They should have made it free for Amazon Prime members with a discount on the monthly contract.
What would have been better is if Amazon came out with a cheap ($100 or free) phone that can use the Amazon bonus bucks, that one gets for using their Amazon CC, to pay for the monthly service. Nothing fancy, just voice and data for a browser would do. (And maybe free movie and music streaming through Amazon Prime as a bonus.)
As it stands now, I already have and accumulate every month, way more bonus dollars than I can spend shopping on Amazon .com. I know I can get $100 cash for every 2500 bonus bucks, but there's a limit per year and it wouldn't be enough to cover the monthly cost of even the cheapest smartphone plan. But if i could offset the monthly cost of having a smartphone with my Amazon CC spending, I'll have a free smartphone or maybe just have to pay less than $10 a month for one.
Amazon has shown that they can increase revenue by a decent percentage year after year. So long as they can do this, their stock will always command a high PE because investors are hoping that Amazon will eventually solve their razor thin profit margin problem. (They've been patiently waiting for quite awhile now.)
Right now, if Amazon can eliminate free shipping without reducing revenue, their stock would go up even more as it's the free shipping that is eating up a lot of their profit margins. But it's free shipping that attracts a lot of their customers. (Tax free use to one of the perks but that is slowly going away as more and more States are requiring Amazon to collect sale tax on deliveries to their State.) So most likely, revenue would drop to the point where the extra profit margin wouldn't amount to more profit.
So one solution is to reduce their shipping cost. And that's one of the reason why Amazon shows so little profit. Amazon keeps pumping millions of dollars of their revenue back in to building new infrastructures like new warehouses near their customers. Revenue that could had otherwise shown up as profit. But eventually this will reduce their shipping cost, which in turn will increase the profit margin on their main revenue stream. Much smarter than spending money on a Motorola or Nokia. It's the same as Apple investing millions (if not billions) in R&D. Hopefully, it will eventually pay for itself many times over.
Amazon has shown that they can increase revenue by a decent percentage year after year. So long as they can do this, their stock will always command a high PE because investors are hoping that Amazon will eventually solve their razor thin profit margin problem. (They've been patiently waiting for quite awhile now.)
Interesting data. Thanks for sharing.
I'll put my money on the consistent, reported profits of AAPL over the hope of future profits of AMZN any day.
But then again, what do I know. I'm not a Wall Street analyst. /s
Amazon has shown that they can increase revenue by a decent percentage year after year. So long as they can do this, their stock will always command a high PE because investors are hoping that Amazon will eventually solve their razor thin profit margin problem. (They've been patiently waiting for quite awhile now.)
Right now, if Amazon can eliminate free shipping without reducing revenue, their stock would go up even more as it's the free shipping that is eating up a lot of their profit margins. But it's free shipping that attracts a lot of their customers. (Tax free use to one of the perks but that is slowly going away as more and more States are requiring Amazon to collect sale tax on deliveries to their State.) So most likely, revenue would drop to the point where the extra profit margin wouldn't amount to more profit.
So one solution is to reduce their shipping cost. And that's one of the reason why Amazon shows so little profit. Amazon keeps pumping millions of dollars of their revenue back in to building new infrastructures like new warehouses near their customers. Revenue that could had otherwise shown up as profit. But eventually this will reduce their shipping cost, which in turn will increase the profit margin on their main revenue stream. Much smarter than spending money on a Motorola or Nokia. It's the same as Apple investing millions (if not billions) in R&D. Hopefully, it will eventually pay for itself many times over.
I don't believe one second that no matter how much they cut their shipping cost, their PE ratio makes sense. Come on. Look at it. Pure crazyness. They've been building infrastructure for 20 years BTW, that's a hell of a long time for most businesses, even patient ones.
Their margins and competitiveness is also eroding because there are now thousands of retailers that offer pretty decent deals online that are cheaper in their own niche and only marginally more expensive just outside their niche, while providing much better customer service. Local retailers that also offer internet sales will eventually get the ratio of real world vs online service right (they are getting close) and provide a distinct differentiation with Amazon. The fun thing, those local retailers don't need to build anything, they're already there.
If your doing B2B, Alibaba is the place to go, and even people can easily order things directly from China from there that undercut Amazon severely (you just have to be ready to wait for it to get to you).
I'll put my money on the consistent, reported profits of AAPL over the hope of future profits of AMZN any day.
But then again, what do I know. I'm not a Wall Street analyst. /s
I understand the delusion about Amazon; I still don't think it makes any sense except if you all think of it as a "pass the potato" type of game where the last one holding it gets their ass kicked. You do great if your not "that guy".
