Amazon It Strategy Essays

Amazon It Strategy Essays Amazon It Strategy Essay Amazon It Strategy Essay Consumers, particularly young consumers, Increasingly view the Internet as their primary source of entertainment. This trend in attitude is the driving force 1 OF 7 Detente Innovations Tanat seek to merge ten Attitudinally AT televisions, PCs, gaming consoles, smart phones etc. Players in this space, such as Rook, BIJOU, and Applets, have focused on ways to facilitate the watching of downloaded or streaming movies on TV and channels like BBC and HOBO make their content available on the internet where users can watch them anytime. As this trend evolves, devices that provide multiple functionalities will win consumers largely. Televisions that allow on-demand video streaming, AD, live gaming, online shopping and quick browsing will wipe out the dumb boxes, Just like smart phones that replaced traditional cell phones. In addition, companies like Nettling have expanded their business model to online video streaming in response to the decline in the purchase and rental of DVDs. This evolution is mainly attributed to the change in behavior of consumers who care more about what they want to watch than from what source or on what device. Streaming and portability across multiple devices Consumers demand more value and convenience for their purchase. There is an increasing demand for portability across multiple devices. A user should be able to stream a video through Apple tunes on her PC and be able to watch it on her car entertainment system while traveling. To add to her experience, her car entertainment will know where exactly she stopped watch the same video on her PC and will start playing from there. This is the internet of things in the media industry. 3. Evolving ecosystem There have been three major trends in the digital media ecosystem: Move from pure competition to strategic partnerships Recently, Nettling has signed up with Amazon to move its web technology to Amazons loud, though it competes with Amazon on DVD rentals and video streaming. This is just one example where competitors partner with each other to grow together with industry and increase the size of the pie. One might expect more partnerships among the movie studios, content distributors, app developers and device manufacturers and lesser vertical integration Entry of new players As the ecosystem evolves, it attracts the entry of new players into different businesses. The emergence of internet of things will create opportunities for device manufacturers, platform and app developers and telecoms service providers to play a ajar role in shaping the future of the industry. In addition, the growing market will invite big and smaller players outside media industry to grab a share for themselves. Wall-Marts purchase of Vaduz is one such case and an older classic case is, of course, the launch of Amazon Video On-Demand! Cross-sector opportunities convergence Just as media industry creates opportunities for new entrants, the technology, consumer base and data possessed by the existing players makes them important components in other sectors. Personal gadgets like watches can become an integral ice in the internet of things and play a major role in connecting to the cloud and streaming authentication. Further, when live streaming technology matures and the demand for tell-health rises, platform and app developers like Amazon and streaming device manufacturers TIVOLI and Rook can leverage their technology expertise in the healthcare sector. We already experience a convergence between the digital media and publishing sectors with players like Amazon and Apple increasing presence in both and building technologies like pads which blur the distinction between media and publishing for an end-consumer. These cross-sector opportunities will bring about more and more convergence, wherein a every company will be able to influence multiple sectors and generate revenue across industries. This, in turn, will be enabled by and will lead to more complex partnerships and licensing deals. 4. Cloud is the enabler For the trends discussed above, including the internet of things and on demand streaming, cloud computing will be the enabler. More and more companies across industries want to get on to the cloud to decrease costs and focus efforts on their core business. This explains why the bandwidth consumed by Amazons global besides is far less compared to that consumed by its web services. The cloud is important specifically to the media industry because it is the most efficient approach to handle customer data, distribute streaming APS, enable devices to talk to each other and above all content storage. 5. Getting closer to the customer than ever before As per a Minute report, between 2007 and 2009, online video ad sales increased 161. % from $424 million to $1. 1 billion. The category includes video ads, layovers, and banner ads within videos. In spite of these rapid gains, Online video currently accounts for only 3. % of ad dollars spend on media, making it a clear target for growth. To fill this gap, there is a need for extensive data analytics and innovative means to understand the customer better. Amazon is big on tracking customer behavior and leveraging it in different aspects of its business. Media distributors are in a very unique position to reach the customers and we see players like Tivoli investing heavily in data analytics. Some other players partner with companies like Google to transform the data they own into useful information that can be modernized. Real-time data analytics gives an opportunity for players in this space. In an ideal world, Olive Gardens will want its ad to be displayed when a person is in a car watching a movie streamed through Amazon in the car entertainment system and is within 1 mile radius of its restaurant at 12 noon. At the end of the day, the one who wins is the one who can give the right ad to the right customer at the right time Amazon Lets take a look at Amazons mission statement once before getting in depth. To be Earths most customer-centric company where people can find and discover anything they want to buy online Breaking it down: customers Buyers, sellers, Developers, Partners Anything they want I Books, music, apparel, video, devices, web service, platform, applications. What is not obvious in this mission statement is that Amazon intends to expand their business, innovate and creep into multiple sectors leveraging their technology expertise. In short, Amazon wants to be disruptive in what they do! Amazon has strengths that are unique to its status and would not carry over to its competitors that emulate its design. The company is simply so different from