10 ms·

Nobody Seems to Understand What Jeff Bezos is Doing. Does He?

94 points by suprgeek 14y ago

DiabloD3 14y ago
The rule on headlines that ask questions: If a headline is asking a question, the answer is no. This has unfortunate implications for Jeff Bezos.
- mindstab 14y ago
  Might it more be that "the answer [the author believes] is no" which is only unfortunate if you believe the author in this case to be smarter or know something secret about Jeff Bezos. Since Jeff was ahead of the curve with the online book company and then again ahead of the curve with the internet architecture (AWS,EC2 etc) thing I'd say he's pretty bright and just because some semi technical author can't figure it out doesn't mean that the authors conclusion is correct.
  - kefs 14y ago
    Jeff Bezos is a brilliant mind and I'm thankful for all of his innovations within the tech community, but what interests me most is his 10,000 year clock project currently under development in a Nevada/Texas mountaintop. http://longnow.org/clock/ http://longnow.org/clock/ http://www.wired.com/gadgetlab/2011/06/10000-year-clock/all/1 http://www.wired.com/gadgetlab/2011/06/10000-year-clock/all/...
    - grey-area 14y ago
      The Long Now foundation was not started by Jeff Bezos, or run by him, I think it was founded by Danny Hillis and others, though they do have funding from Bezos and I think they're building it on his land.
      - kefs 14y ago
        > This Clock in the Mountain is being funded and built on property owned by Jeff Bezos, the founder and CEO of Amazon.com. > Bezos is also active in designing the full experience of the Clock.
        grey-area 14y ago
        Thanks for repeating what I told you by quoting the website. The long now foundation had this idea and the plans for the clock long before bezos gave them lots of money, it is not in any sense 'his' project, it's a team effort which started long before he became involved. Haven't read the wired article but I wouldn't use that as a basis for your opinions as wired is not exactly a reliable source. Do some more reading on the website though as it is a fascinating project, in some ways I prefer the Rosetta disk and wish he had taken an interest in that as well. Anyway, this is straying off topic.
  - ableal 14y ago
    > Jeff was ahead of the curve with the online book company That's a popular belief, but it is wrong. Back in 1990 (pre-web) there was an online books company at books.com. It was an outfit in Ohio, which started with telnet access and ordering from their online catalog. Amazon came later and executed better. Books.com was sold to B&N around 2000, if memory serves.
graeme 14y ago
The author misses one big implication of Amazon Prime: it's an invitation to start routing thousands of dollars in annual spending through Amazon. I'm in Canada. If prime were available here, I would rarely go into a store except for groceries. Most other things I need I would just get shipped to me, much easier that way. Not everyone in the US has figured out that free delivery of supplies is usually easier than driving to the store. But once amazon gets someone inside their ecosystem, it will be much easier to convince them to route more and more purchases through amazon. Given the broad range of amazon's offerings, it's a huge mistake to treat them as a book company, or an e-reader company.
- harlanlewis 14y ago
  This. When I need a new pack of dry erase markers, I spend 45 seconds giving Amazon $5. Two days later, I don't have a dry erase marker problem anymore. I don't really know how I feel about the future world that's created by universal delivery like this, but there's something wonderful about every "pick up x at store" chore being reduced to a few moments.
  - jayzee 14y ago
    please don't do the 'This' thing.
    - deleted 14y ago
      [deleted]
    - swombat 14y ago
      Just do what I do: I reflexively downvote any comment starting with "This[punctuation]". Variations (e.g., used elsewhere in this discussion, "Exactly this.") also get the downvote. If we all do "this", we can perhaps stamp out this annoying habit.
      - bmelton 14y ago
        Y'know, it's funny. I also hate "This" as a usage for, well, anything. Reading this comment made me go look to see what moron posted "Exactly this" only to find out it was me. :-( It gets worse too, now that I think about it, in that I responded to a comment about the article without having read the article. I suppose it's contagious? Ug. Now I'm having a crisis. Either way, thanks for pointing out it, however indirectly.
stcredzero 14y ago
