Amazon’s Echo Chamber(dcurt.is)
dcurt.is
Amazon’s Echo Chamber
http://dcurt.is/amazon-has-no-taste
93 comments
Great read and I agree with the majority of it.
This stood out though:
>Amazon’s retail strategy of being allergic to profit does not translate well into hardware manufacturing.
Don't most gaming consoles sell at a loss? The pickup for the console maker is on the publishing rights & distribution channels and the fact they take a gamble that the hardware will get cheaper over the course of that hardware generation. I had always though that it what Amazon was trying to emulate with their hardware attempts.
This stood out though:
>Amazon’s retail strategy of being allergic to profit does not translate well into hardware manufacturing.
Don't most gaming consoles sell at a loss? The pickup for the console maker is on the publishing rights & distribution channels and the fact they take a gamble that the hardware will get cheaper over the course of that hardware generation. I had always though that it what Amazon was trying to emulate with their hardware attempts.
>Don't most gaming consoles sell at a loss
Initially, yes. Nintendo has traditionally turned a profit on most of their consoles (I'm not sure about the new one), but for the last several generations Microsoft and Sony have been losing money on each console purchase - at least initially. Later during the lifespan of the console the component cost has usually dropped enough that they start to turn a profit
Initially, yes. Nintendo has traditionally turned a profit on most of their consoles (I'm not sure about the new one), but for the last several generations Microsoft and Sony have been losing money on each console purchase - at least initially. Later during the lifespan of the console the component cost has usually dropped enough that they start to turn a profit
Most console launches are supply-constrained and you can't buy one for months, so why do they charge the normal $400 price at launch when people can just buy them and resell them on Craigslist or eBay for hundreds more? If they launch at a higher price they can just ride the demand curve downhill over time by reducing the price and profit from the start.
As a previous employee at Amazon, I was extremely surprised at the quality of how they write software internally. When I heard about their new phone endeavor while still there, I was not expecting anything to come out of it quality wise, at least from the software side, and it seems they compromised on the hardware side as well (I never examined one up close). I think anyone that has worked at Amazon, and seen their internal processes would not be surprised at this either.
The article and the thread miss the point. Echo is a consumer / market research device. It gets an always-on sensor into some small percentage of American households. This could be used to collect data on in-home behavior in unprecedented ways. The seven microphones could probably be used to echo-locate walls, movement, and furniture positioning. The rest is up to the "always learning, in the cloud" part.
where the author sees an echo chamber that portrays false success, i see a bias on behalf of the author that blinds him to some seemingly obvious truths. others have already pointed out the demonstrably false assertion that "no one makes money selling media for consumption any more." a statement like that seems to only be able to come from a blind spot.
i bought 7 kindle fires for my household (i have 6 kids) largely because it's the best deal you can get on a tablet and it performs it's function extremely well (i.e. media consumption device coupled with some games here and there). i don't think any objective measure of kindle fire can relegate it to failure just because it doesn't have the premium experience you get with a tablet that is 6 times the price. i personally do not think the apple experience is worth 6 times the price.
i've no idea if the the fire tv stick is going to be a good device, but the fact that it cost me $20 coupled with the positive media experience i get on our multiple fire tablets was enough to get me to buy one and try it out.
similarly, i can get amazon echo for $99 and i just signed up to try it out. i've long wanted a device with the presence and interface of a star trek computer. i'm skeptical that the technology is there yet to provide the kind of experience that i know will enhance the life of my family, but it's promise is exactly what i want and i don't see anyone else out there trying it esp. at the price point.
i think it's a bit myopic to relegate all of amazon's hardware strategy to the failure bin just because they had a clear failure in the fire phone. the other devices all seem to offer compelling reasons to try them out (not the least of which is price point).
i bought 7 kindle fires for my household (i have 6 kids) largely because it's the best deal you can get on a tablet and it performs it's function extremely well (i.e. media consumption device coupled with some games here and there). i don't think any objective measure of kindle fire can relegate it to failure just because it doesn't have the premium experience you get with a tablet that is 6 times the price. i personally do not think the apple experience is worth 6 times the price.
i've no idea if the the fire tv stick is going to be a good device, but the fact that it cost me $20 coupled with the positive media experience i get on our multiple fire tablets was enough to get me to buy one and try it out.
similarly, i can get amazon echo for $99 and i just signed up to try it out. i've long wanted a device with the presence and interface of a star trek computer. i'm skeptical that the technology is there yet to provide the kind of experience that i know will enhance the life of my family, but it's promise is exactly what i want and i don't see anyone else out there trying it esp. at the price point.
i think it's a bit myopic to relegate all of amazon's hardware strategy to the failure bin just because they had a clear failure in the fire phone. the other devices all seem to offer compelling reasons to try them out (not the least of which is price point).
Despite the title this has nothing to do with the product from Amazon called Echo.
So I call it clickbait.
Maybe call it Amazon's Echo Chamber instead.
So I call it clickbait.
Maybe call it Amazon's Echo Chamber instead.
I though that the point of the article was that Amazon's hardware strategy isn't working, completely ignoring the echo. The title then invites us to draw our own conclusions about the echo, and enjoy the irony...
After reading it, I actually went looking for a date hoping it was written before the Echo announcement and was a wonderful coincidence.
On a side note, having to hover over the title to expose the date is a silly UX.
On a side note, having to hover over the title to expose the date is a silly UX.
I titled it that on purpose, to allude to the new product. I hate clickbait.
I changed the title anyway.
I changed the title anyway.
