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Amazon’s New Customer
- bipson 9y agoI had to exit at this quote: Apple’s goal was not to build a phone but to build an even more personal computer; their strategy was not to add on functionality to a phone but to reduce the phone to an app; and their tactics were not to duplicate the carriers but to leverage their connection with customers to gain concessions from them. I disagree here, this is hindsight and speculative, and the provided link is from 2013. The initial iPhone did not come with a market (the 'iTunes App Store') and AFAIK we don't know for sure if it had been planned from the beginning to pan out the way it did. I am not trying to play down the success of the iPhone and how it has changed the world. Yes, it was incredibly successful, yes it all panned out nicely. I am just questioning if it was all planned to come out exactly this way from the beginning, or maybe there were some decisions made after initial success and someone came up with even better ideas.
- awjr 9y agoSteve Jobs was absolutely dead set against 3rd party apps in the app store, which was one of the reasons the iPhone became such a huge phenomenon. http://www.cultofmac.com/125180/steve-jobs-was-originally-dead-set-against-third-party-apps-for-the-iphone/ http://www.cultofmac.com/125180/steve-jobs-was-originally-de...
- qeternity 9y agoThis was also the driving force behind the early jailbreaking efforts, because there wasn't a way to run ANY native code, be it Apple approved or otherwise.
- jimbokun 9y agoInteresting: “partly because he felt his team did not have the bandwidth to figure out all the complexities that would be involved in policing third-party app developers.” So the App Store model answered his objections. It's clear from the quotes in that article, he did want apps, but thought web development technologies would be sufficient. When that turned out not to be the case, looks like they turned to the App Store model so they could lock down the experience and keep the same degree of control as for web apps.
- ganoushoreilly 9y agoI agree, one would have to argue that concepts may have been there for some of the developers and engineers, but it's be recorded that Steve wasn't too fond of the idea. As with most products, it's been iterative improvements, that have made it the behemoth it is today.
- webwielder2 9y agoA computer with apps from only one vendor is still a computer (unless you prescribe to the ideological notion that a "computer" must be "open" somehow).
- webwielder2 9y agoTo say nothing of the fact that from day one the iPhone had a best-in-class web browser. It's funny how the iPhone has been continually derided for not being open enough while having full access to the open web, the platform that is routinely held up as the future of computing by those who think local binaries are a relic of the past who also deride the iPhone for not being open enough.
- detaro 9y agoPartially because it's lagging behind in "open-web technologies", although it's fair to question if all of those are really as necessary. (Which wouldn't be an issue if you could install an alternative browser (edit: rendering engine) on it, but it's not open enough for that)
- encoderer 9y agoLook man, you can have any browser you want, as long as its Safari.
- MBCook 9y agoYou're right. It's too bad we don't have all those great web browsers that existed on phones before. I remember how great PocketIE was. The Opera thing that sent down screenshots? The joys of WAP? People complain about Safari but it was a REVOLUTION compared to what was available before.
- detaro 9y agoI was strictly talking about the criticism now, not back then (I mean, Apple briefly tried to champion the web-only approach some of those critics now advocate and see Safari as in the way of. We'll see if it has more success this time)
- zinckiwi 9y agoThe phone was always one app among many, even before the platform was opened to third parties.
- d0ne 9y agoWas in an audience when Mark Benioff discussed Steve Jobs coming to him to acquire AppStore.com as Mark owned it at the time. Apparently Mark and Steve discussed this concept very early on. Just did a whois history search on the domain and it changed hands from SFDC -> Apple on 03/19/2009
- rgbrenner 9y agoThat's over 2 years after the iPhone announcement in jan 2007 at Macworld.. about 1 year before the AppStore launched
- petra 9y agoBen Thompson(the author of stratechery) is a smart guy, but his free articles, even though that they seem deep, do lack domain/technical knowledge. I've noticed that on the subjects of self-driving-cars, car-sharing and now on logistics/delivery/e-commerce - notice how abstract and detail free this article is. But actually, that could be a great content authoring strategy: create a really good, smart name for yourself. write articles that the smart people of the internet like to read. give them the wrong answer, they will be forced to correct you. collect replies(including those from you your closed forum) and grab the right answer. publish and charge. Don't know if that's the strategy. But it could work.
