Amazon in America is offering $5 off a purchase if the user orders via their mobile app. As of Saturday, if you go to Macy’s or Toys R Us and physically scan an item’s barcode with the Amazon App, Amazon will give you up to $5 off that item if you add it to your (mobile) cart and leave Macy’s empty handed.

This is about as aggressive as business gets: if you walk into a competing retailer, scan the very item they’ve spent money on to put in store, we’ll do you a better deal today. Does pricing get any more predatory? Amazon don’t want to be a major retail player online, they want to be the retail player, period. eBay and Google can play around with physical pop up shops, but not Amazon. They know where their expertise lie: online. And they aren’t shy about getting you there either.

It’s yet another stunning lesson from Bezos of using market-leader advantage to further leverage your position. The banks are claiming “Caveat emptor,” or buyers beware, as a retort to the mis-selling and exploitation critique. I can’t help but think Amazon will be saying, ‘sellers beware,’ in the coming years as they turn retailers’ own guns back on them having mined the data to within an inch of its life.

The modern business model from Silicon Valley is build. Don’t just make a computer, make digital products (as Steve Jobs said by launching a music player, then a music store, then a phone). Build and build again is what the dominant players are showing us to be the winning formula.

Google was just a search engine, Apple was just about consumer electronics, Amazon was just a bookstore and Facebook was just a social network. No more.

These four colossal companies all appear to want to channel us down their particular funnels and have you ride their own track as you consume all things digital. To paraphrase the eloquent John Battelle, Google used to equal search, now they equal Chrome, YouTube, Android, Docs, Gmail, Maps, Places, Voices, self-driving cars, energy research, Adwords, Google+ and Motorola. And let’s not forget possibly their biggest opportunity for a true golden goose: Google TV.

This Fab Four will make the scale of Murdoch’s empire look about as impressive as a Lego village. Their dominance of technology, media and data over our lives will be insurmountable. Google is expected to bring in more than $30 billion this year. Analysts expect Amazon to reach $100 billion in revenue by 2015, faster than any other company. You need to stand up when you hear Apple’s annual growth numbers: net profit up 85% to $25.9 billion (£16.5 billion). In just Q3 of this year (obviously not their largest without Christmas sales), Apple turned over $28,571,000,000*. Read that number again – it’s genuinely staggering. They sold over 17 million iPhones in their financial Q4!

Such is the significance of the Fab Four, that we barely even think of Microsoft in the same vein. Arguably the largest of them all and the business choice of the world, Microsoft simply isn’t in the running for our hearts and minds like these guys are. They’re in their own cold war with each other, leveraging the juxtaposition of the web in that the low barrier of entry shouldn’t allow such monopolistic companies to exist. Yet again, what shouldn’t be possible, actually proves true online.

Each of the Fab Four want to build an ecosystem. Think about smartphones, tablets, apps, cloud storage, social networking, gaming, music, TV, or movies and all fit into their strategic map of web’s future – their own corner of the web.

I can’t help but think this is taking the open web and making silos for the user. Amazons new tablet, the Fire, doesn’t like you to browse around the web too easily, but if you want to download a movie from Amazon or buy shoes from their marketplace, then that’ll be a piece of cake.

There’s an element of lock in. I don’t necessarily mind that it’ll be a bit stifling, but the decision you make with your hardware may well dictate how easily you can consume software and content in the future.

It’s a bit like choosing to buy a car having the knowledge of exactly where and how you’ll drive it in the future. Suddenly what you buy becomes far more than we’ve traditionally dealt with when buying a laptop or a PC i.e. size, speed and storage.

It’s like buying a new BMW. Not happy just with selling you the metal, plastic and rubber, BMW build a bunch of roads and would very much prefer it if you drove only on them. And they’d like you to use their fuel stations as they’ll hook up with your car far easier than any other (perhaps auto payments through number plate recognition). And BMW have plans afoot to offer you destinations too that will stop you going to the beach or Center Parcs or the shopping centre – the BMW equivalent will be better, more secure and more ‘holistic’ to your vehicle.

It’s hugely exciting to see these guys slug it out on the global scale and change our lives through innovation. It’s a shame none of them are British. Who are you backing to be the winner or can they coexist?

*The numbers and much of the facts came from an excellent post by Farhad Manjoo.

Amazon has shown itself as the first true competitor to Apple in the tablet war. The launch of the Kindle Fire this week is an audacious move to out-price the iPad with a dumbed-down system costing just $199.

Tablets are a future cornerstone for the world’s data consumption. As ever, Jobs lifted the curtain on that future and then he charged us a fortune to let us walk behind it. Amazon’s Jeff Bezos has had the hindsight of not being the first mover – he’s seen others throw pebbles at the armour of Apple with their tablet efforts (HP’s TouchPad was surely the most ham-fisted go at it).

I agree with Jason Calacanis that price is the key here, as you need to flood the market to gain traction and lock out competitors. Of course the product needs to be sellable in the first instance. Free may convert latent demand but it doesn’t create demand. No price reduction is enough if the product is tat – you could stand on every street corner in the country selling Betamax recorders for 1p. If you’d raised a whole £1 after a year I’d be stunned.

