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Amazon’s Category Creation Going Again

Grid Platforms: The big idea?
5 steps to Category Creation:
1. See a critical gap.
2. Figure out how to fill and dominate it.
3. Establish innovation as a Differentiation. Must have a point of differentiation or others take advantage of your category creation.
4. Enable “platform momentum” so more people use your stuff than others.
5. Become the dominant source of all commerce online. Thus, all commerce.
To create a market, is to solve something that no one else even realizes could be a business. Think Oracle, Microsoft, Ebay and you go back to their early starts and it was considered a throw-back, low value idea. Really. It takes a bit of time in technology and a lot of savvy to figure out which one of the ideas is just some smoke and mirrors and which ones have legs.
And that’s what is so elegant about the infrastructure on tap model Amazon has been rolling out this last few months.
At Etech, I met Jeff Bezos, Amazon’s CEO, just after his CTO, Werner Vogels, spoke about Amazon’s Web Services Platform. Bezos and his gang are figuring out how to do an infrastructure play to take the technical and logistical part of the business and create scale for other companies. It’s a version of plumbing that I’m not sure I’d be interested in doing because I’d be worried about being a commodity, but it is a critical need. It uses Amazon’s spare computing capacity, data storage and of course all the IP they’ve had to learn to manage this. I would think that by offering both the ecommerce tools, and the computing power, Amazon grows more knowledgable about user interests over time across an even broader spectrum of use. Amazon has always excelled on making itself more useful over time to customers, first by customer reviews (if you remember, they were the first) and now creating the ultimate tool for all companies.
The thing about being a platform is that you want to build more advantages into using all your services. I understand from the crowd around me that many who are using Amazon’s services are only using a part of the 7 offers, essentially using their infrastructure for large files but using ecommerce functionality elsewhere.
Vogels’ did a really tough pitch (it sound to me like buy, buy, buy) when he should have talked about the technical difficulties of doing it in different ways and why Amazon took a particular approach. By explaining what is probably obvious to him, he would have helped to validate the need to use Amazon’s services rather than recreating the wheel. Ah well, hindsight and floor show critic is easier than being up there.
The more amazon can talk about all 7 capabilities and why to drive all usage to their platform, they’ll have a successful business. I’d bank on them doing it. I’d bank on Bezos doing it. He understands category creation.

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