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Ballmer Says Amazon Isn't a "Real Business"
theodp writes According to Steve Ballmer, Amazon.com is not a real business. "They make no money," Ballmer said on the Charlie Rose Show. "In my world, you're not a real business until you make some money. I have a hard time with businesses that don't make money at some point." Ballmer's comments come as Amazon posted a $437 million loss for the third quarter, disappointing Wall Street. "If you are worth $150 billion," Ballmer added, "eventually somebody thinks you're going to make $15 billion pre-tax. They make about zero, and there's a big gap between zero and 15." Fired-up as ever, LA Clippers owner Ballmer's diss comes after fellow NBA owner Mark Cuban similarly slammed IBM, saying Big Blue is no longer a tech company (Robert X. Cringely seems to concur). "Today, they [IBM] specialize in financial engineering," Cuban told CNBC after IBM posted another disappointing quarter. "They're no longer a tech company, they are an amalgamation of different companies that they are trying to arb[itrage] on Wall Street, and I'm not a fan of that at all."
The only computer-related business I can think of with more R&D budget is Microsoft, IBM isn't a tech company? Shut your mouth. Then again, if Cringely says it, it's probably wrong.
Amazon is clearly a business. But its model is Microsoftian EEE. Sure, you can sell through Amazon, but they keep stats and if it becomes worth it to stock what you're selling, they're going to do that. Of course, on eBay, if the Chinese see you sell a lot of what they've got, they'll start selling it directly. Then you only get to sell to people who care about shipping time and support.
Amazon is a real business, but their business model basically requires that they shut everyone else down, and not everyone wants to shop with Amazon. So they'll eventually fail if they don't find a new model.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
Ecommerce is a fast changing world and I know Balmer left Microsoft to go sow his oats in the basketball world, but I think we'd benefit from some insight from Bennett Haselton on the matter, someone outside many industries who has a proven track record for out of the box thinking. I'd like get some insight from him before I draw any conclusions. He's a frequent contributor.
The only reasons Microsoft makes ANY MONEY is because of WINDOWS and OFFICE, both achieved using illegal/borderline illegal MONOPOLISTIC TACTICS. Microsoft fails everywhere else. In their cash cows, they never innovate and only stay afloat because they are entrenched in a market with high barriers to entry (the huge amount of software/drivers for Windows and the Office file format and that fact that students/workers are raised/trained on Office. The places they DO innovate (phones, portable music players, tablet hybrids) they fail miserably.
Is he even relevant anymore? To be honest, I had no idea he's even blogging anymore...
I'm going to take a reality TV douchebag seriously?
He got lucky once... like winning loto.
IBM is a marketing company. Their product line is a hodge podge of mismatched technology from companies they bought that doesn't work together, so they also sell consulting too.
...and I don't care.
Well this is the same guy that said that the iPhone would never sell. Also the iPad was a "bubble". At the time I thought he was just cheerleading for MS and Windows because he was CEO. Now upon hearing that he's purging the LA Clippers of all non MS gear it appears that he has a strong bias.
And in my World, Microsoft is not real company because it does not pay dividends. Why would anybody buy shares of a company which does not pay back? Aaaa, because you expect to sell it for more ... and the last buyer is a looser. Classic pyramid scam.
He knows fine well Amazon could start generating profits whenever they want. It is a crazy business model they have but it continues to work well for them. Every year they have more fingers in a plethora of interconnected pies.
Although I came in the tech field quite late (in the 1970's) I've still been around the block a few times, so here's my take ...
IBM
IBM was a sales company with strong tech foundation. Was. Now IBM has turned into a service company
Cisco
Cisco's strength was derived from teams of cracked engineers churning out amazing communication hardware. Was. Now that the cracked teams of engineers have mostly left Cisco has turned more and more like an Indian company
Microsoft
Microsoft used to be THE company that sells software that corporations need (from OS to their office suites). Used to. Now Microsoft is a company clinging onto new versions of legacy software
Apple
Apple used to be a very brave company that dare to come up with strange products that people crave for. Used to. Now Apple, much like Microsoft, is a company clingong onto new versions of legacy hardware
Muchas Gracias, Señor Edward Snowden !
Even without that phone flop, their business is selling products are below cost to consumers using the money borrowed from shareholders and banks.
