Amazon (NASDAQ: AMZN) shareholders have had quite a lot to smile about over the past few years, and the company's most recent earnings release was no exception. If you've never read an Amazon quarterly press release before, it can seem like a novella, as Amazon operates in just about every industry on the planet (it is "The Everything Store" after all) and adopts a rapid pace of innovation.
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Here were the most noteworthy achievements from Amazon's busy fourth quarter.
1. A future bundle?
Many may not have noticed a tidbit regarding Amazon's new partnership with CBS (NYSE: CBS) All Access, which will be added to the Amazon Channels lineup. Amazon Channels allows Prime customers to buy on-demand streaming services from most premium video suppliers, like Starz, HBO, and Showtime. Of course, Amazon also has its own Prime Video service, and it just acquired the rights to The Lord of the Rings for an upcoming prequel series.
However, this CBS deal actually marks the first live linear broadcast feed in Prime Video. In addition, Amazon had Thursday Night Football live-streaming for the first time as well last quarter. Major competitors like Alphabet and AT&T already offer skinny, over-the-top bundles with linear channels, so the new CBS deal could potentially mark Amazon's entry into the skinny-bundle race. Since Prime and Alexa are becoming more and more embedded in customers' homes, it only makes sense that Amazon should be able to "bundle a bundle" along with Prime at some point.
On that note, the company also reported that the Fire TV Stick was among the best-selling products across all of Amazon last year.
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2. AI as a service
Amazon Web Services (AWS) posted another strong quarter with growth accelerating 45%. And just as AWS revolutionized outsourcing of corporate IT infrastructure, Amazon is now looking to do the same with artificial intelligence (AI) via a new service called SageMaker, which was just announced at the company's November re:Invent conference.
Amazon had offered customers machine-learning tools since 2015, but SageMaker is a much more comprehensive, sophisticated system of ready-to-use, "one click" AI algorithms that don't require a Ph.D. According to the press release:
SageMaker makes model building and training easier by providing pre-built development notebooks; popular machine-learning algorithms optimized for petabyte-scale data sets; and automatic model tuning, enabling developers to build, train, and deploy models in a single click. Since its launch two months ago, Amazon SageMaker is already helping thousands of developers to easily get started and become competent in building, training, and deploying models.
Of note, according to Wired, SageMaker's team was headed by Alex Smola, a "machine-learning superstar with 90,000 academic citations" who had actually turned down a job at Amazon just five years ago when its machine-learning capabilities were much smaller.
The product could be very disruptive, because even though AI has the potential to greatly enhance just about every single industry, the talent required to reap those benefits is scarce. Google CEO Sundar Pichai recently said there were only a few thousand people capable of creating sophisticated machine-learning models. Therefore, SageMaker could go a long way toward solving that problem, reaping huge benefits for AWS customers.
3. Swooning for Alexa
Finally, CEO Jeff Bezos highlighted only one thing in the introduction to the release, and that was the incredible expansion in the adoption of Alexa: "Our 2017 projections for Alexa were very optimistic, and we far exceeded them. We don't see positive surprises of this magnitude very often -- expect us to double down."
Amazon was early in opening up Alexa's voice and AI capabilities to outside developers and companies, and the results have been extremely positive: Just as developers work on apps for either Android or iOS, there is now an expanding ecosystem of developers working on Alexa.
To give some perspective to how much Alexa is expanding, over 4,000 smart-home devices from 1,200 different brands now incorporate Alexa, and outside developers have created 30,000 "skills" (essentially akin to a smartphone application, built for voice). Amazon is also looking at giving developers more opportunities to monetize their innovations, including premium subscriptions and skill-based purchasing.
Amazon off and away
These are just a few of the milestones the company achieved in the fourth quarter, which also included more data center construction for AWS, new Amazon private label brands in clothing and furniture, and much more. With these latest developments, it looks like 2018 is shaping up to bring more pleasant surprises.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Billy Duberstein owns shares of Alphabet (C shares) and Amazon. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Amazon. The Motley Fool has a disclosure policy.