4 ms·

I give Amazon the benefit of the doubt, but I still don't understand their reasoning behind this whole undertaking.

maxerickson 12y ago
I don't think it's complicated, they see a lot of money in media sales and want to have a set of devices where they are the more visible provider. A few hundred million dollars developing hardware is a rounding error on their current media revenues (which I realize sounds a bit ridiculous, but there it is).
- phaus 12y ago
  Amazon as a whole has razor thin margins. They can't afford to squander hundreds of millions of dollars on anything.
  - eclipxe 12y ago
    You don't get it.
  - wiredfool 12y ago
    Amazon had razor thin margins because they're spending hundreds of millions on a bunch of different projects that they expect will be the the future of collecting money for stuff and services. If they stopped that investment, they'd be reasonably profitable. But right now, it's funding their world domination plans.
    - phaus 12y ago
      I fully understand that Amazon invests in these types of projects because they are focusing on growth. The original claim was that hundreds of millions of dollars is a trivial amount of money for Amazon to spend even if a project is a failure. I was simply stating that this is not the case at all. If Amazon has spent 100s of millions of dollars on a smartphone program that turns out to be a failure then it is going to be a painful experience for them. I'm not saying that Amazon has spent $100 million+ on smartphones. I'm also not saying that the project is a failure. I'm simply responding to the hypothetical claim that 100s of millions of dollars isn't a significant amount of money to Amazon.
      - maxerickson 12y ago
        They spent $6.5 billion on "Technology and content" in 2013. $100 million is ~1.5% of that. So not quite a rounding error, but close. They also spent ~$5 billion in 2012 and I guess they will spend a similar amount this year. (That segment includes all sorts of spending, but in the 2013 annual report they do call out devices as one of the focuses of that spending)
        phaus 12y ago
        The importance of the money isn't just determined by how large of an amount it is compared to Amazon's budget.
  - maxerickson 12y ago
    Is it already obvious that they have squandered the money spent trying to establish their own device ecosystem?
MBCook 12y ago
Apple phones push iTunes and iBooks (soon Beats), and you can't buy Amazon digital content in the Amazon apps because they don't want to pay Apple the 30% tax. Either way Apple will always encourage you to buy from Apple's storefronts. Google pushes Google Play for music and books. Similarly it's in Google's interest to push people to the Google storefronts. Apple and Google make up basically 100% of the smartphone/tablet market. If Amazon doesn't get in there they may slowly get pushed out. They don't lead in music (iTunes?) or video (iTunes/Netflix?) or apps (Apple's store), and they certainly don't want to lose their position in books.
- uptown 12y ago
  I don't understand why Amazon hasn't tried to buy Netflix. It seems like a natural fit for their business model.
  - eurleif 12y ago
    Netflix's market cap is 19% of Amazon's.
    - primelens 12y ago
      They missed their opportunity in mid to late 2012 when NFLX hovered around $65. They're in the high 400s now.
- XorNot 12y ago
  If Amazon wanted to lead in music they could try this crazy new strategy called: offer a quality product. You're Amazon. You ARE datacenters. So why the ever-living-hell can I not buy FLAC-encoded lossless tracks? There is an utterly negligible cost in providing this content, its the only market which still moves CDs so there's obviously demand, but no one is touching it?
  - Aloha 12y ago
    Simple, less than 1% of the population can hear the difference (and I'm not convinced the remainder isn't sampling error.) - I'm certain as soon as there is a overwhelming demand for it, Amazon will support it. I'd point out, that Apple doesn't event support its own lossless codec for downloads, and they are arguably the market leader.
hans 12y ago
I see it as zon just beefing up their mobile abilities: build know in android and top level mobile software, lay the groundwork for future dev, as mobile grows just like pc grew but way more, your ability to take advantage of mobile growth improves. This phone stuff is just a learning curve, and as hardware decreases in cost over time, zon can get a foothold and take advantage.

I don't think it's complicated, they see a lot of money in media sales and want to have a set of devices where they are the more visible provider. A few hundred million dollars developing hardware is a rounding error on their current media revenues (which I realize sounds a bit ridiculous, but there it is).

phaus 12y ago
Amazon as a whole has razor thin margins. They can't afford to squander hundreds of millions of dollars on anything.
- eclipxe 12y ago
  You don't get it.
- wiredfool 12y ago
  Amazon had razor thin margins because they're spending hundreds of millions on a bunch of different projects that they expect will be the the future of collecting money for stuff and services. If they stopped that investment, they'd be reasonably profitable. But right now, it's funding their world domination plans.
  - phaus 12y ago
    I fully understand that Amazon invests in these types of projects because they are focusing on growth. The original claim was that hundreds of millions of dollars is a trivial amount of money for Amazon to spend even if a project is a failure. I was simply stating that this is not the case at all. If Amazon has spent 100s of millions of dollars on a smartphone program that turns out to be a failure then it is going to be a painful experience for them. I'm not saying that Amazon has spent $100 million+ on smartphones. I'm also not saying that the project is a failure. I'm simply responding to the hypothetical claim that 100s of millions of dollars isn't a significant amount of money to Amazon.
    - maxerickson 12y ago
      They spent $6.5 billion on "Technology and content" in 2013. $100 million is ~1.5% of that. So not quite a rounding error, but close. They also spent ~$5 billion in 2012 and I guess they will spend a similar amount this year. (That segment includes all sorts of spending, but in the 2013 annual report they do call out devices as one of the focuses of that spending)
      - phaus 12y ago
        The importance of the money isn't just determined by how large of an amount it is compared to Amazon's budget.
- maxerickson 12y ago
  Is it already obvious that they have squandered the money spent trying to establish their own device ecosystem?

MBCook 12y ago

Apple phones push iTunes and iBooks (soon Beats), and you can't buy Amazon digital content in the Amazon apps because they don't want to pay Apple the 30% tax. Either way Apple will always encourage you to buy from Apple's storefronts. Google pushes Google Play for music and books. Similarly it's in Google's interest to push people to the Google storefronts. Apple and Google make up basically 100% of the smartphone/tablet market. If Amazon doesn't get in there they may slowly get pushed out. They don't lead in music (iTunes?) or video (iTunes/Netflix?) or apps (Apple's store), and they certainly don't want to lose their position in books.

uptown 12y ago
I don't understand why Amazon hasn't tried to buy Netflix. It seems like a natural fit for their business model.
- eurleif 12y ago
  Netflix's market cap is 19% of Amazon's.
  - primelens 12y ago
    They missed their opportunity in mid to late 2012 when NFLX hovered around $65. They're in the high 400s now.
XorNot 12y ago
If Amazon wanted to lead in music they could try this crazy new strategy called: offer a quality product. You're Amazon. You ARE datacenters. So why the ever-living-hell can I not buy FLAC-encoded lossless tracks? There is an utterly negligible cost in providing this content, its the only market which still moves CDs so there's obviously demand, but no one is touching it?
- Aloha 12y ago
  Simple, less than 1% of the population can hear the difference (and I'm not convinced the remainder isn't sampling error.) - I'm certain as soon as there is a overwhelming demand for it, Amazon will support it. I'd point out, that Apple doesn't event support its own lossless codec for downloads, and they are arguably the market leader.

hans 12y ago

I see it as zon just beefing up their mobile abilities: build know in android and top level mobile software, lay the groundwork for future dev, as mobile grows just like pc grew but way more, your ability to take advantage of mobile growth improves. This phone stuff is just a learning curve, and as hardware decreases in cost over time, zon can get a foothold and take advantage.