This Technology Holds the Key to Amazon's Future; It's Not Robots

Generative artificial intelligence is getting all of the hype but cloud computing is the technology that has truly transformed businesses and the broader economy over the past decade.

Cloud computing allows for companies to move operations and data into online remote servers instead of physical machines inside offices. As a result, companies are better able to collaborate and share data, no matter the geographic distance. But more importantly, companies can access more or less computing power as needed, allowing them to nimbly respond to shifts in consumer demand.

What’s remarkable is that it's e-commerce giant Amazon Inc.  (AMZN) - Get Free Report, not Google  (GOOGL) - Get Free Report, Microsoft  (MSFT) - Get Free Report, or IBM  (IBM) - Get Free Report, that has dominated cloud computing. And no sector has benefited more from Amazon Web Services (AWS) than the high tech economy, especially startups centered in Silicon Valley and Seattle.

Thanks to AWS’s low cost services, startups have been able to grow rapidly and cheaply into companies with multi-billion valuations before even going public. In fact, more than 80% of these so-called tech unicorns use AWS.

A Game Changer

All of this is just a long way of saying that Amazon knows how to do more than just sell cheap stuff online. Not only does Amazon recognize a transformational technology when it sees one but can effectively scale it so hype becomes reality.

That’s what makes Amazon’s recent announcement so significant. The company said it will spend $100 million on collaborating with users of AWS to develop generative AI technology.

Most AI systems can be trained to distinguish between images of dogs and cats. By contrast, generative AI systems can be trained to generate an image of a dog or a cat that doesn't exist in the real world.

There are plenty of possibilities. For example, research firm Gartner predicts that by 2030, a major blockbuster film will be released with 90% of the film generated by AI (from text to video), from 0% of such in 2022.

The technology can also help energy and transportation companies compose new materials with specific properties like greater magnetic attraction, electrical conductivity, or resistance to erosion.

“The ability for technology to be creative is a game changer,” Gartner says.

Spreading AI Through AWS

Given the stakes, a hundred million dollars seems rather modest, at least by Amazon’s standards. But the details of what the company calls the AWS Generative AI Innovation Center are what’s important.

Amazon will send its experts — engineers, data scientists, strategists — to work alongside companies like Lonely Planet and Twilio to create new products and services based on generative AI.

“Customers around the globe are hungry for guidance about how to get started quickly and securely with generative AI,” said Matt Garman, senior vice president of sales, marketing, and global services at AWS. “Our goal to help every organization leverage AI by providing flexible and cost-effective generative AI services for the enterprise, alongside our team of generative AI experts to take advantage of all this new technology has to offer.”

“Together with our global community of partners, we’re working with business leaders across every industry to help them maximize the impact of generative AI in their organizations, creating value for their customers, employees, and bottom line,” he said.

As of first quarter this year, the company controls 32% of the global market for cloud infrastructure services, according to Statistica, compared to 23% for Azure (Microsoft) and 10% for Google.

Therefore Amazon enjoys a prime (pun intended) position to spread generative AI through its AWS cloud business: one transformational technology enabling and scaling the other.