> I titled it that on purpose
Not originally - it was titled Amazon Has No Taste, and was changed to Amazon Echo. Even the current title (Amazon's Echo Chamber) is link-baity IMHO.
Not originally - it was titled Amazon Has No Taste, and was changed to Amazon Echo. Even the current title (Amazon's Echo Chamber) is link-baity IMHO.
Amazon Has No Taste is a pretty good title if you ask me, it's an excellent summary of the problem.
Amazon's Echo Chamber doesn't strike me as that bad, it also seems to describe the problem decently. Amazon is big enough and has enough eyeballs that they can make mediocre products appear to succeed for quite a while. Because of that insulation the products don't improve nearly as fast as they probably should.
Amazon's Echo Chamber doesn't strike me as that bad, it also seems to describe the problem decently. Amazon is big enough and has enough eyeballs that they can make mediocre products appear to succeed for quite a while. Because of that insulation the products don't improve nearly as fast as they probably should.
So you only used this title to piggy-back off the announcement of the actual Amazon Echo?
And you don't even mention it in the blog post. Nice.
Edit: It appears the title has been changed. Sorry for the asshole tone above, but I don't like clickbait.
And you don't even mention it in the blog post. Nice.
Edit: It appears the title has been changed. Sorry for the asshole tone above, but I don't like clickbait.
Scathing and harsh, but probably pretty accurate.
> No one makes money selling media for consumption anymore. That market is quickly and brutally dying. The media market is now so efficient that all profit is completely sucked out of the equation by the time you get to the consumption delivery system, to the point that it is barely possible to break even.
This part resonated with me a lot. The media market was always a race to the bottom. iTunes only proved there was a market, not that it could be profitable once there a multiple entrants with closed ecosystems competing for attention.
I think Amazon is full of smart people, but they need to focus on what they're good at to increase their profits. Their core businesses simply aren't profitable enough for them to try to compete with Apple and Google. They should fix that problem first and then turn to the more ambitious projects.
> No one makes money selling media for consumption anymore. That market is quickly and brutally dying. The media market is now so efficient that all profit is completely sucked out of the equation by the time you get to the consumption delivery system, to the point that it is barely possible to break even.
This part resonated with me a lot. The media market was always a race to the bottom. iTunes only proved there was a market, not that it could be profitable once there a multiple entrants with closed ecosystems competing for attention.
I think Amazon is full of smart people, but they need to focus on what they're good at to increase their profits. Their core businesses simply aren't profitable enough for them to try to compete with Apple and Google. They should fix that problem first and then turn to the more ambitious projects.
No one makes money selling media for consumption anymore.
This is a common belief among people in tech. It is also disastrously false. Frozen has sold 1.2 billion dollars worth of tickets. The related IP alone, to say nothing of merchandising, will be sold for decades to come, and bring in additional billions.
You know the DVD, a dead format that can be trivially pirated? Yeah, they sold 3.2 million copies of Frozen. In a day.
This is a common belief among people in tech. It is also disastrously false. Frozen has sold 1.2 billion dollars worth of tickets. The related IP alone, to say nothing of merchandising, will be sold for decades to come, and bring in additional billions.
You know the DVD, a dead format that can be trivially pirated? Yeah, they sold 3.2 million copies of Frozen. In a day.
The author doesn't mean media isn't profitable, but media retail isn't profitable.
The author is somewhat right. It's only profitable when you have a walled garden that you control, so you can squeeze markup out of the supplier.
The author is somewhat right. It's only profitable when you have a walled garden that you control, so you can squeeze markup out of the supplier.
> The author doesn't mean media isn't profitable, but media retail isn't profitable.
Meanwhile HMV, the UK chain that used to be #1 in music and DVD sales before going into administration a year ago, is now rapidly expanding again (as in: adding more retail outlets) [1], and looks set to overtake Amazon in media sales if growth continues at the current pace. While they posted an overall loss, most of that is one-offs related to the restructuring, and all their stores are reportedly now profitable and they reported 17 million in operating profits.
If you'd asked me a month ago, I'd have said the same. Now I'm not so sure.
[1] http://www.cityam.com/1411962291/hmv-returns-profit-hilco-re...
Meanwhile HMV, the UK chain that used to be #1 in music and DVD sales before going into administration a year ago, is now rapidly expanding again (as in: adding more retail outlets) [1], and looks set to overtake Amazon in media sales if growth continues at the current pace. While they posted an overall loss, most of that is one-offs related to the restructuring, and all their stores are reportedly now profitable and they reported 17 million in operating profits.
If you'd asked me a month ago, I'd have said the same. Now I'm not so sure.
[1] http://www.cityam.com/1411962291/hmv-returns-profit-hilco-re...
The author is talking about Amazon's share in those profits. It's clear that people who own the IP make a lot of money in media content.
Which is exactly why Netflix for example is moving into content production. Does amazon do the same?
Amazon has a number of self-produced shows. Also, they have an interesting "pilot" season where they put out the first episode of a half dozen or so shows and then let people vote on which one get produced into a full season.
The quality of them is on an uptick as well. 'Transparent' has been getting a good deal of critical attention and 'Tumbleleaf' an old school by hand stop-motion animated production is just incredibly high quality.
The quality of them is on an uptick as well. 'Transparent' has been getting a good deal of critical attention and 'Tumbleleaf' an old school by hand stop-motion animated production is just incredibly high quality.
Awesome. That's exactly what the big tech companies need to do if they want to break the media monopolies we have currently!
Amazon moved down that path two years ago, and is continuing to look at ways to expand original content:
http://www.digitaltrends.com/home-theater/amazon-joins-netfl...