- Analemma_ 9y ago> give them the wrong answer, they will be forced to correct you. Before Stack Overflow, the savvy knew that this was a great way to get help with anything Unix-related. If you just went to Usenet or mailing lists and asked "how do I X?", you'd be pummeled by uppity greybeards going "RTFM, n00b". Ah, but if you created a sockpuppet and posted the wrong answer in reply to your question, then you'd be guaranteed to get useful advice.
- sah2ed 9y agoYep, that's definitely Cunningham's Law [0] in action. [0] https://en.wikipedia.org/wiki/Ward_Cunningham#Cunningham.27s_Law https://en.wikipedia.org/wiki/Ward_Cunningham#Cunningham.27s...
- 9y ago
- TallGuyShort 9y agoI distinctly remember the way Steve Jobs presented it: "It's a phone, it's an iPod, and it's an Internet communications device." That just comes off to me as though even he didn't realize how ubiquitous phones would become, and how integral to our lives they would become, even replacing computers for so many tasks. It's my phone, my iPod, my work outside of office hours, schedules and times my workouts, my alarm clock, my camera, my GPS and mapbook, my library, my notebook, my flashlight, my scanner, my TV, the way I look at cat pictures and the way I look up where to find an AED in an emergency.
- visakanv 9y ago"There will be web dialtone everywhere." – Steve Jobs, 1996 – https://www.wired.com/1996/02/jobs-2/ https://www.wired.com/1996/02/jobs-2/
- nickpsecurity 9y agoI found the school voucher idea to be the best part of that article. I didn't know the cost was so close for some of those public and private schools: "I have a 17-year-old daughter who went to a private school for a few years before high school. This private school is the best school I've seen in my life. It was judged one of the 100 best schools in America. It was phenomenal. The tuition was $5,500 a year, which is a lot of money for most parents. But the teachers were paid less than public school teachers—so it's not about money at the teacher level. I asked the state treasurer that year what California pays on average to send kids to school, and I believe it was $4,400. While there are not many parents who could come up with $5,500 a year, there are many who could come up with $1,000 a year. If we gave vouchers to parents for $4,400 a year, schools would be starting right and left. People would get out of college and say, "Let's start a school." You could have a track at Stanford within the MBA program on how to be the businessperson of a school. And that MBA would get together with somebody else, and they'd start schools. And you'd have these young, idealistic people starting schools, working for pennies."
- dragonwriter 9y ago
- pizzetta 9y agoFrom what I've heard/read it was basically a play against cannibalization of the mp3 player market by proto smartphones. There were two camps, Steve's which wanted a sleek new form factor without physical keyboard (touch input) rather than the alternate team's approach which was to shoehorn a phone onto an ipod.
- erikpukinskis 9y agoI don't understand the distinction you are drawing. The original iPhone, with the addition of a usable web browser, was a general purpose computer in my mind. Would you not call a ChromeBook a general purpose computer? I realize there is a contingent on HN who doesn't consider a browser to be a valid virtual machine, and doesn't consider anything a real computer unless they have access to a command prompt. But that's a religious conviction, I don't see any principled difference. Let me put it this way: the original iPhone, with only mobile Safari, was a more powerful machine in every way than every computer I owned up to probably 1999 or so, with the exception of screen size. What am I missing?