The odds are that Mr. Bezos knows exactly what he's doing. People asked questions like this when Amazon was transitioning from selling books to selling everything. Lots of people at the time thought it was crazy. Now it's recognized as a brilliant move. Ask yourself, how many other things has Amazon done that seemed a bit out there, but turned out to be brilliant moves? How about competing with Apple with a tablet computer? Also ask yourself, how do these crazy or out-there seeming things fit with an overall vision in retrospect? I think the answer is: amazingly well. My best guess is that Jeff Bezos has a roadmap for the next 5 years and vaguer plans for the next 10 or 15. (I happen to know that Intel had a roadmap out to 15 years in the late 90's, so it's not unheard of in tech to plan on this timescale. Probably a good thing to note for serious investors in the stock market.) EDIT: I've said it before on HN -- Bezos is a player of the game at Steve Job's level. He's just not getting up on the really big stage and so avoids becoming a target of celebrity attention.
- AnthonyMouse 14y ago
  I agree that Amazon probably knows what they're doing. Amazon is Internet Walmart. The article seems to say, "Walmart is selling razors and razor blades for less money than the mom and pop store! How can this be a sound business strategy?" More than that, eBooks have no marginal cost outside of the royalty they negotiate with the publisher. If they make Kindles super cheap, and make eBooks super cheap, they own the book market. If they own the market then they can dictate royalties to publishers. ("We've decided to sell your book for $10, so we're going to pay you an amount that makes that retail price profitable for us. Or you can sell your book at Borders... oh wait.") Then they can keep selling eBooks for $10, and do so profitably by paying publishers less. Like I said, Internet Walmart.
  - stcredzero 14y ago
    Amazon is Internet Walmart. Or in other words, Amazon is the ultimate middleman. It's not about ebooks. It's about making Amazon the most frictionless way to buy anything. If they own the market then they can dictate royalties to publishers. If they own the market, they can disrupt the publishers. If I were Amazon, I'd be creating software infrastructure to enable serious businesses to create and market curated collections of content because that's all publishing is in its purest form, be it books, music, or whatever. Distribution is plumbing, and why would someone choose to compete with Amazon on that front?
dfriedmn 14y ago
I'm not sure what's so confusing about this strategy - Amazon certainly wants to make money off selling content, and the fire is a content consumption machine. But, they also know how much extra $ prime users spend, and figured they could convert people to prime users by giving them other stuff. That doesn't mean it's not a product in and of itself - it's just also being used as a marketing channel.
easp 14y ago
In easing this, I couldn't help but think of complicated derivative schemes.
klbarry 14y ago
I know that marketplace sales for Amazon in most categories is growing by 70% per year. That is remarkable.
lnanek 14y ago
Man, whenever me or a family has Prime, amazon is the first place we check. It's a great lock in. The trials and share with family functions help make it viral even. Businesses love subscriptions too. Get paid even when they subscriber doesn't do anything? Yes, please! So now we've combined lock in and subscription. We hear Zynga makes a ton of their profits from whales, so low numbers of prime subscriptions doesn't really scare me. Those are whales. Amazon is a business, if they haven't already figured out this will make money and it doesn't end up making money, they'll stop after a while. Makes plenty of sense to me. This isn't a big deal.
aresant 14y ago
Amazon's mission to me is "Buy anything you want faster and cheaper than anywhere else." I've been long on AMZN stock since an afternoon last year when I got home to a delivery of (a) Baby stuff from Amazon's Diapers.com (b) A handful of SSD drives for our business (c) Light bulbs (d) Chocolate. Whenever something comes up that we need to buy the first thing we do in my house is type in Amazon.com. Everybody that I "infect" with Prime by telling them about it gets hooked nearly as fast. Bezos pushing people to Prime from all sections of the site, as a result, makes me believe Bezos knows exactly what he's doing.
YuriNiyazov 14y ago