And for example, Alpha House:
http://en.wikipedia.org/wiki/Alpha_House
http://www.digitaltrends.com/home-theater/amazon-joins-netfl...
And for example, Alpha House:
http://en.wikipedia.org/wiki/Alpha_House
For every Frozen, there are probably a hundred thousand failed media projects that didn't turn a profit. This is an outlier. And most of the profit ended up in the hands of the creators (Disney), not the distributors (everyone else).
Distribution of media is just not a profitable enterprise now. Too many closed, competing ecosystems and the entrenched now have so much capital acquired from other, more profitable ventures (Google from Search/Advertising, Apple from Hardware), that it makes little sense for anyone else to try unless they plan to be really different or disruptive.
Distribution of media is just not a profitable enterprise now. Too many closed, competing ecosystems and the entrenched now have so much capital acquired from other, more profitable ventures (Google from Search/Advertising, Apple from Hardware), that it makes little sense for anyone else to try unless they plan to be really different or disruptive.
I had to read this part of the article twice because I thought I couldn't be reading that right. I finally understand what he means but if taking what written at face value then he is horribly wrong.
"all profit is completely sucked out of the equation by the time you get to the consumption delivery system"
Is this false though? For all the success of the itunes store I seem to remember it not actually making a lot of profit from content?
Is this false though? For all the success of the itunes store I seem to remember it not actually making a lot of profit from content?
> [A Macquarie Capital researcher] expects that this year alone, Apple's iTunes, software and services business should generate about $30 billion on a gross revenue basis, which would be more than 83 percent of S&P 500 companies. [...] Schachter believes earnings before interest and taxes through iTunes, software and services will account for 21.8 percent of the company's profits this year.
http://appleinsider.com/articles/14/03/24/itunes-and-app-sal...
http://appleinsider.com/articles/14/03/24/itunes-and-app-sal...
Not "all" profit is sucked out of the equation by the time a DVD or video gets to retail. But a lot of it is. It's not so much a retail margin issue per se. It's that lots of stakeholders have contractual claims against the top-line sales ("front end") and bottom-line profits ("back end") of any given entertainment property. Producers, talent, studios, production companies, DVD distributors, film financing companies, investment banks, licensors and licensees, etc. Depending upon their clout and their contribution, each may get a cut of either the front-end or back-end of the property. Some of them might double-dip, taking a cut of revenues, in addition to producer's fees.
All of these shares are negotiated and locked before a single DVD (or Blu-ray, or digital download, or what have you) goes on sale. As you might imagine, it's extremely hard to price an entertainment product profitably at retail, given how little flexibility the retailer has on its pricing to begin with. Sure, a retailer could set the price high -- but every other retailer is pricing low, so that won't work. It's a tough racket. Even still, these properties sell like hotcakes, so at least some money's being made. And entertainment sales are often correlated with sales of other big categories (electronics, toys, etc.), so retailers feel the need to keep the category around as a sort of proof point.
The death of the DVD is inevitable, but it's not as imminent as people would like to think. In the meantime, the life of the DVD is kind of a pain in the ass. :)
All of these shares are negotiated and locked before a single DVD (or Blu-ray, or digital download, or what have you) goes on sale. As you might imagine, it's extremely hard to price an entertainment product profitably at retail, given how little flexibility the retailer has on its pricing to begin with. Sure, a retailer could set the price high -- but every other retailer is pricing low, so that won't work. It's a tough racket. Even still, these properties sell like hotcakes, so at least some money's being made. And entertainment sales are often correlated with sales of other big categories (electronics, toys, etc.), so retailers feel the need to keep the category around as a sort of proof point.
The death of the DVD is inevitable, but it's not as imminent as people would like to think. In the meantime, the life of the DVD is kind of a pain in the ass. :)
I like the post and agree with dcurtis about the abysmal phone. However I like my Fire HDX. It works for what I want to use it for: reading books and watching stuff. It isn't the best tablet, but it is not bad. It's the best for buying books and videos from Amazon. Ecosystem is subpar, but that is ok.
That's basically the problem I have with the Kindle. I love how convenient it is to buy books, and just turning from page to page is easy enough with the physical buttons on my model (or hopefully the little touch zones on the new model), but everything else sucks.
Software updates are rare, the menus are convoluted and obtuse, when the newer models you have to know secret touch zones to use different features. Simple options that used to exist have disappeared and new options of questionable utility have taken their place.
Probably my favorite thing about the Kindle is that it syncs my place with my phone, but the app on iOS is gotten much worse over the years. At this point when reading a book the timeline thing at the bottom and all sorts of weird little blue dots on it that I've never been able to figure out. Sometimes if you tap on one it goes away.
The things just smack of strange decisions. Who thought it would be a good idea to remove the page current buttons for two or three years in a row? And when they brought them back or not real buttons, but hopefully they're good enough.
In the meantime the books are still absolutely riddled with typos, terrible formatting, and if a publisher actually makes an update to a book you're unlikely to find out about it. What little I've heard of the authorship side of things is supposed be pretty dreadful too, were even recent kindles don't support some of the newest formatting things because Amazon hasn't bothered to update them.
It's the best e-book reader on the market, and in many ways it's a piece of crap. It's so clear the decision seem to be made by marketing or something else instead of what the readers want.
And sadly this experience seems to match what I've heard about other Amazon hardware. At best they behave like a mediocre hardware company who doesn't understand software. Even their flagship devices like the original Kindle fire have serious issues, which if you're lucky get fixed in a software update later.