- khedoros1 9y agoThe hardware is clearly that of a "general purpose computer". The OS and software was/is limited in ways that make me think more of an appliance, though. A complicated, customizable, but purposely limited appliance. I can write a Javascript program, stick it on a web server, and load it in the phone's browser. Why can't I edit it on the phone and just run the program from disk? If I wanted to do so, how would I write a program to let me? I think the core limitations for me are that I don't have direct access to the filesystem, I don't have access to the APIs required to program the device for things that I consider basic capabilities, and the vendor actively fights me being able to do those things. Any holes that they don't hit with OS and API limitations get caught during the app review when you're going to publish your code. Compare to a Chromebook: There's a Google-provided dev mode that lets me install an OS of my choice, and a chroot environment developed by a Google engineer that gives me access to an unrestricted OS running simultaneously on the machine. The command prompt's moot; one could theoretically write a GUI for anything and everything that it provides. The browser's "a valid virtual machine", but there are limitations of what I can do with JS, where I can host it to run the programs, and so on. My 1st gen iPod Touch was cool after I jailbroke it (kind of a wifi-enabled single-board computer). I used to run sshd and rtorrent, and had Perl and a C compiler on it. I do similar things on my Android device running its stock OS.
- bipson 9y agoI clearly presented my argument badly. I was not aiming for the general purpose computer part, but the suggested notion that the now clearly visible impact of the iPhone was intended just that way, as its main purpose, its this-is-all-or-nothing goal. Steve Jobs and Apple in the 200x years clearly were amazing and did wonderful things, but they did not read the future, they went step by step and built on top of what they had. Some things fell into place, some things went different than expected. I can't prove it, but the shift in how we use our phones nowadays was as visible to Steve Jobs as it was to almost anyone in that field. There were predecessors. Multiple. The goal of the iPhone was to sell things, millions if possible. Everything else was in the range of: "Let's see".
- deepGem 9y agoI am struggling to find that article in Vogue or some magazine that gave some inside details of how the iPhone came out. By my recollection, their strategy was definitely not to reduce the phone to an app. The strategy from what I remember was to add a desktop class browser to the phone and remove the limitations of a physical keyboard. Of course these had to be built on a new OS and all that. Oh there was one more - visual voicemail.
- MBCook 9y agoI think the point is fundamentally they were making something that could do way more than make phone calls, where so many other devices on the market were just a phone (or pager) with some extra functionality strapped on. They started from a clean slate.
- sah2ed 9y agoFunny that you didn't even mention RIM's Blackberry which was the dominant device for email on-the-go among busy execs, including, if I'm not mistaken Obama at that time. Jobs was only looking for 10% of the global mobile phone market in the 2007 keynote announcing the iPhone. The iPhone was so well received it demolished Nokia and RIM's dominance in the space of a few years.
- MBCook 9y agoActually BB is why I added the "(or pager)" to my comment. BB was a two way pager (and later email) that they literally crammed audio in to (the first phone version REQUIRED a headset as it didn't have a speaker/mic). They made the mistake everyone did. They made an X and so they tried to cram new things Y and Z into it because they were an X company. And it limited their vision of what they could do.
- Tsiklon 9y agoI'm still waiting on Visual Voicemail to come to my Carrier; i had it on a previous carrier and it was superbly useful.
- Steko 9y agoIf you exited over that you missed a great bit of analysis.
- bipson 9y agoI tried to stick with it, but to me it was too obvious that he is trying to make an argument with mixing hindsight and intention. It might make for a good analysis true, but trying to mask it as "Let me tell you about everyone's intentions, and on the next slide I show you the future" just puts me off.
- Tloewald 9y agoIt was definitely planned as a more personal computer. Bear in mind that the iPad was the original product, and they switched to a phone because the iPad would be too expensive to do at the time. So "phone" is the afterthought.
- bipson 9y agoDo you have a source for that claim?
- abalone 9y ago> I am just questioning if it was all planned to come out exactly this way from the beginning... The article makes no such claim about the iPhone. The only evidence you cite is the app store. That does not refute that Apple intended on building, from the start, a "more personal computer" that "reduces the phone to an app" and "gains concessions from [carriers]". That's exactly what the original iPhone was and still is. It even launched with support for 3rd party (web) apps.
