Amazon.com founder Jeff Bezos has announced his intention to stand down as Chief Executive Officer and take up the reins of Executive Chairman. Bezos also named his successor as CEO. Andy Jassy, the current head of the cloud computing division, known as AWS.
This move is seen to cement the company’s transformation from an internet based retailer to an internet conglomerate. The announcement answered an often debated question, “Who will replace the world’s second-richest man at the helm of the company?”
Bezos started the company 27 years ago as an internet-based bookseller. Amazon is now one of the world’s top companies. On Tuesday, the company reported sales in excess of $100 billion, a number the company had not reached before.
Jassy’s Promotion Underscores the Importance of Amazon’s Web Hosting Business
Andy Jassy joined Amazon in 1997 after graduating from Harvard Business School. He founded AWS, growing it into a cloud-based platform used by untold millions of customers. Jassy emerged as a clear contender for the top spot since the company created dual CEO positions, both of which reported directly to Bezos. Recent retiree, Jeff Wilke held the other top spot.
Jassy’s elevation to the top spot underscores the importance of those services to Amazon’s overall business strategy. Industry observers are interested in how this focus affects the company’s overall strategy.
Jassy is known for his deep understanding of highly technical details. During the run-up to his being named CEO, he has taken numerous shots at Oracle Corp. and Microsoft Corp, both of which have sales less than AWS. During Bezos’ time at the helm, he has made fewer remarks about Amazon’s potential competitors.
Under Jassy’s tutorage, the cloud business of Amazon has closed deals with major clients, including McDonald’s, Verizon, and Honeywell. AWS division revenues have grown substantially from 37 percent in 2019 to 30 percent a year later, reinforcing its position as the industry leader.
Rock Star Persona
Jassy has brought a rock start aura to keynote speeches given at AWS’s annual conferences. In 2019, he spoke in front of 60,000 people, accompanied by upbeat music.
In a recent note to Amazon employees, Bezos noted that even with his new responsibilities as Executive Chairman, he would not lose focus on the Bezos Earth Fund, the Day 1 Fund, and other initiatives in which he is involved. Bezos went on to say, “This has nothing to do with retirement. I have never had more energy.” Amazon CFO Brian Olsavsky recently spoke to analysts. He suggested Bezos would focus his attention on such “one-way-door issues, such as acquisitions where the cost of reversing course is high.
Amazon Net Sales Are Up
With the ongoing issues associated with the current COVID-19 crisis, consumers turned their attention to Amazon for their Christmas shopping. With sales of $125.6 billion, the company beat analyst estimates of $119.7 billion. Earlier this week, shares in Amazon were up less than 1 percent.
Amazon Web Services, which have been a bright-spot, fell a little short of expectations in Q4. AWS posted revenue of $12.7 billion, just short of the $12.7 billion forecasted by analysts.
The e-commerce business of Amazon has never been so big. Since the coronavirus pandemic onset, consumers have turned to Amazon in droves, placing online orders for basic home staples and medical supplies. Brick and mortar shops have been forced into closing their doors, while Amazon has recruited an additional 400 thousand workers in an effort to satisfy consumer demand.
Costs associated with the pandemic are expected to fall from $4 billion in Q4 to $2 billion. The company has made a number of precautionary moves in its fight against COVID, including writing to President Biden, reinforcing its desire to provide vaccines to employees.