 From theCUBE Studios in Palo Alto in Boston, bringing you data-driven insights from theCUBE and ETR. This is Breaking Analysis with Dave Vellante. Despite the posture from some that big tech generally and Amazon specifically should be regulated and or broken apart, recent survey research suggests that Amazon faces many disruption challenges independent of any government intervention. Specifically, respondents to our recent survey believe that history will repeat itself in that there's a 60% probability that Amazon Inc. will be disrupted by market forces, including self-inflicted wounds. Amazon faces at least seven significant disruption scenarios of varying likelihood and impact, perhaps leading to the conclusion that the government should just let the market adjudicate Amazon Inc.'s ultimate destiny. Hello and welcome to this week's Wikibon Cube Insights, powered by ETR. In this Breaking Analysis and a head of AWS re-invent, we share the results of our survey designed to assess what, if anything, could disrupt Amazon, specifically Amazon Inc., not just AWS. Now, here's the background of the survey. Recently, in collaboration with author David Micheler, theCUBE initiated a community research project to understand one, what scenarios could disrupt Amazon, and two, what's the likelihood that each scenario would occur. We developed the scenarios, we tested them in small samples, and then refined the questions and launched the survey. Here are the key findings. The survey asked respondents to rate the likelihood of each scenario disrupting Amazon on a scale of one to 10. As we show here, we have inferred that the ratings are a proxy for probability of disruption. And now, in the interest of simplicity, we chose not to have respondents evaluate the impact of the disruption at this time anyway. Here's the ranking by order of likelihood for each scenario. The N in the survey was just under 600 at 597 respondents. On average, across all scenarios, respondents indicate there's a 60% probability that Amazon will be disrupted by one of, or some combination of these seven scenarios. Now, by a notable margin, respondents felt that complacency, i.e., a self-inflicted wound or series of wounds, would be the most likely disruption scenario for Amazon. Now, history in the industry would support this scenario as leadership in the tech business has proven to be transitory. The likelihood of a technological disruption was rated the lowest at 5.5, although some of the open-ended responses suggested that new models of computing could emerge. Look, in the mainframe days, sharing resources in a timeshare model was very popular and then that gave way to a model of dedicated centralized infrastructure. The prevailing model then became distributed computing, which has seeded momentum back to a more centralized cloud. It's not inconceivable that with edge computing, the pendulum could swing back again. Now, on balance, the remaining scenarios hovered around 60% likelihood individually, but taken all together, the combination of these factors, it could be argued, present a multitude of challenges to Amazon Inc. Now, by looking at the distribution of responses, you can see further evidence of potential to disrupt the company. Here are the distribution results for each scenario in the order of the questions that they were presented. First, was government mandated separation, divestment, and or limits on Amazon's cloud computing, retail, media, credit card, and or in-house product groups. 47% of the respondents believe there's a 70% or better chance of the government disrupting Amazon. Next question was major companies increasingly choose to do their own cloud computing and or sell their products directly for competitive cost, security, or other reasons. Think of this as do-it-yourself cloud. Now, it was not as prominent, but still 42% of respondents gave this a 70% chance or better. So think Walmart, the Walmart cloud, or the Target cloud. Okay, the next question was environmental policies raise, or the next scenario, environmental policies raise costs, change packaging, delivery, recycling rules, and or consumer preferences. If you think about it, Amazon, they ship, you know, they order toothpaste, it comes in a box. And every little piece that you order, every little item that you order comes in its own separate package. So environmental policy intervention or intervention showed a similar profile as above with a somewhat less likelihood in that 70% plus range. Okay, next scenario was price or trade wars with the U.S. and or China create friction with e-commerce giants. So for instance, the China cloud or indoor e-commerce giants and protectionism would start to favor national players. Think again, pricing wars, trade wars. You know, China and others had a similar profile for likelihood, as we just showed you earlier. But you know what, what if you went, think about this thought exercise, what if you go on the web to order an item and AWS doesn't have it, but Alibaba does. You know, maybe that's not such a huge factor in the U.S. because really we don't buy directly from Alibaba, but certainly outside of the United States, particularly in Asia Pacific, it could be a scenario that disrupts Amazon Inc. Okay, next scenario, major computing innovation such as quantum, edge or machine to machine obsolete today's cloud architectures. Tech disruptions ranked the lowest of all of these scenarios presumably because AWS is seen as on the cutting edge technically. So only 36% of respondents felt there was a 70% or better probability of this scenario disrupting Amazon. Next