- thirdsun 9y agoI agree. At the time of its initial release the iPhone "simply" was a combination of 3 main ingredients - as repeatedly stated during the presentation: Phone, iPod, Browser. And that was ambitious enough if you consider the flawless execution: While these features have been done before they always felt subpar: Music players as an afterthought and Opera Mini as a state of the art mobile browser. The idea of apps emerged as an obvious next step and always felt like a demand by developers and users rather than something planned long ahead in Cupertino.
- petra 9y agoI'm not from the US so i have never been to whole foods, but isn't the point of whole foods is that you get a totally different selection than other retailers ? and if so, how could it be a customer for regular grocery products ?
- ganoushoreilly 9y agoWhole foods is more about "organic" foods and brands than necessarily a different selection.
- golergka 9y agoWhich makes it even a better (i.e. more hard-to-please) customer from Amazon's perspective.
- alextheparrot 9y agoIt isn't totally different - I can still purchase all my staples, meat, and whatnot there. They do appeal more to more niche dietary habits, such as vegetarian/vegan/no gluten.
- jvagner 9y agoMany of the brands that are dominant in Whole Foods are also available, to some degree or another, in other grocery stores. But Whole Foods has a more targeted sourcing strategy for fresh veggies, fruit and meats. They carry more of those organic brands than the usual grocery store. It's not entirely a "whole 'nother thing" but it is a pretty deep curation of food, food types, brands, and some of the more eclectic, local and smaller food brands. You get used to Whole Foods but when I visit a Safeway or Raley's, I'm pretty shocked what a more traditional, mainstream grocery store looks like. That said, and on an unrelated point... though I buy more from Whole Foods than any other grocery chain, the degree to which all the stores have started to be more like each other and less local-driven has been a little disappointing. The Whole Foods in Flagstaff is much the same as the Whole Foods in Roseville.
- jonnathanson 9y ago
- golergka 9y ago> The cost to build AWS was justified because the first and best customer is Amazon’s e-commerce business I've seen statements that AWS wasn't actually used for Amazon own needs (in the beginning) and was developed by a different team at least a couple of times, here on HN and elsewhere. Were these rumors false?
- petra 9y agoI've seen similar statements. Btw, even without a perliminary big customer at start, when it started, AWS offered a phenomenal and unique capability for developers, that price didn't matter(to an extent), and hence scale probably didn't matter much. So i'm not sure if this "big customer" theory is correct.
- visakanv 9y agoHistory is always a little murkier than stated – it probably started out as something and then found its 'product/market fit' serving Amazon. Steve Yegge's famous essay covers it quite well, I think: https://plus.google.com/+RipRowan/posts/eVeouesvaVX https://plus.google.com/+RipRowan/posts/eVeouesvaVX > So one day Jeff Bezos issued a mandate. He's doing that all the time, of course, and people scramble like ants being pounded with a rubber mallet whenever it happens. But on one occasion -- back around 2002 I think, plus or minus a year -- he issued a mandate that was so out there, so huge and eye-bulgingly ponderous, that it made all of his other mandates look like unsolicited peer bonuses. His Big Mandate went something along these lines: 1) All teams will henceforth expose their data and functionality through service interfaces. 2) Teams must communicate with each other through these interfaces. 3) There will be no other form of interprocess communication allowed: no direct linking, no direct reads of another team's data store, no shared-memory model, no back-doors whatsoever. The only communication allowed is via service interface calls over the network. 4) It doesn't matter what technology they use. HTTP, Corba, Pubsub, custom protocols -- doesn't matter. Bezos doesn't care. 5) All service interfaces, without exception, must be designed from the ground up to be externalizable. That is to say, the team must plan and design to be able to expose the interface to developers in the outside world. No exceptions. 6) Anyone who doesn't do this will be fired. 7) Thank you; have a nice day!
- alextheparrot 9y agoI think this article hits the nail on the head. When I use a grocery app, I'm usually shopping at Whole Foods. By modifying the structure so that delivery is a feature (Much like Prime), instead of a separate good, they'll be able to take most of the current players in the space to the cleaners.
