Tag Archives: Amazon

Seriously? (updated)

Posted on by at 8:44 am

On Tuesday, a major retailer announced its earnings for the last quarter of 2012. Here is a summary:

The short-term news Tuesday was not good. Earnings per share fell to 21 cents from 38 cents in the fourth quarter of 2011. Although fourth-quarter revenue went up 22 percent to $21.27 billion, both revenue and earnings did not meet expectations. Analysts had predicted revenue of $22.2 billion and earnings of 27 cents a share.

So this company reported numbers substantially below expectations, and in fact guided down for the coming quarter. How did the market react? The stock soared more than 10% in after-hours trading and the next day. Incredible. This company is called Amazon, and it also reported a loss for all of 2012.

Compare and contrast this result to Apple’s earning report last week.

Update, February 1:

Here is what Matthew Yglesias had to say about this:

The company’s shares are down a bit today, but the company’s stock is taking a much less catastrophic plunge in already-meager profits than Apple, whose stock plunged simply because its Q4 profits increased at an unexpectedly slow rate. That’s because Amazon, as best I can tell, is a charitable organization being run by elements of the investment community for the benefit of consumers. The shareholders put up the equity, and instead of owning a claim on a steady stream of fat profits, they get a claim on a mighty engine of consumer surplus. Amazon sells things to people at prices that seem impossible because it actually is impossible to make money that way. And the competitive pressure of needing to square off against Amazon cuts profit margins at other companies, thus benefiting people who don’t even buy anything from Amazon. (emphasis added)

World War Three

Posted on by at 11:28 am

The Economist has published a very thoughtful essay describing the growing competition in the consumer space among Apple, Amazon, Google and Facebook. It is well worth a read if you are interested in that market.

Excerpt:

The tech industry has a history of bitter rivalries: IBM and Apple in the 1980s; Microsoft and Netscape in the 1990s. But the rivalries shaping the market today are even richer and more complicated, not least because they have a personal edge. Three of the big four are still run by men who made their billions as founder, or co-founder, of their empires—Amazon’s Jeff Bezos, Google’s Larry Page and Facebook’s Mark Zuckerberg. And although Jobs no longer rules Apple, he groomed Tim Cook, his successor as chief executive. “In the modern history of technology we have never seen such a highly engaged group of chief executives and founders,” says Mary Meeker, a partner at Kleiner Perkins Caufield & Byers, a venture-capital company.

Nor has the industry ever seen such young and feisty firms—Apple, the oldest of the quartet, was founded in 1976—with so much financial firepower. Each of the companies has developed a powerful business model. Google has turned search into a huge money-spinner by tying it to advertising. Facebook is in the process of doing something similar with the way people’s interests and relationships are revealed by their social networks. Amazon has made it cheap and easy to order physical goods and digital content online. And Apple has minted money by selling beautiful gadgets at premium prices.

Note the missing company: Microsoft.

Amazon Kindle Fire HD review round-up

Posted on by at 7:51 am

Amazon’s new Kindle 7-inch tablet is out and the reviewers are posting their views. It is not all sweetness and light.

David Pogue, NYT:

There is also, alas, a lot of soot.

For example, Amazon trumpets the Fire’s dual Wi-Fi antennas — a first in a tablet — which is supposed to give you a better, faster Internet signal.

Well, fine, but the Fire still lags the iPad in Web browsing. It took my Fire one second longer than the iPad to pull up nytimes.com or ESPN.com (7 seconds versus 6), four seconds longer for People.com, three seconds longer for Cracked.com — and, amusingly, 1.5 seconds longer to pull up Amazon.com.

There’s a camera on the front, but no camera app to use with it. Until someone writes software for it, you can’t take a picture or record video. Amazon says that for now, it’s for use only with Skype for video calling.

Most urgently of all, Amazon should tackle the apps problem. The Fire still lacks built-in apps for navigation, notes, to-do lists, alarm clock or stopwatch.

Amazon says more than 30,000 apps are available for the Fire, but they include only a fraction of my iPad favorites. For example, I couldn’t find Dropbox, Bump, Flixster, Echofon, Voxer, Flight Track Pro, Nest, Jot Not, Google Voice, Google Search or Taxi Magic.

Finally, there are the bugs. Once again, Amazon seems to have scrambled for the holidays, with the intention of polishing its software later.

Everything lags a bit; some apps take 7 or 8 seconds to open. The Gmail sign-up wizard has bugs; Draw Something’s screen appears upside-down, and won’t rotate upright; and turning a magazine page or zooming in produces blurry, blotchy text. It takes the gasping processor a couple of seconds to catch up with the sharp text you’re expecting.