Software updates are rare, the menus are convoluted and obtuse, when the newer models you have to know secret touch zones to use different features. Simple options that used to exist have disappeared and new options of questionable utility have taken their place.
Probably my favorite thing about the Kindle is that it syncs my place with my phone, but the app on iOS is gotten much worse over the years. At this point when reading a book the timeline thing at the bottom and all sorts of weird little blue dots on it that I've never been able to figure out. Sometimes if you tap on one it goes away.
The things just smack of strange decisions. Who thought it would be a good idea to remove the page current buttons for two or three years in a row? And when they brought them back or not real buttons, but hopefully they're good enough.
In the meantime the books are still absolutely riddled with typos, terrible formatting, and if a publisher actually makes an update to a book you're unlikely to find out about it. What little I've heard of the authorship side of things is supposed be pretty dreadful too, were even recent kindles don't support some of the newest formatting things because Amazon hasn't bothered to update them.
It's the best e-book reader on the market, and in many ways it's a piece of crap. It's so clear the decision seem to be made by marketing or something else instead of what the readers want.
And sadly this experience seems to match what I've heard about other Amazon hardware. At best they behave like a mediocre hardware company who doesn't understand software. Even their flagship devices like the original Kindle fire have serious issues, which if you're lucky get fixed in a software update later.
It isn't the best tablet, but it is not bad. ... Ecosystem is subpar, but that is ok.
My, what a ringing endorsement.
My, what a ringing endorsement.
Didn't Bezos once say something like "your margin is my opportunity"? There's a certain irony in Amazon not being able to compete in mobile because the market is too efficient.
They can't compete because they're producing mediocre products that add little value; products that consumers don't have a good enough reason to want. Creating their own Android equivalent store was an extraordinarily terrible idea.
The problem is not because the market is too efficient.
The problem is not because the market is too efficient.
Echo seems really smart to me - the reason Amazon is in hardware is because they are terrified of 'ok google, order me lighbulbs', or 'hey siri, i need a new pair of socks' becoming the way people shop for things online.
Amazon made Echo for 'alexa, order me wheat thins', and all the question answering and music playing is just window dressing.
Amazon made Echo for 'alexa, order me wheat thins', and all the question answering and music playing is just window dressing.
I really don't think being terrified of competition is a good reason to create something, so I hope that's not why they are doing this.
I'm struggling to find a reason why ordering anything via Echo is a good idea. I wouldn't use Siri to order anything, so I'm not sure why I'd want to do this either. I like to research things before I buy them and so do most Amazon users (even if it's a quick glimpse at the overall rating). Do I have to have a long Q/A session with Echo to determine which specific type of socks I'd like it to order? It seems faster to just do this myself via my phone or laptop.
I'm not going to switch to Google Shopping because I can tell my phone to order things. I use Amazon because Amazon is the best place to buy things (for numerous reasons), and until that changes talking to my phone or a device in my house ins't going to effect this decision.
This just feels like a solution that no one was asking for, and that's generally the worst kind of product.
Edit: After multiple people pointed out that this WOULD be useful for re-ordering certain types of things (mainly food/kitchen stuff), I agree it would be useful for that purpose. That said, I think Amazon should be marketing this with that in mind, and the first place this should live is your kitchen, not your living room.
I'm struggling to find a reason why ordering anything via Echo is a good idea. I wouldn't use Siri to order anything, so I'm not sure why I'd want to do this either. I like to research things before I buy them and so do most Amazon users (even if it's a quick glimpse at the overall rating). Do I have to have a long Q/A session with Echo to determine which specific type of socks I'd like it to order? It seems faster to just do this myself via my phone or laptop.
I'm not going to switch to Google Shopping because I can tell my phone to order things. I use Amazon because Amazon is the best place to buy things (for numerous reasons), and until that changes talking to my phone or a device in my house ins't going to effect this decision.
This just feels like a solution that no one was asking for, and that's generally the worst kind of product.
Edit: After multiple people pointed out that this WOULD be useful for re-ordering certain types of things (mainly food/kitchen stuff), I agree it would be useful for that purpose. That said, I think Amazon should be marketing this with that in mind, and the first place this should live is your kitchen, not your living room.
> I'm not going to switch to Google Shopping because I can tell my phone to order things.
Have you tried Google shopping with Voice integration? It's pretty amazing. You say "Ok google, buy me Triscuts" and four hours later, there's Triscuts at the door.
If my grandpa were still alive I would totally set him up with this.
Have you tried Google shopping with Voice integration? It's pretty amazing. You say "Ok google, buy me Triscuts" and four hours later, there's Triscuts at the door.
If my grandpa were still alive I would totally set him up with this.
I am asking for it - I think online shopping is one of those those things, like driving to the store, where you will not realize how annoying it was until you no longer have to do it.
I definitely would like to read reviews and compare prices when buying a big ticket item like a tv or computer, but for repetitive or impulse purchases I would love to be able to make them with the least amount of friction possible.
I definitely would like to read reviews and compare prices when buying a big ticket item like a tv or computer, but for repetitive or impulse purchases I would love to be able to make them with the least amount of friction possible.
"I'm struggling to find a reason why ordering anything via Echo is a good idea"
I agree.
But reordering things...
I agree.
But reordering things...
Amazon pretty clearly has a mid-range strategy of being the place you order groceries and consumables as a first choice. Weaseling into your household with Echo is a likely part of that. No research needed when you're ordering the same Wheat Thins and toothpaste you've ordered a dozen times before.
I also think the drones are for this small, frequently ordered stuff.
I also think the drones are for this small, frequently ordered stuff.
