Monday, June 16, 2014

Amazon has the blessing of Wall Street to lose money as long as it is gaining market share

David Streitfeld

Said : David Streitfeld, who covers technology for The New York Times, in his news analysis titled "With an Amazon Smartphone, the Retailer Seeks a Tether to Consumers" published in today's edition. In 2013, Mr. Streitfeld was part of the team awarded the Pulitzer Prize for Explanatory Reporting.

David, in his analysis of Amazon's much hyped event on Wednesday in Seattle for a possible launch of a 3D phone, writes that by launching the so called phone Amazon "aims to close any remaining gap between the impulse to buy and the completed act" decoding a quote of an Amazon mobile executive who had commented a few years ago : “We’re trying to remove the barrier between ‘I want that’ and ‘I have it.’ ”

According to David, Amazon, known for directing all of its considerable energy to break up the usual way of doing things, has invested billions of dollars on multiple fronts: constructing warehouses all over the country to deliver goods as fast as possible, building devices as varied as tablets and set-top boxes, and creating and licensing entertainment to stock those devices." He calls Amazon's mobile venture "a wildly ambitious venture without precedent in modern merchandising." 

In his article, David has discussed the pros and cons of the mobile business for Amazon. He feels that the mobile phone - which is the last and most crucial link in this colossal enterprise (Amazon) - is a singular gamble for a company that, for all its technology components, is still primarily a merchant. Because even the smartest tech companies have trouble with phones. Giving examples, he writes : "A Google smartphone, the Nexus One, failed to catch on. Google next bought Motorola and then dumped it. BlackBerry, once the dominant smartphone maker, is struggling to survive. Microsoft’s Windows Phone has less than 3 percent of the global market. A Facebook phone stumbled last year." Referring the mobile ambitions of Amazon, David feels : "Now Amazon is giving this brutal business a shot."

And for those who wonder why Amazon has to keep playing with - and investing in - unconventional and brutal business plans, David has a wonderful observation : "Most of all, Amazon has the blessing of Wall Street to lose money as long as it is gaining market share — although recently the enthusiasm has dimmed a bit. The stock is about 20 percent off its peak."

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