Amazon also had the gumption to go big. To double down as the yanks would say. And it needs to be so audacious because the scale of winning in this tech war is simply stratospheric. It’s not just about a few million bucks on the hardware, that’s just the entry fee to the club. The real win is at the bar. Consumers are paying for data that the world thought would be free for all time until the App Store showed us otherwise.

And nowhere is content more available than Amazon. Books, music, movies and TV shows are there. And of course, physical products from the deepest marketplace imaginable. Regardless of whether Amazon want to outgun the iPad, they are undoubtedly set to sell a whole tonne of content.

This is a killer strategy that doesn’t work in a cash strapped start-up with very little runway money and time. It’s the epitome of a loss leader, but it comes with the double whammy of providing a huge content channel as well as seeing off hardware competitors. Advantage Amazon.

This is a great move and a business test case for millions of students in years to come. What can Microsoft come back with?

News Corp’s readership numbers are on the up since they introduced their paywall last July. Surely that’s all good news?

The Times and The Sunday Times has grown from 50,000 monthly digital subscribers in October to 79,000 at the end of February. They seem to have brushed under the carpet the fact that the growth rate is slowing. They also lost 90% of visits the moment the paywall was cemented but that was expected by all.

However, volume isn’t the same as value because revenues are less online per customer due to their aggressive pricing strategy and smaller variable costs (another 1,000 iPad subs cost virtually zero to deliver, greatly less than a 1,000 physical papers).

It’s a bit disappointing that these figures aren’t broken down across all platforms but the papers say digital is digital regardless of your hardware so we can’t glean who’s using on Kindle, iPhone etc.

But the most surprising and impressive number is that churn is just 1%. 99% of subscribers in month one, stayed and paid for month two. Wow, talk about sticky.

This is interesting stuff. Tablets are having their 15 minutes of fame and The Times et al will only help reinforce that. Horse versus car; email versus letter; telephone versus telegram; paper versus digital news. All have an obvious ending but the sting in the tail sees all these publishers frantically trying to work out how to monetise their digital content. The world is watching.

Read the Guardian for a (free) great take on the numbers. You’ve got a savvy business mind, what do you think is the correct model?

Do you like business books that inspire you to move into action, or books that break down what someone did in their business? If it’s the former then this month has seen a couple of excellent releases for you:

Gary Vaynerchuk is a hustler. His second book, The Thank You Economy is out this week. Gary took his father’s wine store turnover from $4m to $69m inside 5 years. He hustled. He expanded. He served. He innovated. He grew. He succeeded. This guy is someone you should hook into.

Seth Godin has released a short 70-odd page book called, Poke The Box. It’s about starting things, kicking off and shipping. Like so many of his short pieces he’s asking you to DO something.

A third beauty that I haven’t got ‘round to yet is Evil Plans: Having Fun on the Road to World Domination from Hugh MacLeod. It’s also his second release and another offering insight into an Internet and marketing powerhouse.

Enjoy (and then DO something).

Some business leaders say they can’t change because their demographic is 55 year olds and changing would jeopardize their custom. Changing would mean devaluing the offering. Changing would be a risk we don’t want to take. I’ve even heard, “We know our customer base is dying, but the boss wont change anything we’re doing.”

We’ve got to throw stuff out and see what sticks. Experiment. If we do what we always do, we’ll get what we always get. Pay per click campaigns are a case in point – they demand experimenting to know the winning/losing keywords and campaigns.

Michael Jordan infamously said, “I’ve missed more than 9000 shots in my career. I’ve lost almost 300 games. 26 times, I’ve been trusted to take the game winning shot and missed. I’ve failed over and over and over again in my life. And that is why I succeed.”

Morgan cars are a company heralded for being in time warp. Their hand built cars are oversubscribed with waiting lists of years not months. Their antiquated methods and manufacture add to the marque’s character. But even Morgan is showing innovation with their second new model launching in as many years.

The fact is when you’ve been around for 5 – 10 years and growth (if that’s a business goal) is stagnant then it’s time to change your growth strategy. What’s got you to this point isn’t going to get you to new plateaus. Change is needed.

That’s not wholesale change to your retail philosophy. I’m not suggesting about going from a hard working, ethical family business to a law-breaking SPAM merchant who hides from the VAT man. Differentiate, but don’t dilute yourself.

I’m proposing you let fly with your product range. Try new avenues of wholesale. Knock on new doors. Add a different category. Seek additional suppliers. Lower shipment thresholds – win customers today, look for extra margin tomorrow.

Yes there are niches that shouldn’t be diluted but an obvious A-list example of change for growth is McDonald’s. The fast food chain has had a five-year make over. It now sells as much chicken as beef, has redecorated branches with soft furnishings and mood lighting and they sold 100 million cups of coffee last year in the UK – that’s more than Starbucks. Boss, Jill McDonald (no relation) says, “We have probably changed more in the past four years than in the last 30.”

Yet some marketers at the time would probably say the McDonald’s demographics/customer base don’t want a sophisticated coffee, they want the soft drinks that are being sold now. Well, they’d have missed the boat on that huge opportunity.