Almost everyone who would be in the market for this kind of a device already has something in their pocket with access to Google Now or Siri, though. Why use Echo when you have to be in a certain room?
Because when you're in that room you don't need to get your device out of your pocket?
But I don't buy that almost everyone will have it in their pocket, given the number of times I see people looking for their phones all over the place.
But I don't buy that almost everyone will have it in their pocket, given the number of times I see people looking for their phones all over the place.
$200 is an awful lot to spend to keep from having to look for your phone while in just one room of your house.
Right. It also struck me as funny in the video that the Echo had moved into their bedroom. Did they buy two? Or are they carting the thing around the house with them (instead of their phones)?
Does that really function? If I order socks audibly, I have no idea what I'm going to get. It's a lot more efficient to look through a page of images than to describe all the intricacies of my sock preferences via text to speech.
The idea is that the app would have some pre configured items that you've previously ordered - i.e. it already knows the brand, size, supplier, delivery method, etc. Its just providing a shortcut to place the order itself. I see this useful in regularly occuring basket items like food/groceries.
> the reason Amazon is in hardware is because they are terrified of 'ok google, order me lighbulbs'
If that's the case, they should worry about Google Shopping Express and same-day delivery vs. 2-day after it's shipped. When Google does roll it out to most US metros, they likely are going to add it as an option to "Ok Google". And in a few hours, your order will be on your doorstep.
I mean, Amazon's delivery chain is absolutely amazing, but it simply can't compete with local delivery.
If that's the case, they should worry about Google Shopping Express and same-day delivery vs. 2-day after it's shipped. When Google does roll it out to most US metros, they likely are going to add it as an option to "Ok Google". And in a few hours, your order will be on your doorstep.
I mean, Amazon's delivery chain is absolutely amazing, but it simply can't compete with local delivery.
> they should worry about Google Shopping Express and same-day delivery vs. 2-day after it's shipped.
I'm sure they do. And I'm sure something will happen in the US too. Meanwhile in the UK, Amazon has started rolling out their own delivery depots to complement their large warehouses, and leaving partners to do local delivery from their depots instead of the full end-to-end delivery.
Recently they announced that as a part result of this, they've signed a deal with a retail magazine distributor to deliver your packages to local shops etc. for pickup.
Not quite Google Shopping Express - yet - but it means that you can shortly get your packages in ~12 hours nearly UK wide, from an inventory my local stores can't compete with, because they're constrained by the cost of retail space.
> I mean, Amazon's delivery chain is absolutely amazing, but it simply can't compete with local delivery.
Most of what I've ordered from Amazon over the last year isn't available from local shops. A lot of it isn't even available from Amazons UK warehouses, and end up getting drop-shipped from other parts of the world. That's what stops me from going other places: Amazon aggregates a whole lot of sources that extends the products available to me far beyond what a service that aggregates local companies can.
And I bet that following the rollout of their local depots, they'll start predictively moving stock of their best selling products ahead of time to cut times further. Especially since the more they push through those depots, the more flexibility they will have in route scheduling for the last leg delivery to cut delivery times even further.
I'm sure they do. And I'm sure something will happen in the US too. Meanwhile in the UK, Amazon has started rolling out their own delivery depots to complement their large warehouses, and leaving partners to do local delivery from their depots instead of the full end-to-end delivery.
Recently they announced that as a part result of this, they've signed a deal with a retail magazine distributor to deliver your packages to local shops etc. for pickup.
Not quite Google Shopping Express - yet - but it means that you can shortly get your packages in ~12 hours nearly UK wide, from an inventory my local stores can't compete with, because they're constrained by the cost of retail space.
> I mean, Amazon's delivery chain is absolutely amazing, but it simply can't compete with local delivery.
Most of what I've ordered from Amazon over the last year isn't available from local shops. A lot of it isn't even available from Amazons UK warehouses, and end up getting drop-shipped from other parts of the world. That's what stops me from going other places: Amazon aggregates a whole lot of sources that extends the products available to me far beyond what a service that aggregates local companies can.
And I bet that following the rollout of their local depots, they'll start predictively moving stock of their best selling products ahead of time to cut times further. Especially since the more they push through those depots, the more flexibility they will have in route scheduling for the last leg delivery to cut delivery times even further.
How are they solving the problem of people in the same room with different accents... that sounds like a really hard one to figure out. Google Voice needs some training for example just to be able to recognise the initial "Ok, Google".
I have a broad Scandinavian accent, my Fire TV still understood me right out of the box.
I was long very negative on the short/medium term potential for speech recognition, but while I still don't use it very often, it's convenient in enough situations that I use it now and again.
I was long very negative on the short/medium term potential for speech recognition, but while I still don't use it very often, it's convenient in enough situations that I use it now and again.
I kind of understand why Amazon makes mobile hardware. They control the software experience and push Amazon storefronts over Google's. You get people into an ecosystem and they become comfortable in it, so they stick.
They author says "No one makes money selling media for consumption anymore". But surely a properly executed (key word: "properly") foray into mobile devices is better for Amazon than staying out of it? If they can create a good value proposition for the hardware and a good software ecosystem too, that would be better for them then missing out on mobile consumption of all that media they've put so much effort into.
Or am I just completely wrong?
They author says "No one makes money selling media for consumption anymore". But surely a properly executed (key word: "properly") foray into mobile devices is better for Amazon than staying out of it? If they can create a good value proposition for the hardware and a good software ecosystem too, that would be better for them then missing out on mobile consumption of all that media they've put so much effort into.
Or am I just completely wrong?
"No one makes money selling media for consumption anymore."
