Originally Posted by tt92618
I'll be upfront and say that most of you guys just don't get it; you don't understand why Amazon would build a phone to begin with, and so you try to frame it in terms that you can understand, which is direct competition with Apple. But Bezos isn't trying to compete with Apple. Bezos isn't trying to steal Apple's lunch (yet), or even grab the pickle off their burger.
Bezos is optimizing Amazon's business, which is in essence the argument leveled in this piece, minus all the Apple worship.
Kindle is an excellent case in point. Although just about everyone here is quick to dismiss Kindle tablets, when you look at the real numbers, it's easy to see why Bezos and company think they are a grand idea. Kindle tablets are estimated to own about 7 - 8% of the market, which is not as insignificant as everyone here would like to imagine. It is higher, for example, than those guys up in Redmond. Still it is a number that is obviously no threat to Apple. But it may interest you to know that this seemingly insignificant 7 - 8 percent number has helped fuel 21% quarterly growth of Amazon's sales of media (video, books, and other content). So that small 7 - 8 percent market share is driving almost 90% growth YOY of Amazon's content business, which is not at all shabby, and which more than justifies Amazon's approach. And that business presently accounts for almost 8 billion dollars in annual revenue. Map that number out with 1 or two years of continued 90% growth and it is not very hard to understand why Amazon is committed to their technology strategy. Promoting their ecosystem is a huge plus for Amazon's business.
So against that, the sane question to ask is why wouldn't Amazon want to build a phone? It is tailor made to drive the company's core business, and that is I might add not a shred different from how Apple uses the halo effect of their hardware to drive other aspects of their business.
FYI, it is estimated that grabbing just 3% of the Android phone market could net Amazon an additional $5 billion in annual revenues. That's not chump change.
People don't understand how Bezos approaches things; he has a horizon of 5 to 10 years when it comes to business strategy, and it is a core value for him that he is willing to be misunderstood for a very long time, which is essentially what most of you are doing; you misunderstand what Bezos is up to and you all too quickly dismiss it.
Amazon has built probably the best cloud services infrastructure in the world, which is quite surprising for a company everyone sees as a retailer. But to clue you in on how good AWS is, it is the backbone for many successful tech companies, including Netflix, Adobe, Expedia, Pinterest, and more. As a matter of fact, AWS just won a major CIA contract, and beat out IBM to do it. Which serves, in many ways, as a testimony.
Amazon has also built an advertising and data harvesting enterprise that significantly exceeds that of competitors such as Twitter and LinkedIn, and which directly challenges Google in many ways.
Amazon competes directly against Netflix for streaming video, and quite well.
Amazon competes against Google and Apple for video and music content sales.
Amazon is a gargantuan retailer competing against almost everyone.
Amazon just built a payment processing service to compete against Paypal and others.
And I could go on.
My point is that there is a much bigger picture here than simply hawking phones, and I think that most of you laughing about the phone completely miss that very big picture; you don't see the many strategic ways in which selling a phone is a strong plus for Amazon's business, even if it never even comes close to challenging Apple in any way.
Have a nice evening.