My first reaction when the FirePhone was announced, and I think I posted it here: Amazon made a huge mistake by pricing this phone in line with other flagship phones. Its main purpose is to get people to spend more money on Amazon, and as such they should give it away for practically free. Of course, making a phone that was essentially only compatible with AT&T (it's missing 3G AWS for full T-Mobile support) was a very restricting choice, further limiting the market for the phone.
Had they initially priced the phone at $140 with 1 year free Prime for the unlocked version, it would have been a massive success -- but this would have of course been a huge marketing expense that they probably were not prepared to take. The release of the iPhone 6 and 6Plus, redefinining the standard for a premium phone, was the last nail in their coffin.
All the big boys will soon be out of the high end phone game. All that's left is a bunch of cheap piece of shit phone makers like Xiaomi and even the former CEO of Apple Scully's phones. LOL. Middle class Chinese don't want to be caught dead with those POS phones.
By 2022 there is suppose to be 650 million middle class Chinese. Probably close to 60% will buy iPhones. That's almost 400 million iPhones sold in China alone. That is about 160 million a year based on upgrade cycles.
To those haters who said iPhone growth is over.....its just beginning. China alone will allow Apple to grow iPhone units at 15-20% for the next 5 years. And after that we have India that will spur on growth for the next 5 years. We are talking about a decade of solid 15-20% unit growth.
I think your numbers are way too optimistic. I don't think Apple will be able to dethrone any domestic brand like Xiaomi mainly because the majority of Chinese phone buyers are price sensitive and require other features that Apple do not offer like dual-sim and reskinning of the GUI which only Android offers. If you have any experience with Xiaomi phones you know their phones are completely built for theme customization.
My most optimistic guess is that Apple will hold 14-18% marketshare in China the next 2 years and could fall because of market saturation.
The reason why Amazon Fire failed because Bezos didn't realize his company's target audience is not Apple like. They are like most PC and Android users. Specs > Price > Brand.
Comments
They should have made it free for Amazon Prime members with a discount on the monthly contract.
What would have been better is if Amazon came out with a cheap ($100 or free) phone that can use the Amazon bonus bucks, that one gets for using their Amazon CC, to pay for the monthly service. Nothing fancy, just voice and data for a browser would do. (And maybe free movie and music streaming through Amazon Prime as a bonus.)
As it stands now, I already have and accumulate every month, way more bonus dollars than I can spend shopping on Amazon .com. I know I can get $100 cash for every 2500 bonus bucks, but there's a limit per year and it wouldn't be enough to cover the monthly cost of even the cheapest smartphone plan. But if i could offset the monthly cost of having a smartphone with my Amazon CC spending, I'll have a free smartphone or maybe just have to pay less than $10 a month for one.
I hope they start shipping these phones worldwide, contract-free for $0.99. I'd buy it in a moment of weakness!
And yet AMZN seems fine.
I don't understand how the market gives AMZN so much latitude, and AAPL so little. Mind-blowingly irrational.
http://www.statista.com/statistics/266282/annual-net-revenue-of-amazoncom/
Amazon has shown that they can increase revenue by a decent percentage year after year. So long as they can do this, their stock will always command a high PE because investors are hoping that Amazon will eventually solve their razor thin profit margin problem. (They've been patiently waiting for quite awhile now.)
Right now, if Amazon can eliminate free shipping without reducing revenue, their stock would go up even more as it's the free shipping that is eating up a lot of their profit margins. But it's free shipping that attracts a lot of their customers. (Tax free use to one of the perks but that is slowly going away as more and more States are requiring Amazon to collect sale tax on deliveries to their State.) So most likely, revenue would drop to the point where the extra profit margin wouldn't amount to more profit.
So one solution is to reduce their shipping cost. And that's one of the reason why Amazon shows so little profit. Amazon keeps pumping millions of dollars of their revenue back in to building new infrastructures like new warehouses near their customers. Revenue that could had otherwise shown up as profit. But eventually this will reduce their shipping cost, which in turn will increase the profit margin on their main revenue stream. Much smarter than spending money on a Motorola or Nokia. It's the same as Apple investing millions (if not billions) in R&D. Hopefully, it will eventually pay for itself many times over.
http://www.statista.com/statistics/266282/annual-net-revenue-of-amazoncom/
Amazon has shown that they can increase revenue by a decent percentage year after year. So long as they can do this, their stock will always command a high PE because investors are hoping that Amazon will eventually solve their razor thin profit margin problem. (They've been patiently waiting for quite awhile now.)
Interesting data. Thanks for sharing.
I'll put my money on the consistent, reported profits of AAPL over the hope of future profits of AMZN any day.