Is that really true? No one makes money selling music, apps, or books on iTunes? Netflix doesn't make money selling a media consumption service? HBO doesn't make money selling premium content?
Those are all examples of media. And they're all capable of making money for their creators and distributors.
Is that really true? No one makes money selling music, apps, or books on iTunes? Netflix doesn't make money selling a media consumption service? HBO doesn't make money selling premium content?
Those are all examples of media. And they're all capable of making money for their creators and distributors.
The next two sentences are
> That market is quickly and brutally dying. The media market is now so efficient that all profit is completely sucked out of the equation by the time you get to the consumption delivery system, to the point that it is barely possible to break even.
I don't think he's claiming that copyright owners can't make money selling copyrighted material. It sounds like he's claiming that the delivery networks can't make money.
> That market is quickly and brutally dying. The media market is now so efficient that all profit is completely sucked out of the equation by the time you get to the consumption delivery system, to the point that it is barely possible to break even.
I don't think he's claiming that copyright owners can't make money selling copyrighted material. It sounds like he's claiming that the delivery networks can't make money.
If that's actually what he means, it's a feature, not a bug.
Unless you're trying to be a delivery network.
Delivery networks are not profitable anymore, but if you control the avenue, you can promote and distribute your own content for almost nothing and you can profit from it.
And Netflix is not a delivery network?
They don't really want to be anymore, which is why they're spending so much money on original programming.
Even HBO pads out their scheduling with content produced by other companies. I do not see a future where the bulk of Netflix's streamed content is produced by Netflix.
Amazon is also at least nominally getting into entertainment production, though so far they're doing a pretty clumsy job of it.
Amazon does a clumsy job at a lot of things. It's incredible. Their shipping and logistics? Top notch. Their server operations, including AWS? Very good. Their website UI? Pants. Utterly pants. Using the Prime Instant website to watch video and using Netflix to watch video is like the difference between night and day. Netflix is well-organized, provides helpful recommendations, and has meaningful categories. Amazon, meanwhile, uses the exact same UI for buying books as it does for browsing streaming movies. And it uses that same UI for office supplies, groceries, clothes and caskets. (Okay, maybe not caskets.) And it's a mediocre UI for all of them.
EDIT: I checked, you can totally buy caskets on Amazon. Wow.
EDIT: I checked, you can totally buy caskets on Amazon. Wow.
Is Netflix making money yet or are they taking losses to grow?
Netflix was profitable for 2011, 2012, 2013.
They generated $231m in net income the last four quarters (while simultaneously dramatically expanding their expenditures on content acquisition and production).
They generated $231m in net income the last four quarters (while simultaneously dramatically expanding their expenditures on content acquisition and production).
Netflix has been profitable since 2003.
International video game revenue is estimated to be $81.5B in 2014.[49] This is more than double the revenue of the international film industry in 2013.
http://en.wikipedia.org/wiki/Video_game_industry#Economics
http://en.wikipedia.org/wiki/Video_game_industry#Economics
Its curious that selling to one's customer base amounts to an "echo chamber." The Amazon Echo could be really nice. If I could tell it to play an audiobook, I'd be very tempted. It's a truly new product in a world that has too few of those.
The problem with Amazon "selling to their customer base" is that they're doing the old "cheap razors, make money on the blades" shtick, because they're selling all their hardware at or near cost. So the correct measure of success is how many more blades you sell, not how many razors. The author is arguing that the low engagement after purchase due to poor quality undercuts how many blades they sell.
Spot on.
A lot of people have recommended a Kindle to me but I've held off. I can't get past the massive Amazon logo on it and the awful page turn.
A lot of people have recommended a Kindle to me but I've held off. I can't get past the massive Amazon logo on it and the awful page turn.
Weird. My kindle paperwhite doesn't have an Amazon logo on it at all, I don't see how the page turn could be characterized as "awful", and it happens to be the far and away the best digital thing I've ever read a book on.
There's some truth there but also some misses. Besides the phone, Amazon's hardware has been at least decent and in the case of Fire TV, the best. The Kindles and tablets are more than usable. Even if only a speaker with a handful of voice commands (the complete Siri-like experience is a stretch; but, for example, voice search on Fire TV is excellent), the Echo looks to be a reasonable product.
I agree that their strategy is broken, but don't believe it's due a lack of taste.
I understood Amazon's hardware to be the opposite of Apple. Cupertino makes their profit on hardware mark up, so it makes sense that everything you buy on iTunes is as cheap as possible - standard complementary products theory. Since Amazon has primarily got their (marginal) profits from selling you content, it made sense that their ebook readers, phones, and tablets are cheap.
I don't get the Kindle Voyage. Premium priced hardware doesn't fit into their model. And now the Echo. I can't even guess how they think they will make money with this thing, or how it could generate more sales anywhere else in the org.
I understood Amazon's hardware to be the opposite of Apple. Cupertino makes their profit on hardware mark up, so it makes sense that everything you buy on iTunes is as cheap as possible - standard complementary products theory. Since Amazon has primarily got their (marginal) profits from selling you content, it made sense that their ebook readers, phones, and tablets are cheap.
I don't get the Kindle Voyage. Premium priced hardware doesn't fit into their model. And now the Echo. I can't even guess how they think they will make money with this thing, or how it could generate more sales anywhere else in the org.
There are a few ways of thinking about Amazon, here is one: they can invest back into new products in the same way Google do but at a larger scale since they don't have the pressure of returning profits to shareholders and Amazon's distribution and infrastructure is more likely to be complementary to followup hits than Google's search ad business.
In this hit based model, they can afford more than a few misses and they have already had plenty of hits (AWS, Kindle).
