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Amazon

Amazon mines for more gold

by nick on December 7, 2011

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.

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Is the web becoming a funnel?

by nick on November 6, 2011

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.

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Kindle thoughts

by nick on September 29, 2011

Kindle FireAmazon 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?

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Anarchy reigns

by nick on August 10, 2011

The theme of the rioting youths I’ve seen interviewed this week flows around respect. “When we get it, we’ll give it back. ‘Till then we’re taking,” said one angry girl on the beeb news this morning.

Respect exists inherently in a social society. By minding my own business and not infringing on your day as I pass you on the street, I’m being respectful. You don’t need to be told that and visa versa. You need to be a deluded Neanderthal to believe smash-grab-burn is the way to gain any respect.

Many far smarter than me will be picking the bones of this mayhem for months to come but our modern pillars of society have proven they don’t stand tall in a culture that believes wholeheartedly to entitlement.

The politically correct brigade haven’t helped over the years. Teachers are sworn at, spat at, verbally and physically abused in our classrooms, but they daren’t do anything about it. Immigration has been out of control by any possible measure. We’ve got an overstretched, underfunded, shrinking police force that’s neutered by a judicial system that can’t afford to incarcerate offenders. And we’ve got politicians wishing to hug a hoodie rather than educate and create a job for then. A benefits culture that rewards teenage pregnancy.  Gang culture, drug culture, yob culture… all make a simplistic list towards my pet theory of why.

I fear the elastic is snapping here. I’m sure there are hundreds, if not thousands of youths who’ve never stepped outside the law prior to being caught on camera this week. They’ve never smashed property, never stolen and certainly never thrown rocks at police officers. But some parents aren’t just allowing their kids out, they’re taking them looting.

And what’s next, now that the lion has tasted warm blood? Doesn’t the fact that the lawlessness is spreading demonstrate how easy it is to step across the line of temptation from wanting to taking?

This isn’t an Arab Spring. There is no dictator to topple. This is pure entertainment for these youths/criminals. Yes, the economy is in the toilet. Yes, the job outlook is bleak. And yes, the police took the life of a man, but this is as far removed from legitimate protest as you can get.

David Cameron has opportunity here. An opportunity to put some of the P.C. bull***t back in the cupboard. He says, “You’ll meet the full force of the law.” Well, David, they’ve seen your laws and they’re laughing at them. If the government doesn’t grip this with a force that makes Hulk Hogan squirm, point-scoring Ed Miliband will land enough rabbit punches to really hurt this time.

I genuinely fear for our society today. If anarchy becomes entertainment for the masses then tonight and every other night threatens to become a scene from a Mad Max movie. It is an impossibly difficult task to put this genie back in the bottle and capitalism hasn’t exactly been on a charm offensive of late (bankers, politicians, journalists, austerity et al) and the gap of the haves and the have-nots is growing. Can we really push consumerism to the level we have without consequence (I’m talking American housing as much a teenager’s desire for iPhones)? And how can government reign that back, even if we wanted them to? Surely there’d be cries of nanny-state at the thought of it?

Europe doesn’t have the answer; neither does America. The principles and practices that have gotten us here are clearly flawed and should be questioned by all. Regardless of David, Ed and Cleggy, I think I’d vote for Scooby Doo at this point if his manifesto stated he’d bringing back capital punishment.

Restoring public order is the obvious immediate task, but proving public confidence and restoring peace of mind is hugely urgent too. Government can’t seriously do that alone, there’s a collective responsibility towards change needed here.

Our nation is in metamorphosis this week – what will we become?

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This is a business blog with a digital angle, so here’s some relevancy: since the rioting Amazon has seen a massive spike in shovels and baseball bat sales.

I don’t know if that indicates more protectors or more perpetrators but it’s a spike all the same. Just saying.

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Kindle grows with proximity

by nick on July 30, 2010

Hadfield Road in Cardiff is a haven for the car buyer. It’s just a mile long but straddling nearly every inch of it you’ll find over 20 car dealerships. This proximity to your competitors certainly isn’t unique – pub chains all gather together in city centres. So does the sex industry in London’s Soho, and jewellry in New York’s diamond district around 47th Street. All apply the same phenomenon of proximity.

