Attendees walk through the exhibit hall during the Amazon Web Services Reinvent conference at the Venetian Hotel in Las Vegas on November 29, 2022.
Noah Berger | Getty Images Entertainment | Getty Images
May 2023, Amazon At the annual shareholder meeting, an attendee asked CEO Andy Jassy how the company is innovating in generating artificial intelligence. OpenAI’s ChatGPT quickly became popular, and major technology companies have launched products to compete in the emerging field of chatbots and image generators.
Jassy answers that question by touting Amazon Web Services, the cloud division he helped launch 17 years ago and eventually turned into the company’s main profit engine. Jassy said AWS, led by Adam Selipsky, is developing its own artificial intelligence products and has the potential to provide critical infrastructure for other companies developing artificial intelligence services.
Jassy, who succeeded Jeff Bezos as CEO in 2021, said: “Generative artificial intelligence is still in its early stages. Its potential is very large, we are investing heavily in it and expect Become a leader.
For Selipsky, who took over AWS after Jassy’s promotion, life went by quickly.
Jassy takes the helm after Amazon announced last week that Selipsky, 57, would exit AWS and be replaced by Matt Garman, a 48-year-old AWS veteran who most recently ran sales and marketing. The most significant personnel change during his tenure.
The problem for Selipsky and the challenge for Garman is that despite investing billions in OpenAI competitor Anthropic and launching its own large language model (LLM), Amazon has yet to become a leader in generative artificial intelligence. In the developer space and among startups, the company is fighting the perception that it’s lagging behind its cloud competitors. Microsoft and Googlein addition OpenAI lags behind in developing AI tools.
After years of rapid expansion, AWS growth will slow to 13% in 2023 from 37% in 2021 and 29% in 2022, reflecting more conservative enterprise spending on IT and cloud services. Amazon has cut jobs across the board, including at least two rounds of layoffs at AWS since last year.
AWS remains the leader in cloud infrastructure, but Microsoft is quickly closing the gap. AWS’s market share fell from 32% three years ago to 31% in the first quarter of this year, while Microsoft Azure’s market share jumped from 19% in 2019 to 25%. 2021according to Canalis. Google’s market share has also continued to increase, rising from 7% at the beginning of 2021 to 10%.
Over the past few quarters, Microsoft has cited surging demand for artificial intelligence tools as a catalyst for its momentum.
DA Davidson analyst Gil Luria told CNBC that Amazon was “blindsided” by the craze for generative artificial intelligence.
Luria said of Selipsky’s departure: “It’s letting Microsoft Azure run a circle around them, which shouldn’t happen, and there’s going to be a price to pay for it in the end.”
Garman’s election to the top job “suggests that Mr. Jassy, and perhaps Mr. Bezos, believe he is the person best positioned to help Amazon shrink its lead and potentially build its own lead,” said Luria, who recommends buying Amazon stock.
“Next Generation Leadership”
A source close to Amazon, who spoke to CNBC on condition of anonymity because he was not authorized to speak for the matter, described Garman as a “wartime” leader and said changes were needed to become more active in artificial intelligence. initiative.
Jassy said in a staff memo that he and Selipsky agreed a few years ago when discussing the position that Selipsky “would probably do this for a few years, and during that time he would focus on One of the things” is helping to develop the next generation of leadership. ”
AWS spokesperson Casey McGee told CNBC in a statement that Selipsky will put the cloud unit in a “strong position.”
“AWS’s growth, innovation and profitability over the past three years are self-evident, and based on our year-to-date data, AWS has experienced higher absolute dollar growth than any other cloud provider,” McGee said. He said AWS leads in security and reliability and “the overall breadth and depth of our services.”
Former Amazon Web Services CEO Adam Selipsky speaks with Anthropic CEO and co-founder Dario Amodei during the AWS re:Invent 2023 conference hosted by Amazon Web Services at the Venetian Hotel in Las Vegas on November 28, 2023. Had a conversation.
Noah Berger | Getty Images
Amazon’s annual shareholder meeting takes place virtually on Wednesday, and the timing of the meeting is shaky. It took place just days after Selipsky’s departure and was overshadowed by artificial intelligence-focused events at top tech companies.
During Wednesday’s Q&A session, Jassy was asked twice about the status of Amazon’s efforts to generate artificial intelligence. He said the company is “seeing tremendous momentum” in the area of generative artificial intelligence within AWS, which is now a multi-billion-dollar business based on annual revenue.
He reminded shareholders that Amazon owns Alexa, which was already a popular consumer product long before the latest chatbots hit the market.