As an investor your question is: would you rather Amazon invest $50-300M trying things out with the advantage of their brand, position and infrastructure - or do you want them returning that money, pay tax on it only for you to have to find somewhere else to park it?
> No one makes money selling media for consumption anymore.
This couldn't be further from the truth. Cable is dying and tech and media companies are currently running a multi-billion dollar race in working out who will own whatever platform is next (Amazon buying streaming rights, building tablets and phones etc. is part of their version of what they hope next platform will be - winner(s) take hundreds of billions in market cap).
It is so untrue that as soon as Time Warner dropped their print and cable businesses Murdoch offered $85 billion for the content business that remained and they turned him down.
In this hit based model, they can afford more than a few misses and they have already had plenty of hits (AWS, Kindle).
As an investor your question is: would you rather Amazon invest $50-300M trying things out with the advantage of their brand, position and infrastructure - or do you want them returning that money, pay tax on it only for you to have to find somewhere else to park it?
> No one makes money selling media for consumption anymore.
This couldn't be further from the truth. Cable is dying and tech and media companies are currently running a multi-billion dollar race in working out who will own whatever platform is next (Amazon buying streaming rights, building tablets and phones etc. is part of their version of what they hope next platform will be - winner(s) take hundreds of billions in market cap).
It is so untrue that as soon as Time Warner dropped their print and cable businesses Murdoch offered $85 billion for the content business that remained and they turned him down.
> they can invest back into new products in the same way Google do but at a larger scale since they don't have the pressure of returning profits to shareholders
Can you elaborate on this? Google tries plenty of "moonshots" that may never return profits to shareholders
Can you elaborate on this? Google tries plenty of "moonshots" that may never return profits to shareholders
I meant that Amazon are doing the same as Google. They have similar revenue, Google has twice the margin but is banking $10B+ p.a while Amazon spend all and beyond. They are both maneuvering to capture these new markets using their existing advantages.
For some reason Google investing in projects makes a sense for a lot of people, while for Amazon it doesn't even though it has produced business lines outside of their main that have more revenue and margin than anything Google have done.
For some reason Google investing in projects makes a sense for a lot of people, while for Amazon it doesn't even though it has produced business lines outside of their main that have more revenue and margin than anything Google have done.
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The danger here is actually being so far inside the tech echo chamber you can't see that they have an audience that really are buying their stuff. Yes, the Fire Phone is a misfire, but they have built an incredibly valuable high spending audience with the other Kindle devices.
Loved the Kindle from the beginning. Cheap plastic is part of its advantage. I take it places without the least fear for its safety. Cheap is good here.
This is why it makes sense.
There are a LOT of people that use Amazon to buy things.
A lot of people don't know the difference between phones.
If Amazon has a giant splash screen saying it has a phone, naturally people will buy it just because they don't know any better (eg. 65 yr old Grandmas in Arkansas).
Additionally, Amazon is a long term company and they know that if they want their foot in the phone game they need to start somewhere so they did.
They have never cared about hardcore techies or even their investors. They are one of the most long term focused companies alive right now. They believe in iteration like a religion and they understand the average consumer.
It makes sense because it will make cents.
There are a LOT of people that use Amazon to buy things.
A lot of people don't know the difference between phones.
If Amazon has a giant splash screen saying it has a phone, naturally people will buy it just because they don't know any better (eg. 65 yr old Grandmas in Arkansas).
Additionally, Amazon is a long term company and they know that if they want their foot in the phone game they need to start somewhere so they did.
They have never cared about hardcore techies or even their investors. They are one of the most long term focused companies alive right now. They believe in iteration like a religion and they understand the average consumer.
It makes sense because it will make cents.
This - so long as Amazon understands this.
Amazon has to remember they're in the product sales business, and their hardware exists ONLY to facilitate sales where some customers otherwise have trouble figuring out how to get it. Kindle is great for people who don't have another ebook reader; make sure every platform imaginable has Kindle software available. Fire is great for people who aren't buying into any other tablet ecosystem; make sure good content consumption apps are available on all other tablets. Fire Phone should be a decent phone for those wanting a phone and otherwise uncommitted to other makers; make sure all other phones consume Amazon content easily. Fire TV should be a fine media player; get Amazon Video onto AppleTV and Roku ASAP. Amazon should view their own hardware as nothing more than gap filler where customers haven't committed to other options which should be pursued by Amazon with equal vigor.
For Amazon, exclusive hardware is dangerous. It should complement the competition, not compete where others are superior.
Amazon has to remember they're in the product sales business, and their hardware exists ONLY to facilitate sales where some customers otherwise have trouble figuring out how to get it. Kindle is great for people who don't have another ebook reader; make sure every platform imaginable has Kindle software available. Fire is great for people who aren't buying into any other tablet ecosystem; make sure good content consumption apps are available on all other tablets. Fire Phone should be a decent phone for those wanting a phone and otherwise uncommitted to other makers; make sure all other phones consume Amazon content easily. Fire TV should be a fine media player; get Amazon Video onto AppleTV and Roku ASAP. Amazon should view their own hardware as nothing more than gap filler where customers haven't committed to other options which should be pursued by Amazon with equal vigor.
For Amazon, exclusive hardware is dangerous. It should complement the competition, not compete where others are superior.
I don't see why the the author finds it 'extremely hard for me to understand Amazon’s consumer hardware strategy'.
The strategy is simple: If 100 million people only have an Amazon device (and do not have a Google or Apple device) and one of those people wants to watch the latest James Bond film or English Premier League final, then Amazon can take a 30% cut of the price the user (or advertiser) pays.
