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Amazon’s Path To World Domination

Could patents lead the way for the online retailer?

12Jan

There is no better time to be a tech company than today. Innovative startups no longer get bullied for being young and immature, with Uber, Airbnb and others proving that a young company can represent a serious threat to incumbents. Additionally, as the number of new products is rapidly growing, with startups adding to it, incumbents must ensure their R&D initiatives are effective and that their patents are applicable and capable of generating revenue. IP management, in this instance, is critical as it doesn't matter how many patents and trademarks you own, it's the revenue potential from the patents that makes them the best assets.

According to IFI Claims Patent Services, 2016 saw a record number of utility patent grants - 304,126. Amazon has become the fastest growing company in terms of exclusive rights for new utilities, whereas only two years ago, the company was only 50th on the list. As for the total number, IBM remains the leader, and has been for 25 years, holding over 8,000 utility patents, followed by Samsung, Canon, Qualcomm, and Alphabet.

Last year was undeniably Amazon's moment of glory, but more is expected in 2017. According to the Latest Patents website, since January the 1st, the company has already filled over 40 patent requests. The company's growing influence is there due to the strong knowledge of how different innovations can disrupt multiple sectors, whilst retaining a commercial and technological connection between each other, so the maintenance and development of these are parts of one revenue generating process. One small product, for example, has become a game changer.

At the moment when Amazon registered exclusive rights for 1-click checkout, the company instantly eliminated some serious competitors. Not only had Amazon made an e-checkout procedure faster and customer friendly, but also forced other internet companies to depend on it. Orders are driven by the simplicity in usage and impulsive purchases, allowing for more competitive advantage and profit, so others were desperate to get hold of it. Amazon, however, didn't shut the door with the patent for others completely. Apple was among the first to recognize the commercial potential of 1-click, so they didn't hesitate to ask for a license. Having paid an undisclosed sum of money, the checkout feature is now applied across many Apple's services, including iTunes, iPhoto, and App Store. Until this year, if anyone else wanted to apply the feature, a company would have had to request the license and get their wallet ready. But this year, Amazon's patent expires, meaning that others will eventually be free to use 1-click.

However, it shouldn't be expected that Amazon is unprepared or unaware of the consequences. In the course of the last decade, the company has been generously investing in the improvement of their logistics and new revenue generators - especially AI, drone, and voice command platforms. So, even though the company is likely to experience short-term turbulence from losing the exclusivity of their payment method, they have all the right patents to bring their business to the next level.

Amazon's Alexa is growing in popularity, so is the overall concept of communication with smart devices. Voice command order placements and checkouts may well be the future of retail, and Amazon knows it, despite some initial teething issues. As for drones, the company is getting ready to eliminate conventional methods of delivery in some areas, reportedly working on giant drone warehouses. The retailer has been granted a 'collective unmanned aerial vehicle' patent, where individual modules can detach from the main drone module once they are no longer required, and can then function independently. If translated, without traffic and drivers, both the parcel collection point and smaller drones will be floating in the air, with the latter promptly detaching when it's time to deliver a parcel.

As long as Amazon retains their bold innovative thinking and continues with executing smart IP strategies, it is likely that with time, the number of rivals in e-commerce will only be decreasing.

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