Given enough time, Amazon.com (NASDAQ:AMZN) could arguably beat anybody it wants to on nearly any front. Indeed, Amazon stock has gained more than 9000% since its IPO back in 1997 beating anybody who stood in its way.
More recently though, the ecommerce and cloud-computing giant has chosen to team up with other organizations as a means of expanding its footprint and/or reach.
Case in point: Amazon is now selling select devices made by Apple (NASDAQ:AAPL) at its shopping site. It’s unusual, in that it’s a partnership that wouldn’t have been forged in the past as the two titans were also competitors in some product categories.
In and of itself it’s an interesting side story, but hardly a showstopper. Take a closer look at some more recent headlines, however, and owners of Amazon stock may begin to wonder of the company ever says “no” to any proposed team-up.
Teaming up Is the New Norm
For the record, Apple’s HomePod smart speaker won’t be available via Amazon, as that hits a little too close to home. Amazon’s Echo smart speaker is still crushing its competition. Apple’s iPads, iPhones and its smart watches are all to be listed though, if they aren’t already, even though Amazon’s Fire tablet competes with the iPad.
In the grand scheme of things, however, the Apple partnership is a relatively benign one.
Take, for instance, the fact that Amazon’s digital assistant Alexa, the one that powers the Echo, is now available for use on computers with Windows 10, developed and sold by indirect rival Microsoft (NASDAQ:MSFT).
No Echo account is needed, as has been the case until now. The two companies aren’t exactly mortal enemies, but one would think there’s enough overlap that neither would want to feed the other.
Then there’s Cisco Systems (NASDAQ:CSCO). The two organizations are teaming up to bring a new kind of cloud computing option to the market.
Companies that want or need to keep sensitive information stored securely rather than on a remote server, but still need remote cloud storage for other data and apps, can plug into the “world’s first native hybrid Kubernetes environment for AWS,” co-developed by the two outfits.
It’s interesting, just because if Amazon really wanted to, it could have developed such a solution on its own.
Method to the Growing Madness
To be clear, Amazon stock owners have seen several partnerships take shape over the years. Last year it began selling Kenmore-branded home appliances, a name owned and tightly controlled by Sears Holdings (OTCMKTS:SHLDQ). It’s deepened its relationship with the NFL to livestream some NFL games.
Retailer Kohl’s (NYSE:KSS) will now accept returns of merchandise bought through Amazon.com, if a consumer doesn’t want to bother boxing it up and shipping it back themselves.
And there are many more deals being made you hear next to nothing about.
These partnerships range in quality from “impressive” to “not too important” to “what’s the point?” It’s conceivable that not even Amazon fully understands the potential upside and downside of these occasionally-strange partnerships. But, that’s ok.
Amazon is willing to experiment, and more than that, it may be the most adept company in the world when it comes to learning from a failed experiment.
It also must be noted that with roughly $100 billion worth of liabilities on the books, heavy spending on new solo projects may not be an ideal use of funds.
Perhaps more than anything though, Amazon understands the simple premise that it doesn’t have to turn a profit with every single project it takes on to make it a project worth taking on. Sometimes, just having a seat at the table allows for a certain measure of control that lets the company steer consumers towards its products and services that do drive a profit.
Looking Ahead for Amazon Stock
Current and prospective owners of Amazon stock can look for more dealmaking, as opposed to developing things on its own, for the foreseeable future for a couple of different reasons.
The first of those reasons is, Amazon’s sheer size and complexity has arguably made it tough to manage a massive number of disparate projects. It’s likely to be more cost-effective in many cases to outsource much of any legwork that has to be done to a partner that’s willing to share in the benefit of a venture.
Second, and on a more philosophical note, Amazon may be realizing that the degree of control it exerts in so many markets has made it a target on many sides. Not only are government-based antitrust concerns being voiced, the company’s dominance is prompting rivals to team up as well.
For instance, last year Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) and Walmart (NYSE:WMT) hooked up to develop voice-based shopping solutions that would slow down the growth of Amazon’s Echo-based shopping option.
The response to that feature now offered via Google Assistant has only been lukewarm, but it does point to a trend that will only accelerate the more the ecommerce outfit strives to win the world all to itself.
The great irony is, with a growing army of partners at its disposal (misfits or not), the Amazon monolith may be even more immovable than it would be if it were flying solo on all fronts.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter, at @jbrumley.