When Amazon announced Wednesday that it had provided an additional $2.75 billion to up-and-coming AI startup Anthropic to complete a $4 billion investment it announced last fall, the company called the news a royal victory. It was positioned as
Amazon’s AWS, the king of cloud computing (with nearly a third of global market share), was deepening its partnership with Anthropic, the number two prince (Harry, not William) of the generative AI foundation model. Under the agreement, Anthropic will use AWS as its “primary cloud provider for mission-critical workloads” to train and deploy future AI models on Amazon’s in-house chips, while AWS customers will will have access to Anthropic’s AI technology.
But upon closer inspection, this partnership seems less a sign that Amazon will perpetuate its cloud dominance into the age of AI and more a sign of how vulnerable the company is becoming in a changing landscape. It looks like.
Amazon is considered a latecomer in the race to introduce generative AI technology, but Really Anthropic’s highly touted models are a must, including the latest Claude 3. But at the same time, Amazon is hitting the cart with AI startups that boast superior technology but don’t immediately differentiate or differentiate Amazon from its competitors. They are also human partners.
Partnering with Anthropic is a necessary and beneficial move for Amazon. But with the AWS empire under siege, the question is whether this deal is too late.
“Shiny engine” vs. Rolls-Royce
AWS continues to be the king of the cloud business, with a global market share of 31% in the fourth quarter of 2023. But the race is becoming increasingly fierce. AWS’s biggest cloud competitor, Microsoft Azure, is a close second at 24%, compared to Google Cloud’s 11%. Both Microsoft and Google are seeing cloud growth thanks to their Gen AI services. The cloud is growing, the former thanks to a strong partnership with OpenAI, and the latter driven by momentum from Bard and Gemini AI.
According to Forrester Principal Analyst Tracy Woo, Amazon’s Gen AI efforts haven’t been all that impressive. “It took three or four months. [for Amazon] To come up with AI-specific generative announcements [in 2023],” Wu told Fortune magazine, adding that the results were “really lackluster.”
Announcements at Amazon’s Re:invent conference in December 2023, including Amazon Q, a generative AI work assistant, and next-generation chips designed by AWS, are “a major milestone that signals we are firmly back as the number one cloud.” It was supposed to be a reaction. This is the provider that everyone is looking at,” Wu said. Rather, it was “overwhelming,” especially given his competition with Microsoft and his partnership with OpenAI.
Amazon announced the equivalent of shiny engines, wheels, and windows, while Microsoft “unveiled the Rolls-Royce,” calling its Copilot product for Azure and OpenAI models “cars that fly in the air and drive through water.” It was advertised as such, which is amazing. ”
Microsoft’s flagship products have always been software packages and solutions that are fully integrated into enterprise workflows, so it’s no surprise that the company has performed so well. But Amazon’s overwhelming announcement highlighted just how mismatched cloud competitors still are on the software side.
AWS’ strength has always been infrastructure. And leveraging that skill set to differentiate itself is one way Amazon is trying to gain an advantage. But there are also dangers. Thanks to the rise of NVIDIA, its GPUs are the mainstay and are being further improved by the new Nvidia AI chip, Blackwell, announced at the GTC conference.
Wu said Amazon can have a successful infrastructure cloud business, but the company needs to “do things differently.”
“Everyone is based on CUDA,” she said. “Therefore, asking everyone to recalibrate their software architectures to accommodate the AI-based TPUs developed by AWS is a huge ask.”
Don’t ignore the king of clouds
At this point, AWS is probably lagging behind in both AI infrastructures. and Woo emphasized that no one should exclude the king of the cloud, let alone AI software. Amazon “missed the boat” by recognizing that the cloud race was no longer infrastructure, but moved up the stack to AI-powered software solutions, she added, but with AWS, “anything is possible.” Ta.
“I think this is a bit of a desperate call from someone.” [Amazon CEO Andy] Jassy is answering to shareholders,” she said. “[AWS CEO] Adam Selipsky really understands the market, so I have a lot of confidence that he can steer the ship in the right direction. ” Of course, Amazon was never identified as that person. A.I. King of the Clouds–“That means they are about to face a great and difficult battle,” she added. “But I think they’re resilient. They’re an aggressive company that acts aggressively, and they’re not fat or happy.”