Walt Mossberg, WSJ:

So, while Amazon is still stressing that these new Fires are best seen as front doors to its online stores, it is now claiming the Fire HD is also “the best tablet at any price.”

* * *

However, after testing the 7-inch Kindle Fire HD, I can’t agree with the sweeping claim that it is “the best tablet at any price.”

The Fire HD isn’t as polished, fluid or versatile as the iPad. It offers only a fraction of the third-party apps available on either the iPad or the Nexus 7 (and other standard Android tablets). I found that after prolonged use, the Fire HD showed signs of latency—apps and content displayed delays in launching. This latency disappeared after a reboot.

The Fire HD also assaults users with ads occupying the entire screen every time they start or resume using it. You have to pay Amazon another $15, using an obscure setting on a Web page, to escape these ads. And there are pitches to buy more content on many other screens, even those displaying your already-purchased content.

* * *

The Fire is really a hardware entry point to Amazon’s massive, unmatched selection of books and other content. Amazon CEO Jeff Bezos introduced the Fire HD saying it shouldn’t be thought of as a gadget. “The Kindle Fire is a service,” he said.

* * *

Overall, I see the 7-inch Fire HD as a good value for those primarily interested in easily tapping Amazon’s large collection of content.

Joshua Topolsky, The Verge:

There are two devices in this review. The first is something like an appliance — a window through which you casually view content, a way to listen to music, an e-reader for the train ride home. On that device, things like a big app selection or elaborate user experience take a back seat to content selection, price point, and simplicity. On that device, it’s not about going toe-to-toe with the competition in every way (as Amazon seems to want to do), it’s about offering a lot of fun stuff to consumers, and getting them to consume more. As that device, the Fire HD is a complete success. A marvel of bottom-line engineering and incredibly clever subsidies. It’s a really, really good tablet for doing some very specific things.

But there’s a second tablet in the review as well. One that gets compared to the iPad and Nexus 7. One that I expect to do more than just show me movies or help me shop. One that should be a companion for all kinds of things I want to do, that doesn’t feel limited, that doesn’t respond to my touches slowly, that doesn’t make me wait.

As that device, the Fire HD still has a long way to go. I think it can get there, but it isn’t there yet.

Tim Stevens, Engadget:

Even if you step up and pay the extra $15 to disable Offers on your Kindle Fire HD, you can never and will never shake the feeling that this is less a tablet and more of a tool for shopping — a Trojan Horse that’s let into your home thanks to its low price and then unleashes a legion of must-buy items to completely compromise any walls you’ve built around your budget.

If you can get past that decidedly subsidized feeling, you do have a compelling package in your hands. The HD is fast, has a nice design, a beautiful screen, proper stereo speakers and, of course, oodles and oodles of premium content. For casual users looking for an inexpensive yet powerful tablet, the Kindle Fire HD should absolutely be at the top of your shopping list. But, for those looking to do more, and do more rapidly, the Nexus 7 is still the king of this diminutive hill.

Disclosure: I am long AAPL.

Anti-trust quote of the day

Posted on by at 7:52 am

Amazon was using e-book discounting to destroy bookselling, making it uneconomic for physical bookstores to keep their doors open… Two years after the agency model came to bookselling, Amazon is losing its chokehold on the e-book market: its share has fallen from about 90 percent to roughly 60 percent… Brick-and-mortar bookstores are starting to compete through their partnership with Google, so loyal customers can buy e-books from them at the same price as they would from Amazon. Direct-selling authors have also benefited, as Amazon more than doubled its royalty rates in the face of competition… The irony bites hard: our government may be on the verge of killing real competition in order to save the appearance of competition.

– Scott Turow, president of the Authors Guild.

Competing on worker protections

Posted on by at 5:45 pm

How are Apple’s competitors doing in terms of disclosing or reducing worker abuse at their plants in China?

None too well, according Nick Bilton in the New York Times.

Over the past week I have asked Hewlett-Packard, Samsung, Microsoft, Dell, Amazon, Barnes & Noble and Lenovo about their reports on labor conditions. Many, if not all, of these electronics makers also use Foxconn.

Most responded with a boilerplate public relations message. Some didn’t even respond. The answer from Barnes & Noble, the maker of the Nook e-reader, was typical. Mary Ellen Keating, a senior vice president, said only, “We don’t comment on our supply chain vendors.” Ms. Keating wouldn’t say why Barnes & Noble does not discuss its manufacturing.

Lenovo e-mailed an off-topic report on sustainability.

Samsung, which sells far more cellphones than Apples does, gave no response.

Although some technology companies share some information about their audits, none go into detail about the violations they find or what they are doing to fix problems.