A similar thing is happening with e-book readers. The iPad launched earlier this year and threatened to decimate existing readers like Sony’s Pocket Reader, Barnes & Noble’s Nook, and, most notably, Amazon’s Kindle. But it appears to have done the opposite as sales of Kindle have trebled this year compared to the first half of 2009.

Amazon is now selling more E-books than they do hardbacks! Just think about that [undisclosed] number for a minute. In an interview with USA Today, Amazon’s CEO Jeff Bezos said, “I predict we will surpass paperback sales sometime in the next nine to twelve months. Sometime after that, we’ll surpass the combination of paperback and hardcover. It stuns me.”

They’re releasing a new Kindle at the end of August that’s smaller, lighter, better and half the cost. I don’t know if it can launch an artillery strike but it’s going to further enliven their product life cycle.

All this should remind us that the next time competitors threaten to join our market or emulate our products, we should wonder if we cant use proximity to grow the whole together, rather than needing to turn into cannibals. It’s another argument for the thoroughly modern co-opertition, not necessarily competition.

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What price for postage?

by nick on January 10, 2010

Charging for postage is the perennial debate of e-commerce. I think Amazon’s decision this week to extend its free postage charge trialled before Christmas might favour a good deal more consumers than Amazon serves. I can see other retailers having to follow suit as they look to win a friend and gain a client from their competitors.

You can almost see it as a cost per acquisition – how much would you pay a 3rd party to get you a customer? Is it cheaper than banner ads and affiliate percentages?

Then again, when Amazon can charge $3 billion for a Discovery Channel CD-ROM, maybe taking the hit on their postage bills wont hurt the P&L so much.

Photo credit: Mooganic

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August the advertising month

by nick on September 2, 2008

Is it me, or did an inordinate amount of the tech news from both sides of the pond seem to be about advertising last month? Not really surprising considering online is about the only area of advertising that’s going to grow this year. Here’s what I think are the more notable ones:

- The ever-innovative TiVo have paired up with Amazon to allow viewers to buy products they see in shows or adverts. This is new indeed and is pro-advertiser as opposed to TiVo’s previous innovation which allowed you to record programmes without the ads.
Evan Young their director of broadband services, said, “For example, if a guest on the Daily Show or Oprah has a new book, CD, or DVD out, you can purchase it on Amazon.com using your TiVo remote without missing a second of TV, whether the viewer is watching live or recorded.”

- ITV has been bigging up its ITV.com audience numbers but sales head, Rupert Howell, had some refreshing words about online cannibalising offline ads. “The growth of the internet as an advertising medium is taking business away from direct marketing, classified and local and regional press but doesn’t appear to be taking away from television. What matters is that we outgrow the growth in internet advertising – in the first half of this year, the internet grew as an advertising medium by 24% and we grew at 43%.”

- Google’s acquisition of Double click appears to have changed their mind on invasive cookies and privacy (DoubleClick plants cookies on users’ computers who see the ads it serves). Advertisers will be cock-a-hoop as they can limit the number of times a single user sees their ads and see how many different people have seen it. They can also track how many people saw an ad and then visited their website.
But what of internet users? Google promises a better experience, because “they will no longer see the same ad over and over again.” The message: cookies are good for you. Better get used to it.

- YouTube is now showing ads plus video, much to the dismay of the NY Times. But if you’d bought the company for $1.65 billion (as Google did) could you persuade the board not to sell, sell, sell?

- Yahoo! has pre-announced a new opt-out so that users of Yahoo services can request not to be on the receiving end of targeted advertising. Though it looks like they will still plant cookies and collect data, even if it doesn’t use the information for behavioural targeting purposes.

- Video search index Blinkx attempting to buy MIVA, the pay-per-click ad network. Blinkx reckons the acquisition would allow it to more quickly roll out the technologies it’s developed over the last year – like its own video advertising proposition, AdHoc.

It seems the eye(ball)s have it – yours, via your monitor. There are plenty out there spending big money to get to them.

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