Two days ago, I started this post:
As I mentioned before, Amazon’s business strategy looks like cheating:
- Sell product for a loss
- Sell a lot of that product
Amazon lost money for many years.
Their most recent financials show them making 3% profit.
That is not very much.
By comparison, Apple makes ~25% profit (though Apple is on the high side of the spectrum).
…then, just today, this report came out:
Amazon profits dive
Perhaps I was on to something.
Two thoughts on Amazon.
First: Amazon’s business strategy seems like cheating.
- Sell product for a loss.
- See a lot of that product.
Something doesn’t add up. Who is being screwed?
I have heard that Amazon uses the Walmart strategy of pinching suppliers. Except Amazon’s suppliers are the content creators, the authors and artists.
Merlin Mann explained the difference between Apple and Google business strategies this way:
Google: Thanks for looking at 100s of ads you hate.
Apple: Thanks for buying 100s of dollars of stuff you love.
So, would Amazon be: Thanks for buying 100s of dollars of stuff for so cheap that someone isn’t getting paid?
Second: Why is the Kindle so primitive and cumbersome?
People who own a Kindle, love it. That might be all that matters. My experience with a Kindle is limited to helping two people set up their Kindles (now called Kindle Keyboard). And it was horrible. The two people were thrilled. But I was literally offended by the primitive, cumbersome way you interacted with it. The keyboard was embarrassingly horrible, navigating was horrible, browsing the internet was horrible.
Almost a third point: Why seven models? (Is the DX still available?) Aside from the fact that every business (except Apple) operates that way: make a confusing number of products; give them confusing names; operate on poor revenue-to-profit margins.
Almost a fourth point: Amazon’s PE ratio. !?
There are too many ads on the internet.
We’ve had sold so much we have sold everything.
Go to http://www.nba.com and you don’t get basketball. You get a little basketball and a violent assault of ads.
Go to http://www.nytimes.com and you don’t get The Times. You get The Times hidden in the midst of a barrage of ads.
Been to Facebook lately? The. Whole. Thing. Is. Ads.
Much has already been written about Google and ads. (Hint: YOU are the product, the advertisers are Google’s customer.)
Amazon’s Kindle is now ad-supplemented.
Selling ads is not as profitable as selling a product. But it certainly scales. Just sell more ads. And then more.
It’s not going to stop. And it’s already too much. What happened? What have we sold?
Why can’t anyone replicate Apple’s success?
Everyone is trying. From yogurt makers to car makers to internet search companies, everyone tries to copy Apple’s products, or design philosophy, or retail strategy, or marketing, or chase Apple into an industry that Apple created.
But none of the copying transforms any of the companies that try.
Why not? It is an interesting question.
I offer two answers:
1) Everyone is chasing Apple. You cannot overtake anyone when you are trying to keep chasing them. Still, I would think that the chasing would have the ol’ “Hitch-your-wagon-to-a-star” effect; I would think that at least some of the companies would find themselves transformed into very profitable companies. But that does not happen. Except for Microsoft in the 1990s. But it hasn’t worked for them since them… Microsoft’s market capitalization in 1999: 500 billion; Microsoft’s market cap today: 200 billion. Still very large. But 2 1/2 times smaller than it was.
2) Everyone is trying to copy the external, peripheral factors in Apple’s success. Why isn’t anyone (a company or individual) copying Apple’s focused vision? Organizations and companies spend a lot of money and time and energy on gathering data, buying data, reading data, training, fads, etc. But, I submit, you could spend that money and time (or less) on learning about, growing, sharpening your vision–as a person or a company.
Vision trumps all. That’s the explanation for Apple’s success. You likely already have a vision. Go with it. If you don’t, knock yourself out finding and focusing your vision. Anything else is just a game. An unprofitable, unsustainable game.
Maybe Google bought Motorola because Google is desperate.
Could Google be desperate that all their (admitted) copying has caught up to them? Is it possible that the Motorola buy was not planned or part of a strategy to move into hardware manufacturing, but that it was a sweaty-desperate move to keep Android alive?