Amazon periodically wows a city somewhere in the world by opening an innovation center that lets startups get immersed in its cloud services. Amazon Web Services, or AWS for short, agreed in 2016 to open one center in Busan, South Korea, and it operates two regional ones in China. The Seattle-based e-commerce giant delighted a suburb of Taipei on August 10 with its latest one.
Beyond growing its roster of clients, Amazon's cloud service can also leverage this latest innovation center, which is near multiple tech hardware firms, to find local talent for the parent company and even lead it to long-term business partners, analysts say.
"The biggest reason (to choose Taiwan) is that the talent here is at the AWS level, which means high," says Lin Ta-han, CEO of the Taipei-based crowdfunding consultancy Backer-Founder. AWS and its cloud clients, he expects, “will strive for more cooperation deals."
Amazon picked New Taipei City for its first Taiwan innovation center because the locale offered a "trade-friendly growth environment for investors," the city says in a statement quoting the mayor. Since 2011, 20,000 entrepreneurs have moved into the city for a capital increase of $13.11 billion and sales revenue of $154 billion, the statement says. AWS and the city had been in talks about the innovation center for two years.
What's in it for Taiwan
Startups in Taiwan were already using AWS since about 2010 because they could get free “cloud credits” to kick things off, says Jessica Liu, an associate with the Taipei-based accelerator AppWorks Ventures. AWS would also send speakers to Taiwan for workshops. “If you start a business, the first thing that comes into their minds is Amazon,” she says.
AppWorks has a formal agreement with AWS to refer startups, about 80% to 90% have used the service, she says.
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The innovation center adds to these relationships by offering physical space of about 660 square meters and access to AWS staff people, says Ho Kuo-cheng, economic development director with the city. And its mission is to help top startups build B2B channels for whatever they do, Ho says. AWS will offer "best practices" at the center to help advance Taiwan’s startup sector in multiple industries, the company's greater China managing director Alex Yung told an August 10 inauguration event.
Eventually the innovation center will help “accelerate innovation,” the city says in its statement. “This will create a cluster effect, attracting more talent, funds, technologies, market possibilities, and international visibility,” it says. Taiwan's central government happens to be on a campaign to stoke innovation among startups rather than more me-too inventions.
And what's in it for Amazon
Amazon's outreach to young firms will first help it foster long-term clients, the economic development director says. “It should be a platform for their development and maybe these startups will become some of the AWS clients, though not necessarily,” Ho says.
Amazon's founder Jeff Bezos has seen his wealth skyrocket this year, reaching a new record for all of the billionaires Forbes has tracked over the past three and half decades. His net worth is currently estimated at $154.8 billion, based largely on his 16% stake in the e-commerce giant.
Amazon's most profitable business unit in the fourth quarter last year was AWS, which posted a 45% revenue increase that took boosted its income to $5.1 billion.
AWS did not respond to a request for comment. But there's probably more for Amazon in Taiwan than just more cloud clients, analysts say.
The company has been working with Taiwanese hardware contractors over the years to develop data centers and in-house IT systems, says Leon Kao, senior research analyst with IDC in Taipei. That indicates it may be cruising for more partners such as AppWorks.
"Compared with other countries in Asia, Taiwan vendors can provide a faster design and faster deliverable solution" to big-name tech firms such as Amazon, he says. Taiwan, he adds, has a “stronger ecosystem and value chain in IT and the consumer electronic industry, especially for electronic and electrical engineering and system integration."
Taiwan's got the raw talent, too.
Amazon intends eventually to open an artificial intelligence R&D center in Taiwan, according to this local news report, and that project would need engineers. Meanwhile, America's other tech giants, such as IBM, Google and Microsoft, have all announced plans to develop AI technology in Taiwan. They all look set to be chasing the same engineering talent, which costs less than in the Silicon Valley and other industrialized parts of Asia.
Amazon has recently been making inroads into China, also a hotbed for tech talent to vie with Alibaba, according to a Bloomberg News report. It was hiring hundreds of people in China, including internet software engineers and designers for Alexa, the report says.
