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Amazon definitely didn’t ignore internal costs when deciding to axe its gaming studio https://www.protocol.com/amp/amazon-bad-at-games-2646952917 https://www.p

Amazon definitely didn’t ignore internal costs when deciding to axe its gaming studio https://www.protocol.com/amp/amazon-bad-at-games-2646952917 https://www.protocol.com/amp/amazon-bad-at-games-2646952917 Neither is Disney ignoring transfer cost between Disney Studios and Disney+. Management accounting takes into account opportunity costs.

lotsofpulp 3y ago
The difference is they can choose to ignore it if it is accomplishing some purpose, such as being a loss leader to gain marketshare.
- maccard 3y ago
  Have you any examples of this happening? Because every experience I've seen points to sweetheart deals (such as android + spotify) but internal teams have to play by the normal rules.
  - deleted 3y ago
    [deleted]
  - lotsofpulp 3y ago
    https://www.wsj.com/tech/ai/ais-costly-buildup-could-make-early-products-a-hard-sell-bdd29b9f https://www.wsj.com/tech/ai/ais-costly-buildup-could-make-ea... >Individuals pay $10 a month for the AI assistant. In the first few months of this year, the company [Microsoft] was losing on average more than $20 a month per user, according to a person familiar with the figures, who said some users were costing the company as much as $80 a month. Who knows if Apple is earning a profit on its Music + Classical Music apps or whatever else it bundles into its products. Maybe they consider it to be a small enough loss to offset the chance that a customer buys an Apple One bundle, which then makes up for the loss because the margins on cloud storage are much higher.
    - smugma 3y ago
      Apple is known for insisting on a positive margin on its individual products. $59 Siri Remote, $179 Apple TV, etc.
      - ffgjgf1 3y ago
        For physical products, which makes sense. I can’t imagine Apple TV+ was (or probably still is) at all profitable (especially considering how low the monthly fee was and all the promotions at the beginning).
        smugma 3y ago
        TV+ is a good counter point. Apple is going into content creation, which has huge upfront costs. Streaming music is not like streaming TV.
    - maccard 3y ago
      Theres a big difference between allowing a project to run at a loss over the short term (the article says first few months of this year), and using a different business vertical to allow an unprofitable venture to proceed.

lotsofpulp 3y ago

The difference is they can choose to ignore it if it is accomplishing some purpose, such as being a loss leader to gain marketshare.

maccard 3y ago
Have you any examples of this happening? Because every experience I've seen points to sweetheart deals (such as android + spotify) but internal teams have to play by the normal rules.
- deleted 3y ago
  [deleted]
- lotsofpulp 3y ago
  https://www.wsj.com/tech/ai/ais-costly-buildup-could-make-early-products-a-hard-sell-bdd29b9f https://www.wsj.com/tech/ai/ais-costly-buildup-could-make-ea... >Individuals pay $10 a month for the AI assistant. In the first few months of this year, the company [Microsoft] was losing on average more than $20 a month per user, according to a person familiar with the figures, who said some users were costing the company as much as $80 a month. Who knows if Apple is earning a profit on its Music + Classical Music apps or whatever else it bundles into its products. Maybe they consider it to be a small enough loss to offset the chance that a customer buys an Apple One bundle, which then makes up for the loss because the margins on cloud storage are much higher.
  - smugma 3y ago
    Apple is known for insisting on a positive margin on its individual products. $59 Siri Remote, $179 Apple TV, etc.
    - ffgjgf1 3y ago
      For physical products, which makes sense. I can’t imagine Apple TV+ was (or probably still is) at all profitable (especially considering how low the monthly fee was and all the promotions at the beginning).
      - smugma 3y ago
        TV+ is a good counter point. Apple is going into content creation, which has huge upfront costs. Streaming music is not like streaming TV.
  - maccard 3y ago
    Theres a big difference between allowing a project to run at a loss over the short term (the article says first few months of this year), and using a different business vertical to allow an unprofitable venture to proceed.