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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.
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.
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.
You're a decade out. Microsoft's initial success was Microsoft BASIC, which was actually pretty good, back in the '70s. IBM wanted them to port BASIC to the PC and, when their negotiations for CP/M as the OS fell through, asked MS to write them an OS too. MS bought QDOS and rebranded it (and there was a lawsuit later about this, so it's probably the first instance of interesting business practices by MS). They also sold MS DOS to PC clone makers, which helped cement them in the market. At the time, there were a number of MS DOS clones that were better, but they made their other products depend on their own version to force others out of the market. By the '90s, with Windows 3.0 only running on MS DOS, they were getting pretty good at it...
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You might want to read some news from the last decade. Microsoft started paying dividends in 2003 and has paid them annually. When they started, investors were unhappy because it showed that they no longer thought that the best thing to do to increase value was to invest the money in the company.
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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 !
$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?
You're still not on the mark. Microsofts success was BUYING DOS for $50k. Talk about profit.
Previous to that, I suppose Bills education as a Lawyer was probably the fuel for later hijinx.
I still like the part about his 1st OS for the Altair being sold on punchcards which in turn were copied by enthusiasts and shared.
Bill still made a profit, but the die was cast for a poor business model.
*Repent!Quit Your Job!Slack Off!The World Ends Tomorrow and You May Die!
Nah, he's too busy trying to run his pizza shop.
Muttered something about IT being a vacuum of wasted time and wanted to get back to things that mattered.
*Repent!Quit Your Job!Slack Off!The World Ends Tomorrow and You May Die!
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!
I parallel his career with that of Marilyn Manson. He was a thing for a while, had his controversy and publicity. Now everyone has had enough of the ride and has moved on. Look for Steve to host the Tech segment on HSN in the future, with negotiations for Hollywood squares in the works. Steve always had his eye on Don Knotts square.
*Repent!Quit Your Job!Slack Off!The World Ends Tomorrow and You May Die!
... 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.
Starting up after dumpster diving for BASIC interpreter source code wasn't interesting enough?
The MS business model has always been to sell something that has already been demonstrated as a success by someone else and then use lawyers to stop the next in line doing the same thing. It's not unique (outside of computing) and it's not as bad as some of the practices of Cisco, HP etc (and MS being underhanded enough to deal with clones led to the cheap PC) - the only tragedy is they came to dominate so there wasn't really a lot of other stuff to copy and compete with. That's probably a major reason why computers generally still suck to use compared to what we would have expected by now. The MS Windows 10 desktop looks like a linux desktop from before this site even existed and the back end is nowhere near as good - how pathetic is that?
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.
Its hard to top that!
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I think this may be a sign to buy Amazon stock, the patented Ballmer Reverse Bellweather has just indicated they're going to have a huge, massive 2016.
Mod me down, my New Earth Global Warmingist friends!
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....
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?
Ok, I'm declaring it. People are no longer allowed to use the word "Monopoly" The general public clearly has no idea what the word means, and like here, completely misuse it.
Previous to that, I suppose Bills education as a Lawyer was probably the fuel for later hijinx.
Bill dropped out of a computer science program to start a business building software for traffic statistics equipment. Going to Harvard is not the same as being educated as a lawyer-- they DO teach other things than law there.
Seriously, where are people getting all of their bogus info? Every thread its people spouting about crypto, history, politics, and 90% of it is wrong.
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.
What the hell is that FUD?
What's that about "illegal backward engineering of motorola chips", what are you smoking? Apple used real Motorola CPUs just like Amiga and Atari ST.
And that Apple Corps lawsuit was just a legal battle about a name, not industrial espionnage.
There's plenty of reasons to bash Apple if you want to, but your reasons are pulled out of thin air.
Get free satoshi (Bitcoin) and Dogecoins
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.
Many other people were introduced to IBM including Gary Kildall from Digital Research, yet he didn't become a billionaire.
And by the time he was introduced personally to IBM he was already well known for shipping the dominant basic interpreter for all personal computers, IBM compatible or not.
A quick check shows that they pay dividends quarterly, but the dividend rate (compared to stock price) isn't particularly great... While their dividends have risen somewhat in recent history, their stock price hasn't even kept up with inflation. IBM is about the same rate, and AT&T is notably better.
The investors were apparently right. Microsoft's stock price has gone roughly nowhere in the last decade, mostly because they're one of the most boring companies to invest in. They don't pay high dividends, they don't produce must-have new technology, and there's nothing that distinguishes them (in a positive way) from any other investment vehicle. They're just Microsoft.
