The Year in Amazon: How the tech giant redefined itself in 2016, and where it’s headed next

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Amazon Prime Air jet
Amazon unveils its new “Prime Air” branded Boeing 767 airplane at Seafair over Lake Washington in Seattle on August 5, 2016. (Red Box Pictures Photo / Scott Eklund)

The rise and expansion of Amazon Prime, the continued dominance of Amazon Web Services, the surprise emergence of Amazon Alexa, the first official Prime Air drones deliveries, an Amazon Boeing cargo plane, and the Amazon Go grocery store.

Amazon’s spheres under construction in Seattle in 2016. (GeekWire Photo / Kevin Lisota)

Not to mention Amazon’s dramatic reshaping of its hometown through a rapid expansion of its urban headquarters.

That is just a sampling of the Amazon stories that made headlines in 2016. Many of the tech giant’s long-term ambitions came into sharper focus over the past year, expanding well beyond the flagship e-commerce site that fueled its rise over the past two decades.

GeekWire’s news team sat down recently for a conversation about the past year in technology, and what to expect in 2017. This week we’re presenting the discussion in a series of podcast episodes. Today’s topic: Amazon.

Listen to the podcast below, download the MP3 here, and continue reading for highlights from Amazon’s big year.

Amazon Prime: Amazon CEO Jeff Bezos said this year that the goal is to make it “irresponsible” not to be an Amazon Prime member. The company piled on the benefits for its $99/year membership program — expanding well beyond the basic perk of free two-day shipping.

Amazon doesn’t publicly disclose Prime membership stats, but one analyst estimated that 50 percent of U.S. households are Prime members.

New Amazon Prime benefits include Prime Reading, Audible Channels and Twitch Prime. Amazon’s new Music Unlimited streaming service is discounted for Prime members. Prime Now one- and two-hour delivery continues to expand its reach.

Amazon extended Prime benefits to its physical bookstores. Prime Day set new records. Amazon launched a new Prime membership tier to challenge Netflix. The company started offering discounted smartphones to Prime members. And the company’s original shows for its Prime Video service continued to expand and earn Hollywood recognition.

Next up: Amazon Prime housekeeping?

The AWS Snowmobile, capable of moving huge amounts of data from a data center into Amazon’s cloud, debuted to applause at re:Invent 2016 in Las Vegas on Nov. 30, 2016. (GeekWire Photo / Dan Richman)

Amazon Web Services: Amazon’s cloud computing juggernaut continued in 2016, providing a financial lift to the rest of the company and fending off rivals including Microsoft Azure and Google Cloud Platform. AWS’s strong sales have made an understatement out of Bezos’ April prediction that the service will deliver $10 billion in sales this year. AWS could easily achieve over $12 billion in revenue this year.

As demonstrated at the company’s re:Invent conference, AWS continues to release new features and services at a rapid pace.

AWS also showed a flair for the dramatic, unveiling a 45-foot semi trailer called Snowmobile that can park at data centers to move exabyte of data to the cloud.

The Alexa-enabled Amazon Tap, Amazon Fire TV, Amazon Echo and Echo Dot. (Amazon Image)

Amazon Echo + Alexa: Amazon’s Alexa has become a leader in the growing market for voice-enabled virtual assistants, thanks in part to the rapidly growing catalog of third-party Alexa “skills” that expand the capabilities of the technology.

Meanwhile, the Amazon Echo product line, Alexa’s first home, has emerged as the “accidental” early winner of the smart home speaker market. Amazon expanded the Echo product lineup to include a variety of new devices over the past year.

However, the Echo devices are facing new competition from Google and other industry players.

In 2017, look for Amazon to continue to spread Alexa to more third-party devices, beyond its Echo devices. One key question that we discuss in the podcast: How can Amazon make Alexa relevant on smartphones, to be a legitimate mobile rival to Siri, Cortana, and Google Assistant?

Amazon Physical Retail: Amazon opened its first physical bookstore in Seattle in 2015, but we really started to see its ambitions over the past year. Amazon is poised to make a major push into grocery stores, starting with the recently unveiled Amazon Go store in Seattle.

Amazon has denied a report that it plans to open as many as 2,000 grocery stores, saying that it’s “still learning” and refining its plans. But the company has quietly been working on multiple approaches to the brick-and-mortar grocery business, including a planned drive-up grocery location in Seattle’s Ballard neighborhood that could open any day now.

People posed in front of the Amazon Go sign as testers tried out the new service. (GeekWire Photo / Nat Levy)

After spending more than two decades disrupting the traditional retail industry through online commerce, Amazon clearly aspires to create its own physical retail footprint with its own high-tech spin. This promises to be the most interesting area of the company to watch in 2017.

Amazon Delivery Infrastructure: Amazon built up its physical delivery infrastructure in a variety of ways over the past year, expanding its Uber-like Flex delivery service, launching its own fleet of Prime Air cargo planes, and making its first official drone deliveries.

A close-up look at the latest Amazon Prime Air Drone design. (Amazon Photo)

The company says the delivery build-up will supplement outside services such as UPS and FedEx, but increasingly it’s clear that Amazon is looking to take this aspect of its business into its own hands, despite the high cost of establishing a delivery infrastructure.

“There’s a lot of things that we’re doing to shorten the time to delivery,” said Amazon CFO Brian Olsavsky in a conference call with reporters after the company’s latest quarterly earnings report. “We acknowledge that’s expensive, but it’s certainly a great part of our value proposition, and customers love it, so we take it as a given and then we work very hard to bring down our costs through greater efficiency.”

Amazon in Seattle and beyond: As reported by GeekWire’s Nat Levy, Amazon’s Seattle presence totaled about 640,000 square feet in 2001. As of earlier this year, Amazon occupied 34 buildings and approximately 8.5 million square feet in Seattle. And by 2022, six years from now, the online retail giant could take up close to 12 million square feet across 40 buildings in Seattle.

Amazon campus
A panoramic view of Sixth Avenue from Via6 shows the Amazon buildings Day One, left, the biospheres, center, and Doppler. (GeekWire Photo / Kurt Schlosser)

The company is also expanding beyond Seattle with a big new lease across the lake in Bellevue, Wash.

Amazon grew to more than 300,000 employees this year, about 35,000 of them in Washington state. In the process, the company has become a lightning rod for concerns about the impact of the tech industry’s growth on the rest of the Seattle community. The company has become increasingly visible with its philanthropic activity, but it’s also a target of complaints from unions and others concerned about its rapid growth.

PREVIOUSLY: What gives? Tech giant Amazon finally boosts its philanthropic rep in its hometown

From a regulatory and government perspective, the company’s prospects under a Trump administration may be more shaky than most. Bezos publicly sparred with Donald Trump during the presidential campaign but sought to smooth things over after Trump’s victory.

Meanwhile, a year after publicly disputing a high-profile New York Times story into the company’s culture, Amazon promised to radically simplify its employee review process, and launched an experimental program to create tech teams consistently entirely of part-time workers.

GeekWire reporter Kurt Schlosser has been covering Amazon’s culture for the past year, and he joins us on the podcast, discussing stories including his recent profile of an artist who is watching the tech giant grow up around her.

On the podcast, GeekWire’s John Cook sums it up: “They’re a company that has been fascinating to watch, because they’ve been able to retain their entrepreneurial energy and creativity even as they’ve grown to massive size, which is highly unusual.”

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