The cloud has been a huge catalyst for Amazon over the past few years, as its Amazon Web Services, AWS, has helped fuel the company's top and bottom lines. This unit will be the backbone for the project with Volkswagen, as the automaker prepares to work with Amazon on building out this industrial cloud platform for its 122 facilities.
While Volkswagen is obviously looking to leverage the cloud to its own benefit in the short term, the duo's plan is to eventually make this platform available to other companies as well. Could it set up as a win-win? Of course.
Amazon gains a giant client and the potential for many more who operate in the automotive, manufacturing and industrial space. This can drive further scale and growth opportunities for its AWS unit. Volkswagen will look to leverage technology to improve efficiencies and improve cost. From Andy Jassy, the CEO of Amazon Web Services:
"Volkswagen's and AWS' collaboration will have a profound impact on efficiency and quality in production throughout Volkswagen's global supply chain, as Volkswagen gains access to the broadest and deepest cloud with the most functionality, the most innovation, the highest performance and security, and the largest community of partners and customers of any other infrastructure provider.
"We are tightly aligned across Volkswagen's businesses to help them reimagine the future of automobile manufacturing by taking advantage of all the benefits the cloud can deliver."
The integration will also include Volkswagen subsidiaries, like Porsche, Audi and other brands under its umbrella. For now, it will not include the company's suppliers, which total more than 1,500, but it could include them in the future.
The move follows multiple partnership announcements between Volkswagen and Ford (F) - Get Report earlier this year. The two will collaborate on trucks and vans, while Volkswagen announced it will invest $1.7 billion in Ford's self-driving car unit Argo earlier this month.
Perhaps Ford will eventually become a partner with Amazon, too? Worth noting is that Ford's incoming CFO Tim Stone was previously with Amazon for two decades, as well as Snap (SNAP) - Get Report before coming to Ford. If adopting a new industrial cloud platform will help the automaker save money, who's to say Ford won't move to Amazon Web Services too, particularly with a cost-savings CFO familiar with the company?
In any regard, it's quite clear that Volkswagen continues to make a large push in the innovation department. In some cases, that's to prepare for the changing tide in the automotive market, like with its autonomous and electric vehicle investments. In other cases -- like the deal with AWS -- it's to improve efficiencies.
Look for more automakers to make similar moves and watch for Amazon to continue branching out the reach of its AWS segment.
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This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.