- deleted 9y ago[deleted]
- moomin 9y agoThis whole article seems predicated on a couple of misconceptions. To whit: 1) getting bought out is losing 2) buying is winning. The fact that Amazon has more money than Whole Foods is nothing to do with its performance in the groceries market. The fact that Amazon has bought Whole Foods suggests, in fact, that they think there's value to be had there that isn't reflected in their current market capitalisation. And none of this actually means that the Whole Foods acquisition will work. It sounds like a good idea, and I wouldn't risk money betting against Jeff Bezos but Amazon aren't a dominant player in the groceries market yet. They've just bought one of the few successful insurgents. In short, this is just a move in the game. Calling the match is pretty premature.
- majewsky 9y ago> The fact that Amazon has bought Whole Foods suggests, in fact, that they think there's value to be had there that isn't reflected in their current market capitalisation. Not necessarily. They might be thinking that WF's value can be increased by integrating it with Amazon, making its market cap smaller than its actual value conditional on the acquisition.
- moomin 9y agoTrue, but that's typically a big bet. Very few acquisitions go smoothly. Put it this way, imagine the same article being written about the Tumblr acquisition. It's unclear why he believes Whole Foods constituted an obstacle to Amazon, either. As I say, I'm not betting against Bezos. But not every move he makes is genius, and it's currently too early to call. And groceries are _hard_: history is littered with successful firms and their disastrous expansions. Heck, I remember reading articles about why Apple's new "physical stores" strategy was doomed to failure.
- cpr 9y agoI think you missed the point of the article, which was that buying Whole Foods had nothing to do with winning or losing, but with providing a first, best customer for their grocery sales efforts.
- dsjoerg 9y ago
- meredydd 9y agoThis deal is Venmo for groceries. A tech company is filling an obvious hole in an established industry - where in many other countries, the incumbents have been flexible enough to do it themselves. Amazon has reached the conclusion British supermarkets reached over a decade ago: The sensible way to run a perishable goods supply chain is through an existing network of grocery stores. While WebVan was crashing and burning, Tesco (biggest supermarket) was building out a home delivery service using their shops as "free" fulfilment centres. Tesco Direct launched so early, their original client wasn't even a website - it was a desktop Windows application! This is another odd market where somehow the US incumbents seem unable to implement an obvious feature that is common in other countries. Eventually a middleman (Instacart for food, Venmo for money transfer) do it for them - and take a cut on the way. I wonder why this happens?
- dmix 9y ago> This is another odd market where somehow the US incumbents seem unable to implement an obvious feature that is common in other countries. What other examples are there? We have had online grocery delivery in Canada called Grocery Gateway [1] for a decade or longer. It's run by our biggest grocery company as well. The business seems to be doing fine but it's still very much niche and most people don't know a lot about it. I assumed the US had a few local companies doing the same there. The difference is that these are not anywhere near the scale of what Amazon could do with groceries at a national country wide scale. Overall I don't think Tesco vs Amazon is a really accurate comparison. It sounds more like all of those people who said "Nokia had smartphones way before Apple! This isn't new." Or comparing a taxi company having a mobile app to book a ride vs Uber. Or Couchsurfing vs Airbnb. Etc, etc. There are tons of examples. There is still a huge amount of potential to replace grocery stores with ecommerce and so far only minor attempts have been made. [1] https://www.grocerygateway.com/store/ https://www.grocerygateway.com/store/
- apeace 9y agoIMHO the three biggest challenges have been cost, accuracy, and quality. We have a lot of options for this in NYC: PeaPod by Stop N' Shop, Instacart, Fresh Direct, and Whole Foods has its own delivery service. I've tried them all. I REALLY want to stop going to the grocery store. But with all of them, I've found: * The price is too high to justify it. Walking down the corner to the grocery store is not that big a deal. * You don't always get everything you ask for. They run out of stock of things, or forget things. So you often end up missing that one crucial ingredient. * Sometimes they don't give you the quality you're looking for. Maybe the bananas or avocados are either unripe or too ripe. A couple services ask you the preferred ripeness, but then they don't end up having that so they give you a different ripeness. * Back on the pricing: I personally tend to buy only 2-3 days of food at a time, because I want it to be fresh. If I want baked cod on Friday night, I generally want to buy it Thursday or Friday. But since I'm paying a premium for my delivery, it makes more sense to batch it into bigger orders, which doesn't work for me.