Growth less than 5% so he can't even use the excuse that he's using profits to grow the business.
So at what point is he actually going to turn a profit on any of these businesses?
Then there was the phone, a phone covered in cameras that watches the face of its user like a hawk and has an always on connection to Amazon. A retailers wet dream, but who the f*** wants to buy it?
$2 billion. For the Clippers.
Bezos wants to suck the entire market into the Amazon central economy.
But let us reason together: the distinguishing qualities of both Ballmer and Cuban are that they were both at the right place at the right time. And both are complete pricks.
Bezos is a menace. But Ballmer strikes me as clown and a lackwit.
Is he planning on making back the $2B from the Clippers? Or did he just need his own shiny like Cuban?
It's not an R&D budget, its a "write plausible patents" budget. They don't make any of the things they 'invent' and the inventions are about as inventive as Watson, rehashings of existing technology, patented as if IBM invented it.
It's all a pure patent play company now, they live on their 'inventive' past and size, to put through patents, then demand money from actual inventive companies under threat of blocking their products.
From patenting the patent troll
http://slashdot.org/story/11/01/02/1534223/IBM-Files-the-Patent-Troll-Patent
To patenting the web page template
http://slashdot.org/story/01/10/17/005232/ibm-patents-web-page-templates
Patents on choosing your own ending movies, like Dragonlair
https://www.techdirt.com/articles/20100914/12105111004.shtml
IBM patents stack overflow detection in OS's, claiming what makes it new is that its in an OS... i.e. inventing nothing, taking existing technology of others and writing it in a broad way.
They have three basic business models: Fake patents, Mainframe computers sold as super-powerful, but actually less processing power than your smartphone, IT consulting.
Ballmer said on the Charlie Rose Show. "In my world
That fires an NMI for me right there. I'm not particularly fond of "Ballmer's World".
I would be quite pleased if he would do us all a favor, and keep his world to himself.
Schroedinger's Brexit: The UK is both in and out of the EU at the same time!
... as opposed to ripping your customers off, of course you're not a real business. Ballmer is the best person to attest to that. Not that Amazon doesn't ocasionally rip people off, then again they invest a lot in new stuff, which is quite nice.
Typical Ballmer... by his definition then Microsoft, who produces software which is intangible, also is not a "real business" and neither are services like hairdressers and many other services. Anything of value bought by someone is a business where it is tangible
If Steve Ballmer said something complimentary about me, I would take that as a slanderous insult. Amazon should feel happy to be insulted by Ballmer. Amazon is the only big internet-based business that I like.
It should be kept in mind that the theory of perfect markets says that competition drives all profits to zero. So making an extremely slim margin is a sign of a healthily functioning market, whereas the absurdly high profits that MS have made in the last 20 years are proof that free markets did not do their job in the case of MS software. So I would say that MicroSoft was not a "real business". It was, as we all know, a de-facto monopoly. And a monopoly is not a "real business". Real businesses compete against other businesses.
Balmer is right. Good businesses that have been around as long as Amazon make money. Sentiment alone is holding up Amazon stock. The same goes for Elon Musk's companies. They make no profit and have no prospects of turning a profit as far as the eye can see. Yet Musk's starry eyed fanbois still lap up the stock. Oh, well. They will learn the hard way. As for IBM, eventually they will run out of businesses to sell and will have to sell itself. Pathetic considering what they once were. On the other side of the coin, boring old AT&T yields nearly 5.5% in this pricy market. I've held it for 10 years and am getting rich on the compunded returns.
an ill wind that blows no good
The only reason Apple makes money is because of macintosh, achieved using illegal backward engineering of motorola chips.
Then theres ipod/itunes achieved illegally in defiance of the court order from the apple corps lawsuit.
Corporations break the law... but apparently thats okay because they also make the law.
Quite seriously, first he steered MS from having the muscle in any negotiation with whomever (from retailer to customer, they could say "my way or the highway" and their "partners" could only grin and bear it) to a mediocre company that has to accept setback after setback, only to blow the money he swindled our of piledriving MS on a mediocre (if that) sports team.
