At the Code conference(Opens in a new window) this week, Amazon president and CEO Andy Jassy laid out some big ambitions for where the company is heading, saying Amazon’s business is just "a shadow of what it's going to be 10 years from now" in almost every area it plays in.
In retail, he said, he expects customers to get any item either online or in a store with the company's "just walk out technology," with prime customers able to get many products within a couple of hours using the firm's drone airlift initiative. In technology, while Amazon Web Services (AWS) is big, 90 to 95% of IT spend is now on-premise; he expects that to completely flip. He thinks Alexa will be much more broadly useful, becoming an assistant that can help you will all sorts of things, such as calendaring. In content, he said, "everything will be streaming."
Code host Kara Swisher said that Amazon founder Jeff Bezos had described the company as having three core pillars: Prime, marketplace, and AWS. She asked Jassy what another would be. He said there were possibilities in streaming entertainment, Alexa, transportation (where Amazon has bought self-driving company Zoox), low earth satellites, and health care. Talking about its satellite plan, Jassy noted that more than 300 million people have no connectivity, and Amazon's Project Kuiper aims to change that.
In the longest part of the conversation, Jassy talked about health care, noting that "if there's ever a customer experience that needs reinvention, at least in the US, it's health care." He envisions a service that will offer chats, video appointments, real-world appointments, and pharmaceutical delivery in a much simpler way than the current process. He noted the company has recently acquired One Medical which provides some of this. (Later, he said that customers loved the soon-to-close Amazon Care telehealth service, which gave them more time with providers, but that proved not to work from a business perspective. He said, "It's hard to find the right economic model.")
The common thread in all these concepts, Jassy said, is "always trying to make customers' lives better."
He repeated that concept throughout the conversation. He talked about how during the pandemic, the company had to double the size of its fulfillment network in 24 months to serve customer demand. He said third-party logistics companies couldn’t scale the volume at the cost Amazon wanted, and while they thought it would take 6 to 10 years, Amazon had to do it in-house to have the capacity it needed for 2022. When you grow something that quickly, he said, there are always things to clean up, perhaps reflecting the additional expenses the company highlighted recently. He said Amazon is still hiring, but not at the same rate as the last two years.
Swisher and Jassy at Code 22 (Credit: Michael J. Miller)
Swisher pushed him on unionization, and Jassy defended Amazon's pay (saying its average starting salary was now $18 an hour), benefits, and methods of direct feedback, saying "We think employees are better off in the structure we have now." Asked why salaries couldn't be higher, he noted the company has to build a business with sustainable economics, adding that retail is a "mid-single-digits operating margin business."
Jassy doesn't really believe office workers will come back to the office as we did before, but said Amazon will be intentional about getting people together. He said different teams are making different decisions and that there is a lot of experimentation. He said hardware teams often find more benefit to working in person, and that there are advantages to in-person meetings for invention and building company culture.
Jassy was very negative about the antitrust bill being pushed by Senators Klobuchar and Grassley, saying it is broad and overreaching, in explicitly targeting five companies for being too big. He complained about the size of the penalties in the bill, and about its focus on self-preferencing, saying if the issue is private label products, the same rules should apply to Wal-Mart and Target.
He claims that the problem is too much scapegoating and that there are ways to regulate the industry if the private companies and the public sector worked together, to figure out what things should be regulated, such as privacy or private label products.
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