What a nasty, nasty article. Jeff Bezos knows exactly what he is doing. Amazon is, at its core, an infrastructure company, much like your plumbing or your electricity, except it's one level above those. It's major offerings are infrastructure for web services, infrastructure for shopping fulfillment, infrastructure for digital publishing, and probably a few others. Sure, it is willing to make money by using its own infrastructure to sell you books, shoes, and industrial supplies. In fact, it built the infrastructure to do that, but even if the lion's share of Amazon's profits right now come from selling over the web to consumers, it is not the business that Amazon wants to be in. Amazon wants you to build a business on top of Amazon where you do the marketing and decide what to sell, but use Amazon's Web Services, Fulfillment, Payments and Digital Delivery to run it.
- shareme 14y ago
  Yuri you are real close to the exact roadmap that Bezos envisions Extend it a little more..not just fulfillment but building the product as well..the whole stack as a Vertical Business Machine to create business..
- m_for_monkey 14y ago
  @shareme, you are hellbanned.
- ippisl 14y ago
  I think what bezos does, is asking: in the e-commerce business, what are the difficult parts and the parts that change less often and how do we make sure that we are the best in every one of them? This is the reason bezos thinks long term. because he can. Some of those parts are:customer trust,the need for computing,fulfillment,delivery,payments and access to targeted eyeballs,all content will be digital, need for marketers(affiliates). Serving as a leading infrastructure platform is a great way to achieve this.It gives you revenues , it puts you under customer pressure and i think the new market dynamics works better for amazon also as an integrated retailer, by letting amazon control prices and service levels and limiting the platform, by decreasing competition to a small number of companies in the industry and by pulling startups towards them. Now combine the (small?)benefit of each platform gives you over competitors, together, and you got a big competitive advantage. On the other hand, having a great platform let's you profit and learn from the things that change fast.
brown9-2 14y ago
The author seems to completely miss the idea that Amazon can still profit by selling e-books to Kindle owners while still giving them one free e-book a month.
- mhb 14y ago
  Also Hunger Games is worth much less than $0.
jakeonthemove 14y ago
Well, I don't know what Bezos is thinking, but he always seems to be right. Amazon in general is one amazing company. I can buy anything from them, and I know they can be trusted, their collection of reviews always help me decide what to get, and I just recently found out about Amazon SES - guess who's moving away from Aweber soon?
SatvikBeri 14y ago
I'm guessing that with the advent of the Kindle, there is a large segment of customers who have a Kindle but not Amazon Prime. Having the lending entices Kindle customers to subscript to prime, which in turn entices them to spend more at Amazon in general.
skarayan 14y ago
Bezos is trying to take over the world, like the guys at Google and Facebook. They are architecting the new world as they envision it. It isn't about just one industry or some obscure way of making profits, it is really about all of it.
sbtest 14y ago
Its only confusing if you still view Amazon as a book retailer or even book + X + Y retailer. They are a retailer of all categories of goods. Using ebooks as a loss leader to dominate a far broader market is a fairly straight-forward strategy.
tmuir 14y ago
Nobody seems understand what Pando Daily is talking about. Do they?
- rbn 14y ago
  The only reason why I clicked this link was because I thought, how is Pando Daily on the frontpage?
- anigbrowl 14y ago
  Yes - itself: http://news.ycombinator.com/item?id=3930700 http://news.ycombinator.com/item?id=3930700
option_greek 14y ago
I will probably grow wings before Bezos makes a dumb business decision.
deleted 14y ago
[deleted]
vbo 14y ago
Amazon is giving away free stuff in order to get you to subscribe. There's nothing novel in this. It gets confusing when you consider the number of businesses Amazon is into and the way they interact. Does Bezos know what he's doing? Yes. A lot of things at once, likely with different levels of confidence and surely with different outcomes, which Amazon will adapt to and evolve into. They aren't afraid of trying things out. What's great about Amazon is that, like Apple, it hasn't settled onto what they do, except what they're doing right now; this isn't an issue with their focus, but evolution.
IsaacL 14y ago
