Slashdot Mirror
Amazon's Echo Chamber
An anonymous reader writes: The announcement this Thursday of another dubious piece of hardware from Amazon led Dustin Curtis to write an article critical of Amazon's hardware strategy, saying the company just doesn't understand what makes a device good or bad. Curtis says, "With Amazon.com, it can heavily and successfully promote and sell its products, giving it false indicators of success. It's an echo chamber. They make a product, they market the product on Amazon.com, they sell the product to Amazon.com customers, they get a false sense of success, the customer puts the product in a drawer and never uses it, and then Amazon moves on to the next product. Finally, with the Fire Phone, customers have been pushing back.
The media strategy that seems to be driving Jeff Bezos to make mobile consumption devices (with Amazon's media stores and Prime video/music) is flawed. No one makes money selling media for consumption anymore. That market is quickly and brutally dying. The media market is now so efficient that all profit is completely sucked out of the equation by the time you get to the consumption delivery system, to the point that it is barely possible to break even."
The media strategy that seems to be driving Jeff Bezos to make mobile consumption devices (with Amazon's media stores and Prime video/music) is flawed. No one makes money selling media for consumption anymore. That market is quickly and brutally dying. The media market is now so efficient that all profit is completely sucked out of the equation by the time you get to the consumption delivery system, to the point that it is barely possible to break even."
Re: Cable Cutting
The Amazon FireTV (the full size square, not the HDMI dongle) is a fantastic device for $99 and XBMC has native support for it now. Once you bump the buffer from 20MB to 500MB and remove the bandwidth cap XBMC + Amazon Fire TV is a fantastic device for streaming the largest uncompressed 1080p video. It also handles your standard 100MB-4GB video files without cache modification as well. Also it does stuff like Netflix, Amazon Prime (aka HBO), most Android apps (like BombSquad, a Smash Brothers clone), you can side-load APKs without rooting it etc etc Amazon did a great job with the device and I use it daily instead of owning a cable box.
Absolutely zero interest in an Amazon branded phone though. I heard their Fire Tablet or whatever was pretty fantastic for the time but the market has moved on and even the $79 chinese branded tablets are competitive these days for most users.
moox. for a new generation.
Not when they first started.
Amazon (under Bezos' leadership) has made enormous amounts of money where no one thought there would be money.
They've made enormous amounts of revenue. It has never made consistent profits.
SJW n. One who posts facts.
Amazon directly or indirectly employes around 100,000 people. The have revenue to pay those people, as well as revenue to develop other products, which are somewhat successful. The Fire line of tablets, for example, provided much more compelling competition to the iPad than the MS Surface. Bezos himself has made a lot of money. There is the question of profit, however. As a public company who wants stock value to go up, profit is important. OTOH large profits are not critical to a company that consistently has cash flow and sales. In most cases profits can manipulated to make then look larges or smaller, depending on the fiduciary priorities. This is not ta say that Amazon is not making a bunch of crappy products, only to say that many people take an extremely simplistic and gullible view of statements such as these.
"She's a scientist and a lesbian. She's not going to let it slide." Orphan Black
Amazon devices sales are terrible because they don't have Google Play app marketplace. End of story. Everyone who wants to get locked in to a content ecosystem where they are forced to buy devices from one source already owns Apple products. Amazon devices are a media appliance, not computing devices. They have a shitty app store. That isn't going to change any time soon. An Amazon Tablet or Phone is only useful as a portal in to Amazon Prime and Kindle content. It's 1 dimensional. Why would anyone want to own one when they can buy a Nexus phone and tablet and get Google Play AND Amazon Kindle AND Amazon Prime AND Barnes & Noble?
I love Amazon, do 100% of my purchasing of physical goods via Prime. I get 25% of my print media through Amazon because their DRM makes it difficult for me to transfer their content in to my preferred ereader app: Google Play Books. I have a digital bookshelf in one place and I don't want to have to search through 3x different apps to remember where I purchased my ebook.
I could write words on this topic, but these words are better than mine would be:
http://www.eugenewei.com/blog/2012/11/28/amazon-and-margins
http://ben-evans.com/benedictevans/2014/9/4/why-amazon-has-no-profits-and-why-it-works
For investors, understand that not getting dividends from profits is not the same thing as not getting ROI. When you own stock in Amazon, and Amazon builds more of itself, then you own stock in more Amazon, and so your stock becomes more valuable. Also, that increase in value of the stock is considered to be capital gains, whereas money that would come from dividends is considered to be income, which is taxed at a higher rate than capital gains. These words may serve to illustrate this better than mine:
http://www.stocksplithistory.com/amazon-com/
Amazon has low profit *compared to its size and revenue*, but a mom and pop corner store with this kind of profit would be astounding.
Here's their past few years:
http://investing.businessweek....
2010: 1.15 billion
2011: 631 million
2012: loss of 39 million. So admittedly, Mom & Pop would be in trouble if they started in 2012.
2013: 274 million.
I would love to have a mom and pop store that made approximately 2 billion dollars profit in the past four years.
Now, this year looks like it might be another loser year, but it's hard to tell because the xmas season tends to be disproportionately profitable. They do operate right on the knife's edge, playing the long game that we so often say that companies can't bring themselves to do. But the way you write that makes it sound like they have a lifetime and yearly net loss, and no, Amazon is overall much more profitable than a mom and pop corner store.
Measures like return on assets could be another story.