Amazon Is Winning the Battle for the Connected Household

Amazon Is Winning the Battle for the Connected Household

There are several ways a company can achieve an economic moat. One way is to become a leading platform or ecosystem, such as Apple's (NASDAQ: AAPL) app store. Application developers usually write for iOS first, since that is where the most financially well-off customers are. The more apps on the iOS app store, the more likely people are to buy an iPhone, in a virtuous circle. 

Another great advantage is to have a leading subscription business. A yearly subscription or membership causes customers to engage more and provides a business with either upfront or recurring funds, which the company can reinvest to drive more memberships. Think Costco's warehouse membership, or Netflix's leading streaming subscription, which the company utilizes to aggressively grow content, thereby driving more subscriptions. 

Turning to Amazon's (NASDAQ: AMZN) recent blowout quarter, one thing that stuck out was not only the growth in Prime subscriptions (Subscription Services, which includes Prime, grew 59% year over year) but also how the Prime-Alexa combination is becoming the leading platform/ecosystem for the connected household.

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Source: Fool.com