During his company's initial years, Amazon.com, Inc. (AMZN) CEO Jeff Bezos started Project Fargo, an effort to fill the company's warehouse with one sample of every product ever manufactured. That gives you an idea of the scale of his ambitions. As Amazon has grown, Bezos' ambitions have multiplied, and his company has disrupted multiple industries.
Consider this: Within Amazon's current ecosystem, Prime customers can watch television shows on its streaming service, order groceries using Amazon Fresh, shop for products from hairpins to lawn mowers on its e-commerce site, automate homes, communicate with each other and plan their day using Alexa. Taken together, that is approximately seven industries that have been disrupted by Amazon. Now investors are wondering about the next industry that the e-commerce behemoth will disrupt. Here are a couple of suggestions. (See also: Top 10 Companies Owned By Amazon.)
Data Center Networking Gear
At last year’s re:Invent conference for Amazon's cloud division, James Hamilton, vice president and distinguished engineer at Amazon Web Services (AWS), said the company had made its own hardware to speed up cloud networking and ensure faster transmission of data between its data centers. According to Hamilton, designers within Amazon were working on products such as chipsets and network interface cards for its data centers. "When you own the horizontal and vertical, we get to move at the pace we're used to, we get the make changes at the pace we're used to, we get to respond to customer requirements at the pace we're used to. We think this is a really big deal," he said. It is indeed a big deal for the company as well as its competitors. Amazon has already started selling Alpine, its chipset for low-power applications such as WiFi routers, and the company uses them in its own servers.
According to some estimates, the global data center networking market was worth $63.05 billion in 2016 and will be worth $228.4 billion by 2025. Currently, it is dominated by the likes of Intel Corporation (INTC), which produces chips for servers, and Broadcom Limited (AVGO), which makes data center switches. The cloud computing industry itself is expected to grow 18% to $246.8 billion by 2017. Combine the two industries, and you have an enormous market that is primed for Amazon-style disruption. As it has done with other industries, the Seattle-based company could bring down costs and make it cheaper for companies to develop their private cloud networks with its networking hardware. (See also: Amazon Cloud: Is AWS Really Outgrowing Its Competitors?)
According to the World Travel & Tourism Council, the travel industry contributed $7.6 trillion to the world's GDP in 2016. The online travel booking market contributed $178.8 billion of that figure and is expected to rise to $288 billion by 2021. Amazon's ecosystem can easily take a big chunk of that market, especially by integrating travel booking sites (or developing its own travel booking site) on its smart speakers. (See also: Expedia CEO Says Travel Industry in for a Bumpy Ride.)
Booking travel online currently involves intensive research, comparison of data points and multiple open windows. Amazon's smart speakers could easily streamline the process by reducing the complexity to a couple of questions from Alexa. For example, Alexa could launch into a series of queries to determine user preferences (acceptable ticket price ranges and seat preferences) once a user requests a ticket booking. Comparison between airlines and sites would occur behind the scenes. In effect, the experience would take the stress out of travel booking. At the same time, Amazon's scale of operations and customer data could help bring down prices for airline tickets and customize recommendations for travel based on past purchase history. (See also: Amazon Monetizes Convenience.)