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Amazon's Bruising Week
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progman2000
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progman2000,
User Rank: Ninja
7/26/2014 | 10:16:27 AM
Several of the investor websites I follow..
are starting to show a little concern over Amazon as an investment.  Mainly stemming from Bezos's interests not necessarily putting shareholder value first (described in some circles as even being 'arrogant').  As a consumer I am tied to Amazon at the hip.  No way I am buying their phone though.
jastroff
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jastroff,
User Rank: Ninja
7/27/2014 | 12:33:30 PM
Re: Several of the investor websites I follow..
Most of us who have been in any kind of product development know that this kind of departure from what exists is either very foolish or very smart. Often the former.

So, if we know that Amazon is a smart company, what's the reason from reinventing the wheel, so to speak?

>> More significantly, the Fire Phone doesn't use the standard Android user interface. Amazon has substituted Google Android entirely with its own version. Rather than presenting apps and widgets on home screens, the Fire Phone uses a rotating carousel and something it calls Dynamic Perspective (camera-based 3D UI). Other features include Firefly, which can be used to search for purchasable products, the Amazon Appstore, and gestures for interacting with the software.
stotheco
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stotheco,
User Rank: Ninja
7/27/2014 | 1:55:59 PM
Re: Several of the investor websites I follow..
Amazon is my go-to when it comes to online shopping. Not their marketplace or third party sellers (unless I have no choice), but I choose Amazon because of their service and they're really already a well-oiled machine at this point. But like you, I won't buy their phone. They should probably just stick to what they're great at and continue building on that. And if they want to expand to these other niches, at least come up with a phone with features that people would actually use or find useful.
Gary_EL
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Gary_EL,
User Rank: Ninja
7/27/2014 | 10:48:20 PM
Re: Several of the investor websites I follow..
Yes, investing for the future is a great thing. But, there comes a point in time when investors want to see some profit. it looks like that time has finally arrived for Amazon.
nasimson
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nasimson,
User Rank: Ninja
7/28/2014 | 12:40:00 AM
Re: Several of the investor websites I follow..
Amazon is a great services company. It's not even an OK devices company. So the better option for Amazon is to do device partnerships with likes of Microsoft, Huawei or Leno than to procure and market its own devices. Even Google is playing out smartly despite Motorola's acquisition. It only launches one phone a year and that too in partnerships with LG or Samsung just to demonstrate its capabilities.
nasimson
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nasimson,
User Rank: Ninja
7/28/2014 | 12:43:06 AM
Re: Several of the investor websites I follow..
Given the whimsical, unforgiving and shortsightedness nature of Wall Street, I see one more such mistake and the board will ask Below to step down.
progman2000
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progman2000,
User Rank: Ninja
7/28/2014 | 6:54:09 AM
Re: Several of the investor websites I follow..
It will be interesting to see.  Sometimes these things don't play out nearly like I thought they would...
SaneIT
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SaneIT,
User Rank: Ninja
7/28/2014 | 9:35:00 AM
Gimmicky UI
The last thing you want to hear about your Android based phone is that the UI is gimmicky.  I knew there would be trouble when I heard that it would be locked down to Amazon's app store.  That has been the kiss of death for several Android based devices.  When you can't install apps that all your friends are talking about it tends to be more than a little frustrating.  Add to that the fact that people already complain about the fragmentation of Android and Amazon was just digging themselves a hole.  Can they climb out of it?  Probably but it won't be a quick or easy process.

 

 
pcharles09
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pcharles09,
User Rank: Ninja
7/28/2014 | 9:49:52 AM
Re: Gimmicky UI
@SaneIT,

Sounds like the many experiences I had with the Windows Phone. When Android gets compared to a WP, that's never good...
melgross
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melgross,
User Rank: Ninja
7/28/2014 | 10:28:48 AM
Long term problems.
Amazon has put itself in a position where the likelihood of making significant profits is about nil. I remember Bezos telling us, a long time ago, what his business plan was, and it isn't what they are doing. Originally, his plan was to have a small team, those who wrote and maintained the website, or paying an outside company to do so, a small executive group, and people to interact with customers and suppliers. But, those suppliers were to ship all the ordered products. Manufacturers and fulfillment companies would do all the work, leaving massive profits for Amazon. But quickly, it was seen that this wouldn't work. There is way too much inertia between an order, and when a manufacturer or fulfillment company ships. This was found out long ago when the first big Christmas season hit the web stores all over. Late deliveries, wrong packages, no delivery, etc, were common. Amazon, and others, began to realize they had to do this themselves, and that changed his business plan forever. Massive warehouses and shipment centers became unavoidable, killing any hope of massive profits. As long as Amazon expands, they will need to open more of these, costing billions more. Then there is Prime. Prime has always been a loss leader for Amazon. As they continue to add services in the almost desperate attempt to get people to move to them, they offer all of the services others charge for, for "free". What does this cost them? Streaming music subscriptions cost between $10 and $15 a month for those companies offering them (and those companies still aren't making money). For many years they were a failure, until they understood that in order to compete with iTunes, they needed to give songs away for permanent ownership. But now, Amazon has raised Prime to just $79 a year. They are losing massive amounts of money just on those music services. But then there are movie and Tv services, books on Prime, free and expedited shipping, etc. Amazon could be losing $100, or even much more on each Prime customer a year. Possibly much more. So 10 million Prime users could cost them at least $1 billion in losses a year, possibly much more. Then, it's admitted they do no better than break even on devices, or lose money on each sale. Since people buy Amazon's devices because they are cheap, it's not likely they buy enough to cover those losses from marketing those devices. Likely, these people were already buying from Amazon, so there may be little incremental increase there. I believe the proof for what I say is the obvious non existence of real profits when they make any, and the losses when they don't. The problem for amazon is that their business is contingent on continuing these practices, along with low prices. Good for the consumer, but bad for the investor. Going by profitability, their stock is actually worth around $30, not $300. Someday, we may see it there. And, by the way, with a year's free subscription to Prime, the Fire phone is just continuing this sell it for break even policy we've been seeing. It's not likely they're making any real money on each sale.
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