But then again, what do I know. I'm not a Wall Street analyst. /s
http://www.statista.com/statistics/266282/annual-net-revenue-of-amazoncom/
Amazon has shown that they can increase revenue by a decent percentage year after year. So long as they can do this, their stock will always command a high PE because investors are hoping that Amazon will eventually solve their razor thin profit margin problem. (They've been patiently waiting for quite awhile now.)
Right now, if Amazon can eliminate free shipping without reducing revenue, their stock would go up even more as it's the free shipping that is eating up a lot of their profit margins. But it's free shipping that attracts a lot of their customers. (Tax free use to one of the perks but that is slowly going away as more and more States are requiring Amazon to collect sale tax on deliveries to their State.) So most likely, revenue would drop to the point where the extra profit margin wouldn't amount to more profit.
So one solution is to reduce their shipping cost. And that's one of the reason why Amazon shows so little profit. Amazon keeps pumping millions of dollars of their revenue back in to building new infrastructures like new warehouses near their customers. Revenue that could had otherwise shown up as profit. But eventually this will reduce their shipping cost, which in turn will increase the profit margin on their main revenue stream. Much smarter than spending money on a Motorola or Nokia. It's the same as Apple investing millions (if not billions) in R&D. Hopefully, it will eventually pay for itself many times over.
I don't believe one second that no matter how much they cut their shipping cost, their PE ratio makes sense. Come on. Look at it. Pure crazyness. They've been building infrastructure for 20 years BTW, that's a hell of a long time for most businesses, even patient ones.
Their margins and competitiveness is also eroding because there are now thousands of retailers that offer pretty decent deals online that are cheaper in their own niche and only marginally more expensive just outside their niche, while providing much better customer service. Local retailers that also offer internet sales will eventually get the ratio of real world vs online service right (they are getting close) and provide a distinct differentiation with Amazon. The fun thing, those local retailers don't need to build anything, they're already there.
If your doing B2B, Alibaba is the place to go, and even people can easily order things directly from China from there that undercut Amazon severely (you just have to be ready to wait for it to get to you).
Interesting data. Thanks for sharing.
I'll put my money on the consistent, reported profits of AAPL over the hope of future profits of AMZN any day.
But then again, what do I know. I'm not a Wall Street analyst. /s
I understand the delusion about Amazon; I still don't think it makes any sense except if you all think of it as a "pass the potato" type of game where the last one holding it gets their ass kicked. You do great if your not "that guy".
My favorite thing about Amazon is that virtually all of the big box retailers now price match them, free two-day shipping not required.
Of course, making a phone that was essentially only compatible with AT&T (it's missing 3G AWS for full T-Mobile support) was a very restricting choice, further limiting the market for the phone.
Had they initially priced the phone at $140 with 1 year free Prime for the unlocked version, it would have been a massive success -- but this would have of course been a huge marketing expense that they probably were not prepared to take. The release of the iPhone 6 and 6Plus, redefinining the standard for a premium phone, was the last nail in their coffin.
LOL.
Amazon - failed
Samsung - failing
Microsoft - failed with Nokia
Google - failed with Motorolla
LG - about to go bankrupt
Sony - about to close phone division
HTC - about to go bankrupt
All the big boys will soon be out of the high end phone game. All that's left is a bunch of cheap piece of shit phone makers like Xiaomi and even the former CEO of Apple Scully's phones. LOL. Middle class Chinese don't want to be caught dead with those POS phones.
By 2022 there is suppose to be 650 million middle class Chinese. Probably close to 60% will buy iPhones. That's almost 400 million iPhones sold in China alone. That is about 160 million a year based on upgrade cycles.
To those haters who said iPhone growth is over.....its just beginning. China alone will allow Apple to grow iPhone units at 15-20% for the next 5 years. And after that we have India that will spur on growth for the next 5 years. We are talking about a decade of solid 15-20% unit growth.
I think your numbers are way too optimistic. I don't think Apple will be able to dethrone any domestic brand like Xiaomi mainly because the majority of Chinese phone buyers are price sensitive and require other features that Apple do not offer like dual-sim and reskinning of the GUI which only Android offers. If you have any experience with Xiaomi phones you know their phones are completely built for theme customization.
Take a look at the recent article: http://www.cnbc.com/2015/08/26/smartphone-market-is-slowing-massivelyblame-china.html
My most optimistic guess is that Apple will hold 14-18% marketshare in China the next 2 years and could fall because of market saturation.
The reason why Amazon Fire failed because Bezos didn't realize his company's target audience is not Apple like. They are like most PC and Android users. Specs > Price > Brand.