scenario, software replaces centralized warehouses as delivery services are directly connected to suppliers and factories. Perhaps this is one of the most interesting scenarios. I mean, imagine if Google creates software that upon a search, you can then order the item and have it shipped directly to you, no middle person. You know, like an airline ticket actually is today, except now it's physical goods. This direct model would disrupt Amazon's warehouse approach, but as you can see, it didn't really strike the respondents as highly likely. We think it's actually one again, one of the more interesting scenarios and is certainly being put to the test by, for instance, Alibaba, which really doesn't rely on a massive warehouse infrastructure. Now by far the most likely scenario as rated by the respondents was this one, complacency, arrogance, blindness, abuse of power, loss of trust, consumer and or employee backlash slash boycotts. Think of it as self-inflicted wounds. More than half of the respondents indicated that there's a better than 70% chance that Amazon Inc. would shoot itself in the foot over time. And again, history would suggest this is consistent in the most likely pattern, especially when new executives come in. I mean, you saw this with famous companies at the time like Wang, Digital, IBM, eventually Intel, going through some of the challenges that we see today. Microsoft under Balmer. And you know, you see these founder led companies like Dell and Oracle, they continue to thrive. Salesforce as well, but it could be that today's executives and systems are more tuned to longevity. Andy Jassy is a longtime Amazonian. Adam Salipsky, the new CEO of AWS, he boomerang back to AWS from Tableau. He's got a deep understanding of the company and its culture. So it's by no means assured that Amazon is going to trip up. But however, taken together in combination, these factors suggest that government intervention may not be necessary. Indeed, the history of government breakups and pressure on big tech has been mixed and arguably futile. AT&T, IBM, and Microsoft all came under close government scrutiny. In the case of AT&T, the company was broken up. Now generally these actions led to the US companies being less competitive. Certainly was the case with AT&T as international telcos became dominant in the market. And in the case of IBM and Microsoft, antitrust actions by the government while a distraction were less a factor in the challenges that these firms ultimately faced and challenges to their leadership then were market disruptions. Think about it, IBM unwittingly and famously handed its monopoly power to Intel and Microsoft in the PC era. And Microsoft under Balmer kind of hugged onto its windows past and became much less relevant in the industry until Satya Nadella initiated Microsoft's currently hugely successful strategy on top of the Azure cloud. The point is, despite the saber rattling of governments, history would suggest that market forces will be much more successful in moderating the power of giants like Amazon. We'll leave you with one last thought. At a $64 billion run rate and a 39% growth rate last quarter AWS is the profit engine of Amazon. AWS accounts for over a hundred percent of Amazon Inc's overall operating profit. So it was surprising to us last quarter when the stock dropped kind of precipitously after Amazon Inc announced its earnings, its retail business underperformed but AWS blew away expectations, the profit engine. The stock rebounded since then and many investors saw it as a buying opportunity by the dip. But the point is that AWS is the most critical part of Amazon Inc in our opinion. It helps fund Amazon's massive CapEx investment and gives Amazon a platform to enter other industries like payments and content and groceries and other industries that Amazon wants to disrupt. So if you look at the ETR data across AWS's vast portfolio, the picture is very solid. This chart shows net score or spending momentum for AWS in its businesses comparing three survey snapshots, October 2020, July 21 and October 2021. That's the yellow bar. Note the comments from ETR in every sector, AWS spending velocities up relative to last year. And we certainly saw that in this year's AWS results. Accelerating growth with a much larger revenue base across the board in infrastructure, AI, data, database, analytics, core cloud, everything is up, even Chime, which is amazing because Chime is horrible compared to other tools that you use of that like. But other than that weak spot, AWS is hitting on all cylinders. So what do you think? Should the government put the shackles on Amazon Inc? Or should it just let the market forces do their thing? Now by the way, we asked respondents, what else could disrupt Amazon other than these seven scenarios and we received some pretty interesting open-ended responses that will publish for your enjoyment, including my favorite, God could disrupt Amazon. Okay, that's it for now. Thanks to my colleague, David Michela, for his excellent work on these scenarios. Don't forget these episodes of Breaking Analysis. They're all available as podcasts. Wherever you listen, all you got to do is search Breaking Analysis podcast. Don't forget to check out ETR's website at ETR.plus. We also publish a full report every week on wikibon.com and siliconangle.com. You can get in touch with me directly, david.volante at siliconangle.com or you can DM me at dvolante. You can comment on our LinkedIn posts. This is Dave Volante for theCUBE Insights, powered by ETR. Have a great week, be safe, be well, and we'll see you next time.