He'd probably be a great manager for GM, a bank or anything else that we have to prop up now because their managers are about as useful as monkey boy, but just like a company that makes no profit is no business, an idiot that drives companies into a freefall tailspin is no manager.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
Is he planning on making back the $2B from the Clippers? Or did he just need his own shiny like Cuban?
Only after he sells 200 Million Beers at $10 each....
ballmer is a past master of declaring profits one month and then quietly writeing down 3 times as much the next month.
ballmer is a dickhead.
i still find it realy funny that the only firm to actauly make a profit from android devices is ms,the only big firm that has no android devices.
everything else that ms do actualy make or write is a crock of crap
To me Amazon is not a normal company at all because the philosophy of its investors is "Do whatever you have to do, don't worry about profits/losses, we'll be right behind you." How can one compete against a company like that? It's as if a bank (hell, maybe Treasury!) opened an infinite credit line just for Amazon! No wonder our high-street shops (and online shops) are falling like flies!
From a BBC documentary on Amazon (Business Boomers) someone said "Amazon was designed to be a shark right from the start." It's true in a way. Since spending money is no issue, it can do whatever it wants with its prices while growing its business areas. However its brick & mortar (or online) rivals cannot. They don't have an infinite credit line with their banks or investors, and depend on their profit margins. I'm wondering why European governments have not cracked down on this unfair "business" that is Amazon?
take business advice from the monkey boy who ran a successful company into the ground.
Amazon's Jeff Bezos is a finance guy who is very good at manipulating numbers. They do make a ton of money, but reinvest it all on new projects. This year the projects didn't pan out with a net gain. Amazon phone... why? Amazon brand netflix that costs a ton more... nope. Cloud service competition took a bite from them. Plus they are getting dinged by the dirty (but typical American) labor practices in Europe. Physical Amazon stores are next... bye bye bestbuy (YAY) except that the price advantage will go away when they have real overhead, like utilities and shrinkage.
Ballmer is none too smart, but he is noisy and wealthy enough that people hear him. It's like Paris Hilton before her grandpa took her out of the will. She has no brain at all, but if worth billions everybody wants to see what she has to say..... now she is irrelevant.
What stupid question: he will never learn. He remains what he has been all his life: a bullying, clowning second-hand car salesman.
Jeff Bezos does not have the goal of making money for investors; his goal is to amuse himself. His company is his hobby. Amazon is a hobby company and I would not invest in it.
E Proelio Veritas.
does this guy even exist anymore?
Amazon doesn't "lose" $437 million. They don't "lose" anything. They just have sufficient tax sheltering set up to create the appearance that they lose money. The investors know this, which is why the stock is worth greater than zero.
Amazon created and dominated the cloud as we know it before Microsoft even knew it existed. To this day, Microsoft's prices on Azure are about twice that of AWS, and Microsoft doesn't have a prayer in taking that market. All Microsoft has ever done is a half-assed attempt to buy their way into yet-another-market. If Amazon wasn't so laser focused on defining what the cloud means and pouring in R&D dollars, sure they could make a little more money. If Amazon wasn't pushing boundaries like same-day delivery, sure they could make a little more money. Put another way, if Ballmer wasn't so focused on making a little more money, and could be laser focused on R&D and pushing boundaries, maybe he could dominate a market like Amazon - but he left that post years ago.
Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose.
Not everyone had the ridiculous profit margins and market share of a software company. Selling tangible goods you don't make isn't as profitable. Ballmer in any other industry would have in my opinion been a disaster.
Almost every product in every division of MS loses money. Office and Windows on the desktop are about the only lines that make their budget or show a profit. So Ballmer needs to wipe his sweaty brow and shut the ever loving fuck up.
To be clear: this is coming from a Microsoft executive that was responsible for the Xbox and Slate tablet releases?
How many years before Xbox bought their way in to profitability?
How many years of losses before the Slate turned a profit?
Amazon is slaughtering the entire brick and mortar retail market, vacuuming up all consumer spending in the process. Their profitability(or lack thereof) is a small faction of their overall revenues. Once they have driven all their competitors out of business, they can buy up their cheap unemployed workers and commercial real estate for pennies on the dollar and expand their warehouse infrastructure to include in-store pickup. Consequence? No more loss prevention or inventory shrink from customers walking around unsupervised inside the cage.
