Amazon’s Ability To Derive Scale Economies And Generate Profits


Read the Case: Amazon Web Services(will provide). The case emphasizes the point that digital products enable more scale economies and, therefore, more industry concentration. The case on Amazon Web Services (AWS) is an example of a company that was able to transition to a digital company and benefit from scale economies. Moreover, customers of AWS realize scale economies when they build their IT services using AWS instead of building their own.

Question:

1. Describe how Amazon.com was able to decouple the bits portions of their business from the atoms portion of their business.

2. What impact do you think AWS has had on Amazon’s ability to derive scale economies and generate profits?

3. Would you expect there to be concentration or fragmentation in the cloud computing business? Why?
2 pages

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