The good times have kept rolling for Amazon. After reporting earnings on April 26th, the company’s stock jumped seven percent. The good news for investors …

—Amazon’s revenue increased 43 percent from a year ago.

—Sales for Amazon Web Services grew 49 percent in the last year. Now responsible for 73 percent of Amazon’s total operating income, you can thank AWS for helping to support the free shipping you get with Prime.

—Speaking of Prime, the total number of members passed the 100 million subscribers mark. Amazon also plans to increase the price of a membership from $99 to $119.

Above all, the company continues to innovate. It rolled out an Echo Dot for kids; unveiled a service to deliver packages to your car with Amazon Key; has made its own bid for a majority stake in India’s ecommerce leader, Flipkart; and is experimenting with more hardware for the home, including a mobile, Alexa touting robot named Vesta.

In the Q2 update to ZEITGUIDE 2018, we covered more of Amazon’s moves from the last three months and asked: What have legacy companies done to keep pace?

Enjoy this free preview from the Q2 update below. And for even more insight, order ZEITGUIDE 2018, our annual almanac that includes the book published in January and all quarterly updates, today.

Staying Relevant By Staving Off Amazon

In January, we covered the moves legacy businesses have been making to respond to the encroachment of Big Tech firms on their turf—namely, Amazon. There were Disney’s efforts toward an OTT streaming service of its own and making a deal with 21st Century Fox for scale. AT&T, which owns DirecTV, continues to work toward getting its merger with Time Warner approved. CVS acquired insurer Aetna for $69 billion to propel itself ahead of a potential Amazon move into health care.

For Amazon’s part, being the leader in voice technology, buying Whole Foods and announcing its foray into advertising were a few of its aggressive moves we highlighted in January.

Since then …

—Amazon bought smart-home equipment-maker Ring for $1 billion, the second largest acquisition in the company’s history behind Whole Foods. The move helps Amazon in its competition with Google, Apple and Microsoft to control the smart home device market (remember that Google bought smart thermostat maker Nest three years ago) and ensure every device in the home is hooked up to Alexa. Some advantages: Ring’s camera-equipped smart doorbells provide a way to thwart package theft, a big issue for online shoppers, and give delivery services a way to leave packages inside a customer’s front door. And as a cherry on this integration sundae, Amazon is also starting to roll out its own delivery service.

—Banks beware? Amazon is rumored to be vetting potential banking partners to create Amazon-branded checking accounts. As the Wall Street Journal reports, this “could help reduce fees Amazon pays to financial firms and provide it with valuable data on customers’ income and spending habits.”

—On the healthcare front, Amazon announced a partnership with JP Morgan and Berkshire Hathaway to help cut healthcare costs for their 1.2 million combined workers. Amazon is already selling medical supplies and pitching Amazon Web Services as a cloud computing service to healthcare providers. The company has also partnered with Merck to encourage developers to create health-related skills for Alexa and is now rumored to be exploring a move into prescription drugs.

Here are some of the moves legacy companies in different industries are making in response.

—Healthcare: Insurance giant Cigna bought the largest pharmacy benefit manager in the U.S., Express Scripts, for $54 billion. Express Scripts manages prescription drug plans for more than 100 million people. Walmart is rumored to be pursuing a deal to acquire insurer Humana.

—Grocery: Amazon’s purchase of Whole Foods last year put a formidable contender in the grocery aisle. Kroger, the largest grocery chain in the U.S., has seen shares drop as it works to bolster its own digital operations. Those have included expanding the number of cities in which the chain offers home delivery through a partnership with Instacart. Walmart, which controls the biggest share of the U.S. food and grocery market, expanded its grocery home delivery service to 100 cities. And after buying e-commerce site Jet.com in 2016 (deemed to be an undeniable success), Walmart just stepped up its game against Amazon by offering to buy a majority stake in Indian ecommerce leader Flipkart.

—Farming: Walmart is investing in tech that will further automate farming and help it more effectively control its supply chain at the source. We’re also seeing consolidation of seed and crop-chemical firms. Pharmaceutical and life sciences company Bayer got approval in April for its purchase of Monsanto, a deal that had been in the works since 2016 and that will give it control of one quarter of the world’s seeds and pesticides. That acquisition was spurred by economic pressures as crop prices fall and more farmers give up on using pricey GMO seeds and weed killers.

So, What’s Next?

For our full analysis and to #GetSmartQuick on what’s next for Amazon and how legacy companies will continue to respond, order ZEITGUIDE 2018. And contact us to learn more about our custom learning programs.

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