“When violations exist, they don’t follow up nearly as well as Apple does,” said Li Qiang, executive director of China Labor Watch, which monitors and investigates labor conditions in China.

Disclosure: I am long AAPL.

Related articles

Kinde Fire in the NYT

Posted on by at 6:11 am

Not a great set of initial reactions to the Kindle Fire as reported in The Times:

The Kindle Fire, Amazon’s heavily promoted tablet, is less than a blazing success with many of its early users. The most disgruntled are packing the device up and firing it back to the retailer.

A few of their many complaints: there is no external volume control. The off switch is easy to hit by accident. Web pages take a long time to load. There is no privacy on the device; a spouse or child who picks it up will instantly know everything you have been doing. The touch screen is frequently hesitant and sometimes downright balky.

All the individual grievances — recorded on Amazon’s own Web site — received a measure of confirmation last week when Jakob Nielsen, a usability expert, denounced the Fire, saying it offered “a disappointingly poor” experience. For users whose fingers are not as slender as toothpicks, he warned, the screen could be particularly frustrating to manipulate.

“I feel the Fire is going to be a failure,” Mr. Nielsen, of the Nielsen Norman Group, a Silicon Valley consulting firm, said in an interview. “I can’t recommend buying it.”

I would also add that once you enter your Amazon.com password to the device, you never have to enter it again for future purchases. This might sound great, but imagine if a child picked it up and began a purchase frenzy.

You can read Jakob Nielsen’s report here.

Disclosure: I am long AAPL.

Related articles

But other than that Mrs. Lincoln?

Posted on by at 9:32 am

Marco Arment, creator of the fabulous app Instapaper, offers a detailed review of the Kindle Fire. Does he like it? Not so much.

The Fire is an Android version, sort of, of the iPod Touch. It’s the first device available that’s inexpensive and offers Android in a somewhat reasonable package without a cellular contract.

But that’s just about all I can say for it. It’s a bad game player, a bad app platform, a bad web browser, a bad video player, and, most disappointingly, a bad Kindle.

If I didn’t need the Fire for Instapaper testing, I’d return it.

Kindle Fire reviews

Posted on by at 2:21 pm

The reviews of Amazon’s new Kindle Fire tablet/media device are starting to come in. Here is a sampling.

Engadget:

When stacked up against other popular tablets, the Fire can’t compete. Its performance is a occasionally sluggish, its interface often clunky, its storage too slight, its functionality a bit restricted and its 7-inch screen too limiting if you were hoping to convert all your paper magazine subscriptions into the digital ones. Other, bigger tablets do it better — usually at two or three times the cost.

So, the Kindle Fire is great value and perhaps the best, tightest integration of digital content acquisition into a mobile device that we’ve yet seen. Instead of having a standalone shopping app the entire tablet is a store — a 7-inch window sold at a cut-rate price through which users can look onto a sea of premium content. It isn’t a perfect experience, but if nothing else it’s a promising look into the future of retail commerce.

Jon Phillips, Wired:

By the time iPad 3 comes out, Apple’s cheapest iPad 2 will almost certainly be even cheaper. And this could very well be the tablet for you: 9.7 inches of uncompromised screen real estate, a processor that rips through web pages like a chainsaw, and an app and digital content ecosystem that’s already commensurate to (if not better than; let’s be serious) anything Amazon offers.

iPad killer? No, the Kindle Fire is not. And it doesn’t even match the iPad in web browsing, the one area in which its hardware should have sufficient performance to compete. But the press has definitely supercharged Amazon’s product launch with a level of hype and enthusiasm that would make Apple proud.

WIRED A great platform for casual video playback. A perfectly fine Android 2.3 app device. A price that pleads “buy me,” repeatedly, until you crack a big grin, and give in like a good-natured father buying trinkets for the kids at Wal-Mart.

TIRED Small screen size and insufficient processing power. Crap browser performance. Near useless as a magazine reader, and roundly trumped by superb e-ink Kindles as a book reader.

David Pogue:

Most problematic, though, the Fire does not have anything like the polish or speed of an iPad. You feel that $200 price tag with every swipe of your finger. Animations are sluggish and jerky — even the page turns that you’d think would be the pride of the Kindle team. Taps sometimes don’t register. There are no progress or “wait” indicators, so you frequently don’t know if the machine has even registered your touch commands. The momentum of the animations hasn’t been calculated right, so the whole thing feels ornery.

