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| From the Shelves of Amazon)((hint, the earning report is about more than retail) published February 02 2008 |
by Teresa MartinThere are a few companies that I can't seem to stop writing about. Frequent readers know my endless fascination with eBay and the way it reflects the various forms of humanity. Amazon is another. And right now Amazon is in the middle of an interesting job of reinvention. This past week (the last week in January 2008, that is), it released its earnings report for 2007 ... and several tidbits were especially interesting. First, the money.
Yes, that is Billion. With a B. That's pretty much doubling its performance. And I think those numbers should quash any last sounds about e-commerce. It is here. To stay. Period. But, the money isn't the most interesting tidbit. Three other elements suggest some interesting potential realignment of the stars. First, the company took a swipe at Apple and simultaneously positioned itself as a company that sells all forms of media, not just a company that is a storefront for books and other people's stuff.
Second, the company extended that media story and gave a clue to the market response to its digital reader device, the Kindle.
We are transitioning from hard copy content to digital content. Like it or not, that's the way the world is moving. And Amazon is making the statement loud and clear that it part of transition. Oh yeah, Amazon also announced last week that it is acquiring Audible.com, the leading producer of digital audio content. But the most interesting line is this:
These are web services. Amazon isn't a just a storefront for analog - and digital - goods. It is transforming into something much broader. This extension is a bit like a bricks and mortar mall management company becoming the world's premiere brickyard and cement manufacturer too. Amazon Web Services is a unit within Amazon that provides building block web services. Basically, Amazon figured out that to do what it does, it created some pretty robust technology. And, logically, that technology has value unto itself, not just as a supporting platform for Amazon stores. Amazon's Elastic Compute Cloud is a virtual computing environment. You create a machine image of your applications, libraries, etc., and as you need it you draw computing power from Amazon's servers - aka, the Cloud. This approach is a computing industry trend in enabling rapid scaling up or scaling down of computing needs - instead of buying everything you need for peak time, you use the cloud concept to draw on what you need when you need it. And you pay for what you use. This is married to the company's Simple Storage Service, which is a similar approach. You can store and retrieve any amount of data, at any time, from anywhere on the web. And, again, you pay for what you use. There are several other related virtual web products as well, including one that wasn't mentioned in the earnings report, but is part of web services ... human services, that is. Amazon Mechanical Turk is described as a "marketplace for work that requires human intelligence." Like virtual computing and virtual storage, this is a virtual community of workers. Instead of scaling gigabytes, you can scale technical staffing - like data processing, image and video processing, and data verification. It seems hard to believe that in July 1995, when Amazon launched, lots of people snickered at the idea of selling books online. There was all that pesky shipping and besides don't we know that customers need to browse a physical shelf in order to buy a book? A decade later, the world of books - and all commerce - is turned upside down. But the story is far from over ... and even the first successful digital store is now reinventing itself for the next chapter.
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