Amazon is retail. The competitors still occupying the space are just riding the momentum. When they're all out of business, Amazon will be the only game in town and will be able to set prices at what ever level is necessary to ensure profitability.
People worried about Amazon's profitability miss the entire point. Amazon's problem isn't making a profit. It's keeping the regulators from splitting them up following accusations of anti-competitive market behavior. I have no sympathy for Wal Mart because Amazon just did to Wal Mart what Wal Mart has done to millions of other small businesses over the past decade. Set prices so low that your competitors go out of business and then bask in the beautiful light of a competitor free market place ripe for price dictatorship.
He needs to learn to shut his purty mouth while men are talking..
IBM's demise has been coming for a long time. It started when they didn't see the PCs potential. It continued when they stuck with proprietary (Micro channel), or unpopular (802.3) technologies. The 90s reorganization and switch to services helped but they were one of the first solutions companies. Now IBM is one of many competitors, and apparently they aren't the best. IBM isn't the only company to fall from grace. Compaq and HP merged to avoid oblivion. Microsoft lost ground in mobile and has yet to gain a meaningful foothold in tablets. Yes they make money but they are hardly a Wall Street darling. Oracle and Red Hat decided they weren't wealthy enough, so they switched to an expensive M$ style license model. RH is way overpriced considering they're bundling a bunch of free software. Oracle is competing with (and loosing to) free Hadoop, and NoSQL solutions. But that's how it goes. Some company does well. Makes a lot of money, but doesn't make a profit. Cue venture capital and the IPO. A few years later, maybe they turn a profit, maybe they don't. Venture capital takes their profit, so does Wall Street. Everyone assumes the company is dead because the stock price drops and Jim Cramer is smashing his "Sell, sell, sell" button like he's playing wack-a-mole. Yet the company goes on. Sometimes they die, sometimes they live on (like Amazon). Sodastream is still around, but the stock? Ditto for Keurig. Every company dies eventually. Sometimes they continue to exist. They may even expand into new markets.
Only the dead have seen the end of War. - Plato
From a man who has spent his whole life riding on the coat tails of Bill Gates. The only thing he has ever done at Microsoft is damage the company; The company would have been better without him.
These days, the measure of being a success is being able to lose staggering amounts of money while continuing to exist. The bonus round is where the government bails it out because it's too big to fail and the whole cycle repeats on a larger scale.
What matters for stockholders is only two things: stock price and dividends. As long as Amazon continues to re-invest in itself and grow the stock price, the fact that it has low profits is acceptable as it means they are growing their business and keeping it competitive. Additionally, you can't expect a company who is in such a competitive and risky area such as Amazon to always have a good year.
Er, yeah. You know what else originally made no money? Surface, Xbox, Bing, Zune, Windows Mobile/Phone, Internet Explorer, Office, Windows.
I guess this article is here because I'm supposed to care what Ballmer thinks, or that his ravings are somehow important or influential.
Sorry, but I don't, and they're not.
Xbox, Xbox360, Zune, Surface, all were sold below cost to penetrate (or try to) the market.
Yes they're making money on Windows and Office, but if it weren't for
a) the fact Windows comes with PCs (and they strongarmed OEMs to pay for licenses and/or stop installing other OSes (IBM and OS/2 come to mind), the fact that they hid APIs from competitors, and other tactics,
b) the fact businesses are stuck with Office for compatibility reasons
They probably wouldn't be in business (or at least not that big)
I've got better things to do tonight than die.
Steve was a little out of sorts at the time. He was looking at the Win8 after market sales figures on Amazon compared to the numbers of Android products.
This message was not sent from an iPhone because Peter Sellers really was a deviated prevert without a dime for the call
If it doesn't make money, it's a hobby in the view of the IRS. The IRS should disqualify all of Amazon's "cost of doing business" expenses.
I know that comes as a shock to many of you, but it's true - I will miss him. Motherfucker was comedy gold. Where else do you go for that these days? Schmidt? Fucking gray man in a fucking gray suit. Same with Tim Cook - you can put him in jeans, but he just is a guy hat would rather be in a boardroom than on a stage. Larry Ellison? Scary (appropriate for the season), but not funny. The new guy? Nadella? Has the whole exotic foreigner befuddlement thing down (and that's just with respect to HR practice vs. tech culture), but I figure he's not going to be the full-on Olympic chair-throwing, "developers, developers, developers", "I'm going to squirt you with my Zune", "fucking kill Google" sort of guy that Balmer was.