On the other hand, Amazon is currently trading at six times Microsoft's price, and has shown enormous growth. Even if they don't make a profit or pay dividends, they're still interesting to inventors because they're doing interesting things. It's helpful to remember that investing in a company is effectively adding your money to the pool for whatever the company's project is. That project might be (and usually is) simply "make more money", but changing the world is also a possible goal. Being unprofitable is still reasonable for an investment, as long as investors are still interested in the company. I'll worry when Amazon's price falters, and they start using profit as a means to keep their value up.
You do not have a moral or legal right to do absolutely anything you want.
Microsofts success was BUYING DOS for $50k.
Minor quibble: Microsoft licensed DOS for $50K, while Patterson held back some rights. Later on after various payments and negotiations it is estimated that the final cost was more like $500K. By then DOS was already a screaming success, so they got off easy.
" They don't make any of the things they 'invent'"
Have you even paid attention to IBM recently with the TrueNorth processor? They sure do make and invent.
Still waiting on Serviscope_minor to wake up to fucking reality and realize that Jessica Price isn't going to fuck him.
No. His father. However, his mom was on the same charity board that IBM's CEO was. "Oh, you do computers? I should introduce you to my son, he does computers too!" and that's how Microsoft got it's start.
IBM's demise has been coming for a long time. It started when they didn't see the PCs potential. It continued when they stuck with proprietary (Micro channel), or unpopular (802.3) technologies. The 90s reorganization and switch to services helped but they were one of the first solutions companies. Now IBM is one of many competitors, and apparently they aren't the best. IBM isn't the only company to fall from grace. Compaq and HP merged to avoid oblivion. Microsoft lost ground in mobile and has yet to gain a meaningful foothold in tablets. Yes they make money but they are hardly a Wall Street darling. Oracle and Red Hat decided they weren't wealthy enough, so they switched to an expensive M$ 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
Who gave you a monopoly on deciding which words people can use?!
Market cap doesn't have any bearing on ROI. If I'm looking to invest $10,000 for dividend returns, I'll be investing in something with a higher return for the price, with little concern* for the vehicle's total size, as market cap shows.
That Microsoft is bigger than Amazon is actually even more cause for alarm. Amazon has far less cash in their coffers, and does more (at least, more interesting to investors) with it.
* Some concern for diversity should always be held, but that's beside the point.
You do not have a moral or legal right to do absolutely anything you want.
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.
Er, yeah. You know what else originally made no money? Surface, Xbox, Bing, Zune, Windows Mobile/Phone, Internet Explorer, Office, Windows.
Umm.. OK.
Lest you forget, Microsoft was ruled both a monopoly in 2000, and ruled they miss-used their monopoly power. They were going to be split into multiple companies until the 2000 election changed the political landscape and the Federal government dropped the suit.
What makes you think Microsoft STILL doesn't hold monopoly power over the PC business? They don't hold as much of a stranglehold anymore, but I'd say it's still very much a monopoly.
AccountKiller
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.
you should learn how stocks work
IBM's mainframe processing power is a bit different than your typical desktop processing power. Mainframes have, historically, never been used for much numerical computation, but are heavy data/string pushers. All the while a desktop CPU has several subsystems optimized to crunch numbers in a way that is not useful at all in a mainframe that pushes, say, product data around.
A successful API design takes a mixture of software design and pedagogy.
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.
> The Microsoft success (1980s) came prior to the anti-trust stuff (mid 90s).
>
> You may need to revisit your history of microsoft.
So do you.
Microsoft's first run in with the DOJ over anti-trust was the forced bundling of DOS. Now the fact that someone doesn't do something snarky like use the term "WinDOS" doesn't mean they aren't acknowledging the DOS era shenanigans of Microsoft.
Windows is ultimately the successor to DOS and Microsoft got slapped on the wrist for how they handled bulk licensing to clone vendors like Dell and Compaq.
The mania that caused people to fixate on msoffice in the mid-90s helped cement Microsoft's position as intractable.
A Pirate and a Puritan look the same on a balance sheet.
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.
E17
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.
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Does not have to be tangible. I'm not sure why you think that.
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.
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.
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Sorry, I'm mistaken, it must've been those reports of Gates attending law school that threw me.
*Repent!Quit Your Job!Slack Off!The World Ends Tomorrow and You May Die!
Amazon may not be a "real" business, but they get a lot more of my money than Microsoft does.
Nobody cares, Sheldon.
*Repent!Quit Your Job!Slack Off!The World Ends Tomorrow and You May Die!
Can you source that?
You cant be hit by an antitrust suit before you are a monopoly, and as I understand it they had to establish that in the 2000 MS DoJ case. Im not aware of any DOS antitrust case, nor could I find one googling.
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
Just to be fair microsoft did build MSDOS on top of QDOS, but it was not a simple rebrand. $50k was probably cheap, but it is not like they did not spend months improving it.
That's kind of the point. Just because Amazon doesn't rake in the cash from every line of business is largely irrelevant.
"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.