Magazines are supposed to be among the best new features. Most offer two views. There is Page View, which shows the original magazine layout — but shrunken down too small to read, and zooming is limited. Then there is Text View: simple text on a white background. It’s great for reading, but of course now you’re missing the design and layout, which is half the joy of reading a magazine. And Text View sometimes loses words, cartoon captions and so on. …

The built-in Web browser is supposed to accelerate delivery of Web pages by handing off some of the processing tasks to Amazon’s own online computers. Furthermore, when you are on, say, the New York Times home page, Amazon tries to guess what link you will tap next, based on its popularity. It prefeeds your Kindle pieces of the page that would then appear, to save even more time.

In practice, it’s not clear what all of that gains you: nytimes.com takes 10 seconds to load, eBay.com takes 17 seconds, Amazon.com takes 8 seconds. The iPad took about half as long each time. On the other hand, the Fire can play Flash videos (if a little jerkily), which the iPad can’t….

The Fire deserves to be a disruptive, gigantic force — it’s a cross between a Kindle and an iPad, a more compact Internet and video viewer at a great price. But at the moment, it needs a lot more polish; if you’re used to an iPad or “real” Android tablet, its software gremlins will drive you nuts.

 Lance Ulanoff (Mashable):

This is a product I wanted to love. The Kindle Fire’s unveiling was so impressive. Jeff Bezos hitting all the right notes in true Jobsian fashion, telling the tale of a product vision so clear it made my eyes tear up. Instead, now I’m discovering it’s a somewhat flawed gadget — a product that literally does not always know which way is up.

Donald Bell (Cnet):

Amazon’s triumph isn’t just about making cheap hardware. The Kindle Fire is a product that stands on Amazon’s years of hard work building out its e-book and digital media offerings, its app store, and its Cloud storage and processing technologies. But as much as I like this tablet, the Kindle Fire isn’t getting our best rating or an Editors’ Choice. There’s no doubt that I would choose an iPad 2 over a Kindle Fire in a heartbeat. In fact, I’d take an original iPad over a Kindle Fire.

Andy Ihnatko (Chicago Sun Times):

The Fire is a marvelous device. And Apple and Amazon couldn’t have created a more complementary pair of tablets if they’d colluded on it. Want a tablet that does everything, and which does books exceptionally well? Buy an iPad. Want something more compact, and you’re not terribly interested in much more than content consumption? The Fire is aces. I feel as if every potential tablet consumer will recognize themselves in one of those two descriptions.

Disclosure: I am long AAPL.

Kindle Fire and privacy (updated)

Posted on by at 7:15 am

The software on the Kindle Fire includes a new web browser called Silk, designed by Amazon.  It is designed to use Amazon’s online computing resources to speed downloads for users. Sounds good.

However, this also means that every web page a Kindle Fire user accesses goes through Amazon computers.  This gives Amazon the ability to track (and analyze) the detailed browsing history of Fire users.

Another way the browser aims to speed things up is by predicting the future. Silk uses machine learning to predict browsing patterns and pre-load pages that the user is likely to request next. Just as Amazon can guess which books and other products you’ll be interested in, it can also figure out which pages you’re likely to navigate to on the Web.

“The browser observes aggregate user behavior across a large number of sites,” said Jon Jenkins, Silk’s director of software development. “For instance, we might notice that people who view the New York Times homepage, often go to the New York Times business page afterwards. Our browser is capable of detecting these aggregate user behavior patterns and actually requesting the next page you’re likely to need before you even know you need it.”

Consider carefully the privacy implications of a retailer accumulating such data.

Update: More from Chris Espinosa.

The “split browser” notion is that Amazon will use its EC2 back end to pre-cache user web browsing, using its fat back-end pipes to grab all the web content at once so the lightweight Fire-based browser has to only download one simple stream from Amazon’s servers. But what this means is that Amazon will capture and control every Web transaction performed by Fire users. Every page they see, every link they follow, every click they make, every ad they see is going to be intermediated by one of the largest server farms on the planet. People who cringe at the data-mining implications of the Facebook Timeline ought to be just floored by the magnitude of Amazon’s opportunity here. Amazon now has what every storefront lusts for: the knowledge of what other stores your customers are shopping in and what prices they’re being offered there. What’s more, Amazon is getting this not by expensive, proactive scraping the Web, like Google has to do; they’re getting it passively by offering a simple caching service, and letting Fire users do the hard work of crawling the Web. In essence the Fire user base is Amazon’s Mechanical Turk, scraping the Web for free and providing Amazon with the most valuable cache of user behavior in existence.

And from Naked Security:

Fortunately Amazon will support an “off-cloud” mode for Silk. This lets users opt-out of the benefits of using EC2 while retaining the traditional privacy benefits of connecting directly to remote web sites.

While most of us roll our eyes when confronted with long privacy policies and pages of legalese, privacy risks lurk around every corner. If you buy a Fire device, think carefully as to whether your privacy is worth trading for a few milliseconds faster web surfing experience.