A very dumb article. A shame, as it seems the author did have some interesting insights, but missed the main point completely. Bezos is a very, very smart guy. He's the closest thing we have to Steve Jobs right now. (Though that's not really a fair comparison -- Jobs excelled at product and branding. Bezos isn't as good in those areas, but he has a solid background in finance and tech, and he's far better at strategy. Jobs was a samurai warrior that was so good at swordfighting he didn't need much guile. Bezos is a ninja; not as tough in a straight fight, but he never lets it get to a straight fight.) E-books are a massive growth industry right now. In a growth industry, it's generally strategic to invest heavily in growth at the expense of profit. If you want to have a nice profitable business, within a few years your business will be undermined by the "foolish" guys that burned cash to gain market share. Walmart followed a similar strategy. (Lesson: if you want a nice profitable business, don't enter a new, high-growth market). First the publishers ignored e-books, then laughed at them and hated them. Now they're fighting, and some time in the next two years, Bezos will likely win. When you look at the Kindle strategy, you're looking at a business unit mobilised for war. An army doesn't return a profit until after the land is conquered. I read Bezos' biography recently. From that, and from other comments about the guy, I think the guy is thinking long-term. Not just "a roadmap for the next 5 years and vaguer plans for the next 10 or 15" as another commenter said. I'd guess he has concrete plans out to at least 2030 (though obviously with room for various contingencies and black swan events). His current areas of focus like retail and cloud computing are likely just preliminaries. As one internet commenter put it: "I wouldn't be surprised if Jeff's secret goal is to achieve Singularity in space by 2030. That isn't my guess, but that's the scope you should be considering." Sources: http://www.forbes.com/sites/venkateshrao/2011/12/14/the-amazon-playbook/ http://www.forbes.com/sites/venkateshrao/2011/12/14/the-amaz... http://www.antipope.org/charlie/blog-static/2012/04/understanding-amazons-strategy.html http://www.antipope.org/charlie/blog-static/2012/04/understa...
- quanticle 14y ago
  In a growth industry, it's generally strategic to invest heavily in growth at the expense of profit. If you want to have a nice profitable business, within a few years your business will be undermined by the "foolish" guys that burned cash to gain market share. Walmart followed a similar strategy. Not always. I mean, isn't this the reasoning behind the first dot-com bubble? At some point you have to turn a (operational) profit, and the more money you invest, the more profit you have to turn in order to recoup your investment. First the publishers ignored e-books, then laughed at them and hated them. Now they're fighting, and some time in the next two years, Bezos will likely win. When you look at the Kindle strategy, you're looking at a business unit mobilised for war. An army doesn't return a profit until after the land is conquered. Wars are very risky things. The publishing industry (like the RIAA) isn't very large financially, but is disproportionately powerful politically. It's very possible that the publishing industry will lay legal obstacles that would make Amazon's "conquest" a very expensive affair. Let's remember that wars, historically, have not been profitable enterprises.
larrys 14y ago
"But giving away the razor and the blades in order to make money on a subscription loyalty program as a way to sell everything else?" As reported by CNBC in a recent special about Costco apparently all of Costco's profit is from their annual fees and they claim they break even on actual product sales. Here's an article about that from a different news source: http://abcnews.go.com/blogs/business/2011/10/costco-increases-membership-fee-wholesale-clubs-comparison/ http://abcnews.go.com/blogs/business/2011/10/costco-increase...
deleted 14y ago
[deleted]
joedev 14y ago
Amazon Prime is not about books or Kindles, but everything else you would ever want to buy in all areas of your personal and professional life. That is why Bezos dangles all of these carrots in order to get you to become a Prime member. Bezos clearly knows that he is doing.
ricardobeat 14y ago
It's just NetFlix for books, this ought to be the norm someday. Another idea off my drawing board (or not).
Karellen 14y ago
He's making sure he's the only guy between publishers and readers, creating a simultaneous monopoly and monopsony, locking both sides in with DRM. http://www.antipope.org/charlie/blog-static/2012/04/understanding-amazons-strategy.html http://www.antipope.org/charlie/blog-static/2012/04/understa...