I'm just saying an age has passed. Nothing but gray men, as far as the eye can see. I love my new oligarchs.
That is all.
Well, Ballmer was certainly bang on in his comments about the iPhone.
https://www.youtube.com/watch?v=eywi0h_Y5_U
By that criteria, neither is Microsoft of late.
Table-ized A.I.
So a business that invests as fast as it earns isn't a Real Business According To Ballmer.
No wonder Microsoft played catch-up during his whole tenure.
According to Amazon.com, Steve Ballmer isnt a real human.
- -= Napalm means serious BBQ =-
who gives a shit about what these people say?
Cuban got lucky, and MS barely simmered along under Ballmer.
IBM has one of the best RnD labs in the world. So yeah, there a tech company.
It's nice of fat ass Ballmer to tell every hard working mom and pop shop restaurant their not a real business.
The Kruger Dunning explains most post on
Profit is not the only aim of a business. The other is equity.
Amazon is building it equity aggressively, investing heavily in distribution centers, data centers, and in building a loyal customer base. It has become the most valuable brand in book publishing, surpassing even WalMart (which remains number 2 in that space), and vies with Walmart for the #1 spot in retail overall. It is arguably the dominant force in Web hosting. There is no measure by which Amazon is in any kind of trouble.
Amazon will make profits whenever it chooses to do so. Right now, they are simply too busy doing other things.
Everybody in Washington DC, on both sides of the political divide, agrees that the tax code is a mess and in need of urgent reform; it's probably one of the only things they agree on. The current corporate tax mess is so bad that it is likely to be fixed to at least some extent either in the last two Obama years (if the senate flips to the GOP) or in the early years of the next President.
In the time before such reform takes place, the really smart big corporations are either parking piles of cash offshore, or doing what Bezon is doing with Amazon. The Bezos plan is to eliminate all profits by re-investing all the excess cash into growing the business (adding more products/services/facilities). Why hand piles of cash over to the tax collector at crazy high rates when you can instead use that cash to build the empire that will then be in place for you to use later when the tax rates come down and you can post (and distribute to investors) the even larger profits (enabled by the growth) at much better tax rates? This is a smart, modern CEO who is not just focused on this quarter's numbers to justify his pay and benefits before he jumps ship.... Amazon has become a major retailer on this path and will be for many years. A lesser CEO would not re-invest the money in growth now, and would pay the high taxes now to look good to investors now and then later, when the tax rates inevitably come down (the US has not historically had the highes business taxes in the western world as it does now), provide lower returns from a smaller corporate entity. Even without tax reform, what Bezos is doing is the smart business play in a high-corporate tax environment (where every dollar would be double-taxed and at historically high rates) for as long as Amazon's investors are willing to tolerate it. The only other play that would be similarly useful would be to hire lots of lobbyists and climb into bed with a bunch of politicians to get some new legal loopholes added to the tax code.... the Bezos path is, IMHO, far more honorable.
This is just another in a long littany of examples of ways in which stupid government policies cause distortions in the normal operations of the free market, and another instance of a corporation proving that its executives will always hire smarter and more-motivated lawyers and accountants than the unmotivated lifetime carreer lawyers and accountants working for the partisan political hot air emitters in the state and federal capitol cities.
His words about Google in early 00's: "They're commies without a business model." And look at him now.
They are a business as long as they pay their salaries.
Comment removed based on user account deletion
Amazon may not be a "real" business, but they get a lot more of my money than Microsoft does.
Impose tax on company revenues, not profits.
Income tax is imposed on your salary, not savings.
Casteism
Put a cap on market capitalization of these companies (5 times quarterly profits)
Casteism
Considering Mark Cuban is / was a joke in the tech industry; I find his lack of future vision in what IBM is trying to do laughable.
"Today, they [IBM] specialize in financial engineering,"
Financial Engineering? Today? They would have done good for themselves if they did that before the financial crisis. Today the only financial engineering that IBM can think about is engineering their accounts ;)
Steve Ballmer is a Joke. He will be a better fit in a circus ring or a business school.