other players in its space, be it retailers, software providers, digital media providers, that whats good for Amazon is not good for its competitors in different sectors. Strengths * Customer Relations Management * Information Technology * Data Analytics * Strong Brand * Innovative approach to new business development * Business strategy interwoven with IT strategy * Diversified business Opportunities * Cross sales * Partnerships established well in co-branding without brand dilution or lead a disruptive change Recommendation * Initiate On the basis of the emerging trends in the digital media industry and Amazons strengths and opportunities, I recommend that Amazon should develop a platform to enable video streaming across multiple devices using the cloud and lead the Journey towards internet of things in digital media space. Technology The platform will have many components: 1 . Web service that can be accessed by any device to access and store user data in the cloud 2. App that will enable devices to talk to each other 3. App that will stream video to any device (phone, TV, car). The key feature of this platform is device independence. Value Proposition to End-Users 1 . Purchase and watch videos online from Amazon Video On-Demand or Nettling using a delivery gadget- PC, smart phone, gaming console, TV 2. Your delivery gadget tells your personal synchronizing gadget watch, a dumb phone, MPH player or anything that you always carry with you about your video watching behavior 3. Personal gadget stores information in the cloud 4. When you are in your car or using your gaming console, you personal gadget accesses the cloud and transmits the information to the device in front of you 5. Your delivery device then knows what exactly you want to watch right now and starts playing it! Implications The New Ecosystem Amazons streaming platform well Drill In new players Into ten Logical meal ecosystem and also negatively impact some existing players Major Participants: Delivery Gadgets I TV, Smart Phones, PC, Car entertainment system, In-flight entertainments system, Gaming consoles I Content Distributors I Hull, Amazon Video On-Demand, Nettling, Apple tunes (? ) I Synchronizing Gadgets I Wrist watch, MPH players, dumb cellular phones, smart phones, PC,TV I Other participants include ad agencies and data analytics providers. Key Partnerships and Amazons Value Proposition * Tivoli: Tivoli will slowly disappear if internet of things starts gaining traction. Therefore partnering with Amazon to develop the streaming platform will be a insensible strategic move for the company. In return, Amazon can leverage Divots streaming technology and resources in building this platform. * Flash: Amazon can leverage its existing partnership with Flash and make it an integral part of the streaming platform to enable device independence. Thus any device that has Amazons app to stream videos will use Flash and any content distributor who participates will deliver Flash-compatible video. * Content Distributors: Companies like hull and Nettling do not have the technical expertise or resources to build a streaming platform to enable interconnectivity between devices. Partnering with Amazon and purchasing license to use its streaming platform will help these companies increase their customer base and the frequency of usage of their services (customers can now watch a hull video while flying). * Device Manufacturers: When this technology gains traction, end users will prefer to own a device that can enable a great, convenient entertainment experience whether it is a wrist watch, TV or a smart phone. But, on order to light a spark that will create this demand, Amazon needs to partner with device manufacturers and incentive them to have its streaming platform included in the device. Once the network effects start working and users show an increased demand, more and more device manufacturers will want to have Amazons app on their products. Thus both parties increase their reach to end users. * Network Infrastructure: Amazon will see a huge surge in bandwidth and server demands in the future. Therefore, it is important for Amazon to partner with companies like Zamia Technologies that can power their platform delivery from the cloud and seamless video streaming. To handle bandwidth needs, however, Amazon should leave it to the device manufacturers to make partnerships with telecoms companies like Ericson. Who stays neutral or loses in the game? * Youth: The nature of the videos, including length and quality, and the lack of organization will hinder Youth from reaping any significant benefit from this trend. Compass: The primary delivery channel for Compass is cable. Therefore Compass will not gain from the interconnectivity of devices. Rather, internet of things is going against their core business and if this technology gains traction Compass might not generate sizable revenue from on-demand video business. * Nettling: This technology and business model will cannibalize revenue from DVD purchase and mental for Nettling. However, there is already a decline in the demand for DVDs and therefore the increase in revenue from the interconnectivity and cross-streaming across evolves will outline ten centralization Impact. Pricing The end-user is concerned about prices in two forms: a. Price of Video Streaming: The content distributors will experience an increase in ad revenue and revenue from purchase of content because of the improved user experience with the new platform. In order to keep this revenue flowing, there should not be any significant increase in the price that users pay for content currently. B. Price of Devices: In order to experience the interconnectivity and convenience of cross-device streaming, end-users will be willing to pay a premium for devices that support this feature. To end-users, this is a one-time expenditure that will enable them enjoy the benefits over a long time (they dont pay a premium for content). Real- time Streaming Sports: There is a huge opportunity for sports channels to partner with content distributors to deliver real-time sports videos across multiple devices. Such videos are very valuable when watched live, but decrease significantly in value once the event is over. Therefore, this is a place where both the content owner and the distributor can demand a premium from end users and increase revenues. Revenue sharing Players who are very close to the end-consumer constantly are the ones to capture maximum value from data analytics and ads. The following table lays down the revenue model for the different players in this ecosystem Amazon | 1. Revenue from content distributors and device manufacturers by selling license to incorporate and use its platform 2.