“If you don’t believe there’s going to be a truly broad-based personal assistant, then you’re just going to have to bury your head in the sand,” Jassy said, adding that the company was building a “broader” AI model for Alexa provides support. Amazon has previously said it intends to use generative artificial intelligence to make Alexa more conversational. CNBC reported Wednesday that Amazon plans to charge a subscription fee for the more powerful version.
Garman joined Amazon as an intern in 2005 and was hired full-time the following year as an early AWS product manager, responsible for the core computing service called EC2. He was promoted to senior vice president in 2020, overseeing sales, marketing and global services.
In 2021, after Amazon announced that Jassy would succeed Bezos as CEO, many people speculated that Garman would be appointed CEO of AWS. Instead, Amazon chose Selipsky, who had previously worked at Amazon for 11 years but was running salesperson’s Tableau software at the time.
rough patch
Shortly after the transition, the economic climate turned against AWS. Inflation began to rise rapidly, causing interest rates to rise steadily and forcing businesses into capital preservation mode. By mid-2022, Amazon told investors it was “ready to help customers optimize costs” as customers faced economic challenges. AWS admits it is taking a short-term revenue hit in an effort to maintain long-term customer relationships.
Then there is ChatGPT. Microsoft-backed OpenAI releases chatbot in November 2022 and watch it Go viral. A few months later, Microsoft invested billions of dollars in OpenAI and became its exclusive cloud partner, giving Amazon’s main cloud rival a new competitive advantage.
Over the past year, Jassy has gushed about Amazon’s opportunities in generating artificial intelligence, both to provide automation services for advertisers and sellers and to provide technology within AWS for running complex models and workloads.
The company also touts the success of AWS’s Trainium and Inferentia chips, which Anthropic uses to build and train its models, a process that typically occurs on Nvidia Graphics processing unit.
“I don’t know if any of us have seen this possibility in technology in a long time, certainly since cloud computing,” Jassy said on the company’s first-quarter earnings call in April. Maybe since the internet.
But recognizing this opportunity proved to be a major obstacle.
It took AWS several months to launch an AI model that could defeat ChatGPT. The company now offers its own LL.M. as well as those from third parties, including one from Amazon-backed Anthropic.
Last year, Amazon released Q, an enterprise chatbot. One AWS employee who has used Q told CNBC that it feels mundane because the chatbot responds to queries with information that isn’t particularly relevant or valuable. The employee requested anonymity because he was not authorized to comment.
AWS said its Q chatbot is favored by a range of customers including Accenture, Toyota, GoDaddy and GitLab. Bedrock, which allows users to access artificial intelligence models from Amazon and other companies, currently has tens of thousands of customers and partners, the company said.
A week before leaving, Selipsky made some changes to the Q team. He appointed longtime Amazon executive Dilip Kumar to oversee the “Amazon Q Business suite of services,” according to a memo to employees seen by CNBC. Kumar will report to Swami Sivasubramanian, vice president of artificial intelligence and data at AWS.
A former AWS employee who asked not to be named said that for security reasons, the company has restricted the ability of some employees to use AI services in internal work, such as the software tool SageMaker and the data visualization tool QuickSight. This practice, known as “dogfooding,” is common among software companies so that employees can test for bugs in products and services and help make improvements.
AWS said all apps made available to employees undergo security reviews but denied restricting employees from using Amazon’s artificial intelligence tools.
Despite the challenges of artificial intelligence, Wall Street continues to support Amazon, which last month reported better-than-expected first-quarter results, with operating income growing more than 200%. AWS sales grew 17%, a slight increase from past quarters.
Amazon shares are up 21% this year after rising 81% in 2023, outpacing the Nasdaq’s 12% gain.
Jamie Meyers, senior investment analyst at Laffer Tengler Investments, which owns Amazon stock, said he viewed the leadership transition at AWS as a “natural progression,” adding that Garman “has always been viewed as successor”.
“AWS has always been committed to investing in growth,” Meyers said. He said that strategy was unlikely to change under Garman’s leadership.
Garman was viewed internally as a highly skilled man and well respected among engineers. Another former AWS employee said that when Jassy selected Garman to lead the AWS sales organization in 2020, he was looking for a technical leader and someone who “knew everything.” The person added that Garman’s taking on the role is widely viewed internally as a step toward leading AWS.
In a memo to employees last week, Jassy cited Garman’s background in “product and demand generation” at AWS, noting that he “has exceptionally strong skills and experience that are suitable for his new role.”
“I’m excited to see Matt and his outstanding AWS leadership team continue to shape our future,” said Jassy. “It’s still early days for AWS.”
—CNBC’s Jordan Novet and Kate Rooney contributed to this report.
About The Author