- inthewoods 9y agoI generally like Stratechery articles - but I found this one stretching to make everything fit into a nice, neat box - particularly the comparison of AWS to the Grocery business. I found the graphics representing rather incomprehensible (perhaps I'm simply not bright enough to get them) and it feels like someone looking for a grand unifying theory of Amazon, as opposed to something simple: the grocery business is huge ($900b/year), Amazon wants to be a part of that channel. It's basically doing the opposite of Walmart. If there is a grand unifying theory of Amazon, I think it is also pretty simple: start with a specific niche in a category, dominate that and then grow. But that is hardly a unique approach in business. Amazon does, however, execute it extremely well.
- Spooky23 9y agoThompson is good, but he gets blinders on for some things. Last year, Uber was going to be blowing our noses for us. I'd love to hear a devils advocate POV about Amazon from Ben.
- geodel 9y agoWith your hints Thompson can come up with a strategy of a Global Nose Blowing Service. It can explain with neat diagrams how previous attempts failed and why in mid to long term most people on planet are going to use a modularized GNBS instead of doing it in old fashioned way.
- jimbokun 9y ago"the grocery business is huge ($900b/year), Amazon wants to be a part of that channel." I think that fits with his analysis. His take on Amazon is they want a small piece of every single economic transaction, literally. So he is predicting Amazon's end goal isn't to make Whole Foods into the dominant grocery chain. But to insinuate themselves so they have a cut of every grocery transaction, whether it's Whole Foods or any other grocery store making the final sale to the customer.
- inthewoods 9y agoOh I agree - but I think his attempts to link that idea back to a grand unifying theory of Amazon, for me, just seemed forced.
- abalone 9y agotl;dr: Amazon will "transform the Whole Foods supply chain into a service architecture based on primitives," using the stores as customers that guarantee a necessary level of scale. I think this is basically true. Amazon will refactor Whole Foods' supply chain into something that serves both Amazon Fresh and the retail stores. This will allow Fresh to scale massively and dominate the category. I would just emphasize that Amazon probably has more interest in Whole Foods then merely a guaranteed "customer". Whole Foods is bringing a lot of local supply chain relationships to the table. But I agree 100% it's about the supply chain and not transforming retail stores into delivery hubs or anything silly like that. It won't hurt that the stores will freely promote Amazon Fresh and serve as great venues for sampling new products. But Amazon's goal here is to take over the category by massively scaling Fresh.
- pavement 9y agorefactor Geeze, I hope it compiles okay.
- taylorhou 9y agointeresting quote regarding amazon's updated mission statement to be earth's most consumer-centric company where folks can discover things to buy. I wonder what buying a house/home on Amazon would be like.
- adreamingsoul 9y agoIMO, any blog or news article that was written AFTER Amazon has been in the news are simply trying to ride the press wave. I especially find it tickling when most of the authors have no prior work experience or affiliation with any business of Amazon.
- inthewoods 9y agoI'm wondering if Amazon will attempt to buy something like Costco or Bestbuy. Then they'd have both ends of the market and also have the ability to connect the big box to the relatively smaller box.
- yodon 9y agoI was surprised Stratechery didn't talk more about the warehousing side of the grocery industry, which is a huge business unto itself. Given the huge scale of Amazon's fulfillment centers, those are the businesses I would think should be the most afraid of this news.
- rmason 9y agoMy biggest take away is that Amazon will use these stores to take on the restaurant supply business. I'm willing to bet the CEO of Gordon Food Service, which covers eastern US, is clueless on how his company's fortunes are imperiled.