94 points by suprgeek 14y ago

The rule on headlines that ask questions: If a headline is asking a question, the answer is no. This has unfortunate implications for Jeff Bezos.

mindstab 14y ago
Might it more be that "the answer [the author believes] is no" which is only unfortunate if you believe the author in this case to be smarter or know something secret about Jeff Bezos. Since Jeff was ahead of the curve with the online book company and then again ahead of the curve with the internet architecture (AWS,EC2 etc) thing I'd say he's pretty bright and just because some semi technical author can't figure it out doesn't mean that the authors conclusion is correct.
- kefs 14y ago
  Jeff Bezos is a brilliant mind and I'm thankful for all of his innovations within the tech community, but what interests me most is his 10,000 year clock project currently under development in a Nevada/Texas mountaintop. http://longnow.org/clock/ http://longnow.org/clock/ http://www.wired.com/gadgetlab/2011/06/10000-year-clock/all/1 http://www.wired.com/gadgetlab/2011/06/10000-year-clock/all/...
  - grey-area 14y ago
    The Long Now foundation was not started by Jeff Bezos, or run by him, I think it was founded by Danny Hillis and others, though they do have funding from Bezos and I think they're building it on his land.
    - kefs 14y ago
      > This Clock in the Mountain is being funded and built on property owned by Jeff Bezos, the founder and CEO of Amazon.com. > Bezos is also active in designing the full experience of the Clock.
      - grey-area 14y ago
        Thanks for repeating what I told you by quoting the website. The long now foundation had this idea and the plans for the clock long before bezos gave them lots of money, it is not in any sense 'his' project, it's a team effort which started long before he became involved. Haven't read the wired article but I wouldn't use that as a basis for your opinions as wired is not exactly a reliable source. Do some more reading on the website though as it is a fascinating project, in some ways I prefer the Rosetta disk and wish he had taken an interest in that as well. Anyway, this is straying off topic.
- ableal 14y ago
  > Jeff was ahead of the curve with the online book company That's a popular belief, but it is wrong. Back in 1990 (pre-web) there was an online books company at books.com. It was an outfit in Ohio, which started with telnet access and ordering from their online catalog. Amazon came later and executed better. Books.com was sold to B&N around 2000, if memory serves.

graeme 14y ago

The author misses one big implication of Amazon Prime: it's an invitation to start routing thousands of dollars in annual spending through Amazon. I'm in Canada. If prime were available here, I would rarely go into a store except for groceries. Most other things I need I would just get shipped to me, much easier that way. Not everyone in the US has figured out that free delivery of supplies is usually easier than driving to the store. But once amazon gets someone inside their ecosystem, it will be much easier to convince them to route more and more purchases through amazon. Given the broad range of amazon's offerings, it's a huge mistake to treat them as a book company, or an e-reader company.

harlanlewis 14y ago
This. When I need a new pack of dry erase markers, I spend 45 seconds giving Amazon $5. Two days later, I don't have a dry erase marker problem anymore. I don't really know how I feel about the future world that's created by universal delivery like this, but there's something wonderful about every "pick up x at store" chore being reduced to a few moments.
- jayzee 14y ago
  please don't do the 'This' thing.
  - deleted 14y ago
    [deleted]
  - swombat 14y ago
    Just do what I do: I reflexively downvote any comment starting with "This[punctuation]". Variations (e.g., used elsewhere in this discussion, "Exactly this.") also get the downvote. If we all do "this", we can perhaps stamp out this annoying habit.
    - bmelton 14y ago
      Y'know, it's funny. I also hate "This" as a usage for, well, anything. Reading this comment made me go look to see what moron posted "Exactly this" only to find out it was me. :-( It gets worse too, now that I think about it, in that I responded to a comment about the article without having read the article. I suppose it's contagious? Ug. Now I'm having a crisis. Either way, thanks for pointing out it, however indirectly.