I guess my real question is, if businesses – especially SMEs – don’t change, how will they ever evolve?

Most of us look at our labour rates.  A restaurant owner will write her rota and give hours to waiters and chefs based on anticipated takings that week – for example 8% of takings will be spent on wages. I’ve been told Tesco store managers aim to keep labour below 5%.

Well, if you think you’re doing something wrong at 15%, 25% or 35% then think about running a football club. Fernando Torres, Suarez and Andy Carroll have sent the back pages in a spin recently but the underlying labour rate at football clubs is 60%!

Stefan Szymanski from Cass Business School has published a study that says 60% of a premiership football club’s expenditure is on players’ wages. The study calculates that it costs £7m to win a game, up from half a million at the start of the premiership. Assuming you need 28 wins to take the title, costs would be around £200m to lift the silverware.

Where on earth is the profit in this game? How can it survive on these labour ratios and systemic debt without scores of billionaire sugar-daddies willing to treat it as a hobby? Isn’t it the very definition of unsustainable?

Photo credit: Karen Horton

The Internet has only really been around for the masses since Microsoft brought us Windows 95 and the ever-present Internet Explorer. But over 15 years on, digital and digital marketing still remains a bolt on for many businesses that should really know better.

I’m always amazed when strong marketers tell me their marketing director (not HR or finance director) doesn’t know anything about digital or ‘The Web.’ This leaves the marketing managers or their assistants to direct any digital impact the firm achieves.

I mean, where the hell have they been for the past decade and a half, writing Yellow Pages ads?

This digital-is-an-extra-component mindset is the equivalent to the outdoor toilet. For decades the home toilet lived in the back garden. It was an outhouse; an extra to the main building. Of course, modernisation took place and toilets thankfully now live a lot closer to the bedroom.

Directors who think marketing is a whole load of ‘stuff’ plus a bit of digital on the side are dinosaurs. There’s a sea change coming thanks to digital TV and smartphones that beggars belief compared to what we have today, and these dinosaurs need to get on the bandwagon.

Not seeing digital as an integral part of your marketing and communications is as antiquated as an outdoor loo. Quaint, but terribly ineffective for all concerned.

Answers.com sold this week for $127m. This coupled with the growing buzz around Quora, highlights the fact that Q&A sites are the poster-boy targets on the web. Added to that firestorm is Mahalo giving up on human powered search and pivoting to answers. Although it looks like they’re going for ‘how to’ queries more than actual answers to live questions.

We’ve seen plenty of mediocrity from Yahoo! Answers but are question sites about to get good answers? Aardvark, Stack Overflow and others argue that quality is possible if you ask the right community. A specialist community. But doesn’t that take us down a narrow forum-type road rather than the broad majority who only use the top search engines?

Monetising Q&A doesn’t look overly simple – banner ads would likely score awful click through rates. And I can’t help but feel it’s a bit like fighting over the crumbs left over from Google’s table. What happens when Google wants to clear house? That’s my question.

Three isn't a crowd at Google

Two of the world’s top tech companies announced overhauls at the top this week. Sadly, Steve Jobs’ health will see him step aside for an as-yet unannounced successor at Apple (Chief Operating Officer, Tim Cook will stand in at least in the short term). And Eric Schmidt, Google’s CEO, surprised most of us by tweeting, “Day-to-day adult supervision no longer needed! http://goo.gl/zC89p”

Ten years ago Mr Schmidt was brought in to appease Wall Street. The inmates weren’t going to run the asylum; the kids would be looked after by a mature business brain. He’s done an incredible job but of course there are still some who will criticise saying Google is a little slow to react, that their search isn’t as good or as strong as it should be, that they acquire rather than create. But when you’re in this league, they’ll criticise you no matter what. His decade at the helm has been pretty flawless by any standard.

Product trumps business
Just like the footballers that are shuffling around the country this month, tech CEOs need to be product people. It’s easy to say from my chair, but the business side of Yahoo, Facebook, Twitter, Google etc becomes a poor second to the products themselves. Without great products you wont find reach. Without reach you wont have take up. Without take up there is no scale. Without scale there is no money to be had – just look at Delicious’ closure by owners Yahoo!.

I believe product input and knowledge is why Google didn’t look outside for Schmidt’s successor. Just look at the emphasis on product in this excerpt from Schmidt’s blog post on the announcement:

Larry [Page] will now lead product development and technology strategy, his greatest strengths, and starting from April 4 he will take charge of our day-to-day operations as Google’s Chief Executive Officer. In this new role I know he will merge Google’s technology and business vision brilliantly…

Sergey has decided to devote his time and energy to strategic projects, in particular working on new products. His title will be Co-Founder. He’s an innovator and entrepreneur to the core, and this role suits him perfectly.

So we know Larry is definitely a product man. The question is can he change and become more media-friendly under crushing scrutiny, or, is he going to be typically Googlesque and rip up the rules, creating a whole new cult CEO playbook? Plus, what’s the odds on Apple promoting from within for Mr Jobs’ eventual succession?

Your thoughts?