4 ms·

I agree with everything you say, but if history has taught us anything it is that people want "cheap" and just expect great support regardless of price. I mean

I agree with everything you say, but if history has taught us anything it is that people want "cheap" and just expect great support regardless of price. I mean the best example is airlines. For the longest time the big national airlines claimed that they would laugh last since their support/customer care was /so/ much better than cheap no-thrills airlines. But look at what happened! The no-thrills airlines have been stealing market share year upon year, people are booking whatever is cheapest in the price comparison all other things be damned. The same is true of retail Vs. the internet. Retails shops claimed that they wouldn't lose market share because people loved the one on one customer service and face to face interaction, but clearly they were mistaken. In fact the ONLY company I can think of who has high quality customer care/support AND is actually growing is Amazon. But they also often happen to be the cheapest.

LeonidasXIV 14y ago
> In fact the ONLY company I can think of who has high quality customer care/support AND is actually growing is Amazon. But they also often happen to be the cheapest. Not sure about the US, but when buying electronics Amazon is usually somewhere in the middle, price-wise. They are almost never really the cheapest and if so, this is usually due to a Amazon Marketplace seller, not Amazon themselves.
- nanidin 14y ago
  When I had Amazon Prime, the free shipping + lack of sales tax made almost always made Amazon the best choice, financially.
  - LeonidasXIV 14y ago
    Lack of sales tax is US-specific, too which is, for me, quite strange. Amazon here pays 19% sales tax just like every other online and offline business and they end up somewhere in the middle of the spectrum (using price-comparison websites).
phillmv 14y ago
Well, the main difference that comes to mind is that in the airline business, the denominator in your "cost function" is probably going to be keeping $30-100 million dollar planes in the air all the time. Whereas in low-end VPS services, the labour cost for Great, Responsive Service will quickly begin to approach your capital outlay. Amazon on the other hand, doesnt make any money - http://www.slate.com/blogs/moneybox/2013/01/29/amazon_q4_profits_fall_45_percent.html http://www.slate.com/blogs/moneybox/2013/01/29/amazon_q4_pro...
- josh2600 14y ago
  Amazon makes a ton of money. They don't make profit because Amazon's horizon is 100 years from now. They are trying to slowly drive all other retails into starvation by forcing them to operate at unreasonable margins (margins amazon is only able to break even at because of scale). Talking about amazon as if they're a charity is not apt. Amazon makes a great deal of money and judiciously reinvests it.
  - phillmv 14y ago
    They're a publicly traded company. However you want to characterize their strategy – and I think everyone agrees with your summary of their strategy – as a shareholder I'm not interested in 100 year time horizons because I will be dead by then. The argument goes, no other company gets such a free pass from their shareholders. Amazon could be amazingly profitable right now; in real terms, shareholders are subsidizing their current strategy in ways that Apple or Microsoft or Walmart could never get away with.
    - ios84dev 14y ago
      So why are you a shareholder? Or why haven't you attempted to change the policies from long term thinking to quarterly thinking like most companies these days?
  - lsc 14y ago
    >They are trying to slowly drive all other retails into starvation by forcing them to operate at unreasonable margins (margins amazon is only able to break even at because of scale). This is not true in the hosting arena, at least. Amazon is like everyone else in this industry; when they came out, they came out with very compelling prices. Well, costs fall with moores law. Amazon prices (especially bandwidth prices) have not. There are... a lot of new entrants to the market, and they /all/ have prices that are dramatically cheaper than amazon.com. hell, most of them make me look overpriced, and it wasn't so long ago that I was the unreasonably cheap option.

LeonidasXIV 14y ago

> In fact the ONLY company I can think of who has high quality customer care/support AND is actually growing is Amazon. But they also often happen to be the cheapest. Not sure about the US, but when buying electronics Amazon is usually somewhere in the middle, price-wise. They are almost never really the cheapest and if so, this is usually due to a Amazon Marketplace seller, not Amazon themselves.

nanidin 14y ago
When I had Amazon Prime, the free shipping + lack of sales tax made almost always made Amazon the best choice, financially.
- LeonidasXIV 14y ago
  Lack of sales tax is US-specific, too which is, for me, quite strange. Amazon here pays 19% sales tax just like every other online and offline business and they end up somewhere in the middle of the spectrum (using price-comparison websites).

phillmv 14y ago

Well, the main difference that comes to mind is that in the airline business, the denominator in your "cost function" is probably going to be keeping $30-100 million dollar planes in the air all the time. Whereas in low-end VPS services, the labour cost for Great, Responsive Service will quickly begin to approach your capital outlay. Amazon on the other hand, doesnt make any money - http://www.slate.com/blogs/moneybox/2013/01/29/amazon_q4_profits_fall_45_percent.html http://www.slate.com/blogs/moneybox/2013/01/29/amazon_q4_pro...

josh2600 14y ago
Amazon makes a ton of money. They don't make profit because Amazon's horizon is 100 years from now. They are trying to slowly drive all other retails into starvation by forcing them to operate at unreasonable margins (margins amazon is only able to break even at because of scale). Talking about amazon as if they're a charity is not apt. Amazon makes a great deal of money and judiciously reinvests it.
- phillmv 14y ago
  They're a publicly traded company. However you want to characterize their strategy – and I think everyone agrees with your summary of their strategy – as a shareholder I'm not interested in 100 year time horizons because I will be dead by then. The argument goes, no other company gets such a free pass from their shareholders. Amazon could be amazingly profitable right now; in real terms, shareholders are subsidizing their current strategy in ways that Apple or Microsoft or Walmart could never get away with.
  - ios84dev 14y ago
    So why are you a shareholder? Or why haven't you attempted to change the policies from long term thinking to quarterly thinking like most companies these days?
- lsc 14y ago
  >They are trying to slowly drive all other retails into starvation by forcing them to operate at unreasonable margins (margins amazon is only able to break even at because of scale). This is not true in the hosting arena, at least. Amazon is like everyone else in this industry; when they came out, they came out with very compelling prices. Well, costs fall with moores law. Amazon prices (especially bandwidth prices) have not. There are... a lot of new entrants to the market, and they /all/ have prices that are dramatically cheaper than amazon.com. hell, most of them make me look overpriced, and it wasn't so long ago that I was the unreasonably cheap option.