stcredzero 14y ago

The odds are that Mr. Bezos knows exactly what he's doing. People asked questions like this when Amazon was transitioning from selling books to selling everything. Lots of people at the time thought it was crazy. Now it's recognized as a brilliant move. Ask yourself, how many other things has Amazon done that seemed a bit out there, but turned out to be brilliant moves? How about competing with Apple with a tablet computer? Also ask yourself, how do these crazy or out-there seeming things fit with an overall vision in retrospect? I think the answer is: amazingly well. My best guess is that Jeff Bezos has a roadmap for the next 5 years and vaguer plans for the next 10 or 15. (I happen to know that Intel had a roadmap out to 15 years in the late 90's, so it's not unheard of in tech to plan on this timescale. Probably a good thing to note for serious investors in the stock market.) EDIT: I've said it before on HN -- Bezos is a player of the game at Steve Job's level. He's just not getting up on the really big stage and so avoids becoming a target of celebrity attention.

AnthonyMouse 14y ago
I agree that Amazon probably knows what they're doing. Amazon is Internet Walmart. The article seems to say, "Walmart is selling razors and razor blades for less money than the mom and pop store! How can this be a sound business strategy?" More than that, eBooks have no marginal cost outside of the royalty they negotiate with the publisher. If they make Kindles super cheap, and make eBooks super cheap, they own the book market. If they own the market then they can dictate royalties to publishers. ("We've decided to sell your book for $10, so we're going to pay you an amount that makes that retail price profitable for us. Or you can sell your book at Borders... oh wait.") Then they can keep selling eBooks for $10, and do so profitably by paying publishers less. Like I said, Internet Walmart.
- stcredzero 14y ago
  Amazon is Internet Walmart. Or in other words, Amazon is the ultimate middleman. It's not about ebooks. It's about making Amazon the most frictionless way to buy anything. If they own the market then they can dictate royalties to publishers. If they own the market, they can disrupt the publishers. If I were Amazon, I'd be creating software infrastructure to enable serious businesses to create and market curated collections of content because that's all publishing is in its purest form, be it books, music, or whatever. Distribution is plumbing, and why would someone choose to compete with Amazon on that front?

dfriedmn 14y ago

I'm not sure what's so confusing about this strategy - Amazon certainly wants to make money off selling content, and the fire is a content consumption machine. But, they also know how much extra $ prime users spend, and figured they could convert people to prime users by giving them other stuff. That doesn't mean it's not a product in and of itself - it's just also being used as a marketing channel.

easp 14y ago

In easing this, I couldn't help but think of complicated derivative schemes.

klbarry 14y ago

I know that marketplace sales for Amazon in most categories is growing by 70% per year. That is remarkable.

lnanek 14y ago

Man, whenever me or a family has Prime, amazon is the first place we check. It's a great lock in. The trials and share with family functions help make it viral even. Businesses love subscriptions too. Get paid even when they subscriber doesn't do anything? Yes, please! So now we've combined lock in and subscription. We hear Zynga makes a ton of their profits from whales, so low numbers of prime subscriptions doesn't really scare me. Those are whales. Amazon is a business, if they haven't already figured out this will make money and it doesn't end up making money, they'll stop after a while. Makes plenty of sense to me. This isn't a big deal.

aresant 14y ago

Amazon's mission to me is "Buy anything you want faster and cheaper than anywhere else." I've been long on AMZN stock since an afternoon last year when I got home to a delivery of (a) Baby stuff from Amazon's Diapers.com (b) A handful of SSD drives for our business (c) Light bulbs (d) Chocolate. Whenever something comes up that we need to buy the first thing we do in my house is type in Amazon.com. Everybody that I "infect" with Prime by telling them about it gets hooked nearly as fast. Bezos pushing people to Prime from all sections of the site, as a result, makes me believe Bezos knows exactly what he's doing.

