive discount events that attract heavy spending and new prime customers. (The FTC argued in its antitrust lawsuit against Amazon that the e-commerce giant artificially raises prices for consumers around the Web by penalizing merchants who sell products at lower prices to other retailers. But that’s a topic for another day.)
And sure enough, Amazon CEO Andy JassiThe slide deck unveils the new Nova AI models starting with pricing: “75% more cost effective,” was the first feature touted.
Simon Willison, an independent AI researcher, did a quick test and agreed, writing on social network app Bluesky that Amazon’s “price and performance [are] Competing with Google Gemini family, which means they’re _really_ cheap.”
“With this release I think Amazon has secured a place in the top tier of model providers,” Willison added. “Maybe we need a new FAANG summary that covers OpenAI, Anthropic, Google, Meta, and Amazon. I love GAMOA.”
Amazon’s leaders won’t care what the new acronym is called as long as they earn a place in it. If they do, the company’s longtime hallmarks of low prices and selection will likely be the main reasons.
Are you a current or former Amazon or AWS employee with thoughts on this topic or a tip to share? Contact Jason Del Rey at jason.delrey@fortune.com, jasondelrey@protonmail.comOr through the messaging apps Signal and WhatsApp 917-655-4267. You can also message him On LinkedIn or on @delrey on the X.
