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The Fire Phone Debacle and What It Means For Amazon's Future
HughPickens.com points out an article at Fast Company that dug into the creation of Amazon's floundering Fire Phone to figure out why the company pushed so hard to bring it to market. The piece is an indictment of Jeff Bezos's determination to make the Fire Phone into a competitor for an already-saturated high-end smartphone market. "This wasn't some vague guideline from an executive busy running other parts of the business; based on interviews with more than three dozen current and former employees, most of whom were deeply involved with the project, the CEO drove every aspect of the phone’s creation from the outset."
Now that Amazon's growth is slowing and profits have yet to be seen, investors and analysts have run out of patience for gambles like this one. "What makes the Fire Phone a particularly troubling adventure, however, is that Amazon’s CEO seemingly lost track of the essential driver of his company’s brand. It’s understandable that Bezos would want to give Amazon a premium shine, but to focus on a high-end product, instead of the kind of service that has always distinguished the company, proved misguided."
Now that Amazon's growth is slowing and profits have yet to be seen, investors and analysts have run out of patience for gambles like this one. "What makes the Fire Phone a particularly troubling adventure, however, is that Amazon’s CEO seemingly lost track of the essential driver of his company’s brand. It’s understandable that Bezos would want to give Amazon a premium shine, but to focus on a high-end product, instead of the kind of service that has always distinguished the company, proved misguided."
> "but to focus on a high-end product, instead of the kind of service that has always distinguished the company, proved misguided."
What service suffered as a result of this? The product ended up not being what was desired by the public, but what specifically would have fixed this? Just saying "with 20-20 hindsight, that wasn't a good use of your time" is meaningless. When you have built a multi-billion dollar business, you can claim that you have better judgement, until then you are just making noise
David Lang
Amazon has tried to create their own product lines with the Kindle and Fire branding, but unlike Sears' branding for Craftsman and Kenmore, the Kindle and Fire devices are less ends, and more means, at least in my eye, and when they hamstring the phone version by basically taking everything useful out of Android that made it popular (ie, Google's through-the-internet connectivity for 'cloud' stuff) they take away most of the means for which I would use the device.
I honestly don't care what brand of smartphone I have any more than I care what brand of business computer I have at work, in that the phones I buy run vanilla or close-to-vanilla Android, and the computers my work supplies for me generally run Windows, or I install Linux on them myself. The Fire Phone isn't really Android in that what I want to use Android for isn't there, and the experience would be just as foreign to me as using an iPhone or a Blackberry or a Windows phone.
Amazon over-valued their own brand. Amazon is a service more than a product, and attempting to be a product hasn't worked as well for them as they expected.
Do not look into laser with remaining eye.
They risked a gamble, so what. Companies build products that fails - it's not even a headline. Amazon built something that people think is a failure, then everyone went to bed, woke up the next day and everyone moved on.
My ism, it's full of beliefs.
I was an an engineer in that team during the first incarnation of the project. The article is very very inaccurate.
- team was not scrapped by jeff, at least not until large number of people walked out due to mismanagement
- prototypes that worked (and were of phone size & shape) existed more than 2 years before launch but then (as mentioned) team walked and it all had to be scrapped
- hw team often undercut sw team by replacing components and not telling anyone about it
- hw team often made mistakes of the very basic variety (two separate sets of pull-ups on a single i2c bus)
- some parts choices were motivated by personal interests of people in the hw team, even against their own data & analyses. This was allowed to proceed
- some of the management made the team look very foolish in front of vendors (asking questions that made no sense in the current millennium)
- sw team was kept busy by endless meetings with no end in sight, which significantly cut into any chance of productivity
At this point in Amazon's key markets such as the US there is no Pepsi to Amazon's coke. This is actually a dangerous thing for a large company for they could start attributing their wild success to all kinds of the wrong things including simply a divine blessing. The risk for Amazon is that if this situation continues for too long that the competitor won't simply be competitive but will actually leverage any weaknesses that Amazon develops.
For instance I heard a rumour that Microsoft wanted to really take on Word Perfect. So they looked at WP's finances and realized that WP was not a lean company at all. Yet profit margins were really slim. So Microsoft didn't need to really go head to head with WP in all markets in a giant slug fest but that they only needed to reduce WP's revenue by 5% which would mean they would start taking losses. So MS found the easiest 5% to go for and took it with ease. Then with WP on the ropes MS was able to clean up the other 95%.
I also read that in the early days of MS getting into the C++ IDE world that they couldn't make any headway against Borland C++. So a new guy running the C++ project asked the marketing people what C++ programmers wanted; which turned out to be templates. But those were the elite of C++ programmers. So he re-asked the question to the typical C++ programmer and they said that they wanted to find an easy way to make Windows programs (windows was new and much programming was still in DOS at the time). So he released VisualStudio 1.0 which had easy wizards to get a windows program up and running and it was years before VS eventually got around to noodling with templates. But I remember the last version of Borland C++ that I used was all blah blah blah about their wonderful implementation of templates.
So I see Amazon as Borland C++ or Word Perfect 4.2. They are kings of their universe and there is no real competitor on the horizon. And then boom headshot and they were gone. I am certain that if you went to a tech conference 6 months before each of these two products died and suggested that in 2 years the products wouldn't basically be in use that people would have laughed you out of the room.
So at this point Amazon looks eternal and each of their many many mistakes seem to be tolerable. But I will give an example of a WP mistake. They were slightly worried about MS Windows and this crappy little word product. So they thought by dragging their feet with on Windows version that they stood a chance of actually killing windows entirely and keeping the world on DOS. I suspect that many seemingly smart executives nodded approvingly at this brilliant plan.
Some 33% of the fortune 400 have inherited their wealth. All six children of Sam Walton are in fortune 400. The Koch brothers, for all their manipulation and access to the government would have more money if they had just invested their inheritance in index funds.
People without inheritance, even if they make it to top 1% by income, most of them will not be able to accumulate to make it to top 1% by net worth. Of the 97% of the Americans who don't inherit much, about 2% barely make it to a million net worth including their home equity. It takes 4 million to crack the 1% by networth mark. These low end millionaires with home equity are what counted to tout "95% of the millionaires are self made". Most of the people below the fortune 400 but in the top half of the 1% are all inheritors, with more than 15 million dollars of financial net worth. Working stiffs never get a shot at getting there.
These trust fund babies are not as smart as their daddy or mommy who made the dough. How many children of Nobel prize winners win Nobel prizes? It is called regression to the mean, and these trust fund babies are below average. They control some 50% of all the investments. They reward loyalty not competence. That misallocation of capital is detrimental to all of us. We need to tax estates with more than 5 million dollar worth significantly.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
Shares outstanding 2/18/2004: 404,330,593
Shares outstanding 1/22/2009: 428,583,135
Shares outstanding 1/17/2014: 459,264,535
Shares outstanding 10/17/2014: 463,006,452
The increases have virtually entirely been based on stock-based compensation to employees or stock issued as a method of acquiring other businesses. There have been no "stock sales to pay off existing shareholders".
Retained earnings at 9/30/2014: $1,735,000,000, i.e. inception to date they have accumulated more net income than net losses (albeit fairly thin compared to the sheer volume of revenue). They have indeed "turned a profit".
Meanwhile, they are fairly liquid depending on the time of year you look at them (they tend to be flush with cash right after Christmas, imagine that) and had added almost $5 billion in infrastructure between 12/2013 and 9/2014 alone, mostly with cash.
It's fine to hate on teh evil corporations but you should at least accuse them of things they actually do instead of things they don't (no pyramid schemes).