YuriNiyazov 14y ago

What a nasty, nasty article. Jeff Bezos knows exactly what he is doing. Amazon is, at its core, an infrastructure company, much like your plumbing or your electricity, except it's one level above those. It's major offerings are infrastructure for web services, infrastructure for shopping fulfillment, infrastructure for digital publishing, and probably a few others. Sure, it is willing to make money by using its own infrastructure to sell you books, shoes, and industrial supplies. In fact, it built the infrastructure to do that, but even if the lion's share of Amazon's profits right now come from selling over the web to consumers, it is not the business that Amazon wants to be in. Amazon wants you to build a business on top of Amazon where you do the marketing and decide what to sell, but use Amazon's Web Services, Fulfillment, Payments and Digital Delivery to run it.

shareme 14y ago
Yuri you are real close to the exact roadmap that Bezos envisions Extend it a little more..not just fulfillment but building the product as well..the whole stack as a Vertical Business Machine to create business..
m_for_monkey 14y ago
@shareme, you are hellbanned.
ippisl 14y ago
I think what bezos does, is asking: in the e-commerce business, what are the difficult parts and the parts that change less often and how do we make sure that we are the best in every one of them? This is the reason bezos thinks long term. because he can. Some of those parts are:customer trust,the need for computing,fulfillment,delivery,payments and access to targeted eyeballs,all content will be digital, need for marketers(affiliates). Serving as a leading infrastructure platform is a great way to achieve this.It gives you revenues , it puts you under customer pressure and i think the new market dynamics works better for amazon also as an integrated retailer, by letting amazon control prices and service levels and limiting the platform, by decreasing competition to a small number of companies in the industry and by pulling startups towards them. Now combine the (small?)benefit of each platform gives you over competitors, together, and you got a big competitive advantage. On the other hand, having a great platform let's you profit and learn from the things that change fast.

brown9-2 14y ago

The author seems to completely miss the idea that Amazon can still profit by selling e-books to Kindle owners while still giving them one free e-book a month.

mhb 14y ago
Also Hunger Games is worth much less than $0.

jakeonthemove 14y ago

Well, I don't know what Bezos is thinking, but he always seems to be right. Amazon in general is one amazing company. I can buy anything from them, and I know they can be trusted, their collection of reviews always help me decide what to get, and I just recently found out about Amazon SES - guess who's moving away from Aweber soon?

SatvikBeri 14y ago

I'm guessing that with the advent of the Kindle, there is a large segment of customers who have a Kindle but not Amazon Prime. Having the lending entices Kindle customers to subscript to prime, which in turn entices them to spend more at Amazon in general.

skarayan 14y ago

Bezos is trying to take over the world, like the guys at Google and Facebook. They are architecting the new world as they envision it. It isn't about just one industry or some obscure way of making profits, it is really about all of it.

sbtest 14y ago

Its only confusing if you still view Amazon as a book retailer or even book + X + Y retailer. They are a retailer of all categories of goods. Using ebooks as a loss leader to dominate a far broader market is a fairly straight-forward strategy.

tmuir 14y ago

Nobody seems understand what Pando Daily is talking about. Do they?

rbn 14y ago
The only reason why I clicked this link was because I thought, how is Pando Daily on the frontpage?
anigbrowl 14y ago
Yes - itself: http://news.ycombinator.com/item?id=3930700 http://news.ycombinator.com/item?id=3930700

option_greek 14y ago

I will probably grow wings before Bezos makes a dumb business decision.

deleted 14y ago

[deleted]

vbo 14y ago

Amazon is giving away free stuff in order to get you to subscribe. There's nothing novel in this. It gets confusing when you consider the number of businesses Amazon is into and the way they interact. Does Bezos know what he's doing? Yes. A lot of things at once, likely with different levels of confidence and surely with different outcomes, which Amazon will adapt to and evolve into. They aren't afraid of trying things out. What's great about Amazon is that, like Apple, it hasn't settled onto what they do, except what they're doing right now; this isn't an issue with their focus, but evolution.