Amazon's execution may fail because their hardware is crap and are losing to Android and Apple, but their idea is sound.
The strategy is simple: If 100 million people only have an Amazon device (and do not have a Google or Apple device) and one of those people wants to watch the latest James Bond film or English Premier League final, then Amazon can take a 30% cut of the price the user (or advertiser) pays.
Amazon's execution may fail because their hardware is crap and are losing to Android and Apple, but their idea is sound.
There will never be a 100 million if the hardware is too crappy, and that's why the strategy is hard to understand; you can't just assume the end point.
That said, Amazon's phone is the only product I thought made little sense. The Kindles are successful and drive ebook consumption. Fire TV I have no idea, but the Roku has proven that the basic idea has a market. What other giant hardware stumbles has Amazon launched?
That said, Amazon's phone is the only product I thought made little sense. The Kindles are successful and drive ebook consumption. Fire TV I have no idea, but the Roku has proven that the basic idea has a market. What other giant hardware stumbles has Amazon launched?
> They make a product, they market the product on Amazon.com, they sell the product to Amazon.com customers, they get a false sense of success,
Also called "success."
You can make a business selling cheap crap with powerful marketing. It's not noble, but it's probably the norm.
Amazon just hasn't realized yet that it needs to stop competing with Apple and Google and start competing with SkyMall, As Seen on TV, and the dollar stores.
(Half joking. But only half.)
Also called "success."
You can make a business selling cheap crap with powerful marketing. It's not noble, but it's probably the norm.
Amazon just hasn't realized yet that it needs to stop competing with Apple and Google and start competing with SkyMall, As Seen on TV, and the dollar stores.
(Half joking. But only half.)
Although the author is a bit harsh, I tend to agree with him on the aspect that Amazon is largely creating second rate products and ultimately wasting a lot of shareholder money
(their inventory write down on fire phone inventory was $170M).
The markets have been punishing them for their tactic of throwing it against a wall and seeing if it sticks. Ultimately, I think what allows a company like Apple to get ahead was the ability to say 'no', 'it isn't ready', 'do this better', 'redesign that', 'this sucks - can the project'. Bezos does not appear to run his company that way. It seems like he has a bunch of lieutenants building things, but nobody telling them 'NO!'
The author highlights one thing: Amazon is trying too hard to be everything to everyone, failing to excel in most ventures.
Don't get me wrong, I love their core business', use amazon prime, the web services have definitely been a game changer and the kindle makes my life on caltrain nice. But I'm certainly not going to invest in them until they start to show that they've learned to say 'no'.
The markets have been punishing them for their tactic of throwing it against a wall and seeing if it sticks. Ultimately, I think what allows a company like Apple to get ahead was the ability to say 'no', 'it isn't ready', 'do this better', 'redesign that', 'this sucks - can the project'. Bezos does not appear to run his company that way. It seems like he has a bunch of lieutenants building things, but nobody telling them 'NO!'
The author highlights one thing: Amazon is trying too hard to be everything to everyone, failing to excel in most ventures.
Don't get me wrong, I love their core business', use amazon prime, the web services have definitely been a game changer and the kindle makes my life on caltrain nice. But I'm certainly not going to invest in them until they start to show that they've learned to say 'no'.
How expensive are these bets, in reality? To me, they seem like long options. Minimal downside, but huge potential upside as they learn from each mistake and gradually improve and create more exposure to the potential of a hit.
But in reality, it's not the hits that Amazon counts on--it's the recurring revenue of Prime and Unlimited subscriptions and loyalty around lots and lots of low-margin purchases. To keep those memberships coming, you don't need to be a hit machine--you just need to keep offering incremental useful value, mediocre as it may be alone, to add value to the subscription.
I think that's the angle. It's not that Costco hot dogs are the best hot dogs in the industry for $1.50 (or $4.99 rotisserie chickens, or car buying services, etc.), it's just that these items add enough value to enough peoples' Costco experience that they renew memberships and spend a lot of cash on low-margin stuff.
But in reality, it's not the hits that Amazon counts on--it's the recurring revenue of Prime and Unlimited subscriptions and loyalty around lots and lots of low-margin purchases. To keep those memberships coming, you don't need to be a hit machine--you just need to keep offering incremental useful value, mediocre as it may be alone, to add value to the subscription.
I think that's the angle. It's not that Costco hot dogs are the best hot dogs in the industry for $1.50 (or $4.99 rotisserie chickens, or car buying services, etc.), it's just that these items add enough value to enough peoples' Costco experience that they renew memberships and spend a lot of cash on low-margin stuff.
I absolutely disagree with the Amazon Fire phone being terrible. It's not the best in the market, but not terrible at all. Very harsh judgement on the part of the OP. I even suspect a malicious motive behind all the vitriol spewed against Amazon.
I've been helping a non-profit publish some books on Amazon and it has been rather trying.
It is silly, the book comes out great printed through Amazon Createspace and looks great on Kindle, but it gets taken off Kindle Direct Publishing because it is not using English or one of the handful of supported languages.
Why not let people use other languages if they mark the e-book appropriately?
The official Amazon answer has been that they can not guarantee quality in other languages and thus they do not support it.
The problem is that unless you are using one of the limited number of official language Amazon will delete your e-book. https://kdp.amazon.com/help?topicId=A9FDO0A3V0119
Welsh writers managed to raise up enough of a stink about it: http://www.walesonline.co.uk/news/wales-news/amazon-sparks-l...
Still it seems ridiculous that only way to get decent CS is through PR.