Question

2. What is Amazon’s core business? Is AWS related to Amazon’s core business? Why or why not? Some investors are pressuring Jeff Bezos to spin out AWS as a standalone company. Do you agree with this corporate strategy recommendation? Hint: Do you believe AWS will be more valuable within Amazon or as a standalone company?

Answer 1

Answer:

Amazon's core business is Retail Trade and E-commerce.

AWS does not complements Amazon's retail arm however AWS powers the cloud infrastructure the e-commerce operations runs on.

I believe AWS will be better of on its own.

Explanation:

Amazon originally started out as an online marketplace for Books and later included other consumer items like electronics, foods, toys, software etc. It has consistently grown this aspect of its business and even surpassing other online retailers. It acquired an equally big retailer Whole Foods Market to establish its presence as a Brick and Mortar shop.

The homepage of its main website Amazon.com still displays retail items for sale.

AWS - Amazon Webs Services is the cloud computing arm of Amazon that provides digital storage, cloud infrastructure, database and virtual computing needs to all categories of users - governments, companies, technological companies and individuals.

AWS has recently emerges as Amazon's highest operating income earner within the group.

Spin or dont spin:

A major reason for the spin is identity and brand effectiveness. Both business units[Retail & Cloud] do not co-relate. In-fact they are two opposite sides. While the e-commerce unit deals in physical products, physical deliver, live customer interaction in most cases. AWS is a complete virtual world where almost every activity is done behind the screens.

Also noteworthy is that Amazon's retail arm is majorly situated in North america while AWS is more of an international brand providing services to users all over the world.

The two businesses are operating in different climes and business operating environments and as such it is recommended both should exist as separate entities