IsaacL 14y ago

A very dumb article. A shame, as it seems the author did have some interesting insights, but missed the main point completely. Bezos is a very, very smart guy. He's the closest thing we have to Steve Jobs right now. (Though that's not really a fair comparison -- Jobs excelled at product and branding. Bezos isn't as good in those areas, but he has a solid background in finance and tech, and he's far better at strategy. Jobs was a samurai warrior that was so good at swordfighting he didn't need much guile. Bezos is a ninja; not as tough in a straight fight, but he never lets it get to a straight fight.) E-books are a massive growth industry right now. In a growth industry, it's generally strategic to invest heavily in growth at the expense of profit. If you want to have a nice profitable business, within a few years your business will be undermined by the "foolish" guys that burned cash to gain market share. Walmart followed a similar strategy. (Lesson: if you want a nice profitable business, don't enter a new, high-growth market). First the publishers ignored e-books, then laughed at them and hated them. Now they're fighting, and some time in the next two years, Bezos will likely win. When you look at the Kindle strategy, you're looking at a business unit mobilised for war. An army doesn't return a profit until after the land is conquered. I read Bezos' biography recently. From that, and from other comments about the guy, I think the guy is thinking long-term. Not just "a roadmap for the next 5 years and vaguer plans for the next 10 or 15" as another commenter said. I'd guess he has concrete plans out to at least 2030 (though obviously with room for various contingencies and black swan events). His current areas of focus like retail and cloud computing are likely just preliminaries. As one internet commenter put it: "I wouldn't be surprised if Jeff's secret goal is to achieve Singularity in space by 2030. That isn't my guess, but that's the scope you should be considering." Sources: http://www.forbes.com/sites/venkateshrao/2011/12/14/the-amazon-playbook/ http://www.forbes.com/sites/venkateshrao/2011/12/14/the-amaz... http://www.antipope.org/charlie/blog-static/2012/04/understanding-amazons-strategy.html http://www.antipope.org/charlie/blog-static/2012/04/understa...

quanticle 14y ago
In a growth industry, it's generally strategic to invest heavily in growth at the expense of profit. If you want to have a nice profitable business, within a few years your business will be undermined by the "foolish" guys that burned cash to gain market share. Walmart followed a similar strategy. Not always. I mean, isn't this the reasoning behind the first dot-com bubble? At some point you have to turn a (operational) profit, and the more money you invest, the more profit you have to turn in order to recoup your investment. First the publishers ignored e-books, then laughed at them and hated them. Now they're fighting, and some time in the next two years, Bezos will likely win. When you look at the Kindle strategy, you're looking at a business unit mobilised for war. An army doesn't return a profit until after the land is conquered. Wars are very risky things. The publishing industry (like the RIAA) isn't very large financially, but is disproportionately powerful politically. It's very possible that the publishing industry will lay legal obstacles that would make Amazon's "conquest" a very expensive affair. Let's remember that wars, historically, have not been profitable enterprises.

larrys 14y ago

"But giving away the razor and the blades in order to make money on a subscription loyalty program as a way to sell everything else?" As reported by CNBC in a recent special about Costco apparently all of Costco's profit is from their annual fees and they claim they break even on actual product sales. Here's an article about that from a different news source: http://abcnews.go.com/blogs/business/2011/10/costco-increases-membership-fee-wholesale-clubs-comparison/ http://abcnews.go.com/blogs/business/2011/10/costco-increase...

deleted 14y ago

[deleted]

joedev 14y ago

Amazon Prime is not about books or Kindles, but everything else you would ever want to buy in all areas of your personal and professional life. That is why Bezos dangles all of these carrots in order to get you to become a Prime member. Bezos clearly knows that he is doing.

ricardobeat 14y ago

It's just NetFlix for books, this ought to be the norm someday. Another idea off my drawing board (or not).

Karellen 14y ago

He's making sure he's the only guy between publishers and readers, creating a simultaneous monopoly and monopsony, locking both sides in with DRM. http://www.antipope.org/charlie/blog-static/2012/04/understanding-amazons-strategy.html http://www.antipope.org/charlie/blog-static/2012/04/understa...