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Amazon has the potential to meet the expectations of investors. But success will bring a big problem
AMAZON is an extraordinary company. The former bookseller accounts for more than half of every new dollar spent online in America. It is the world’s leading provider of cloud computing. This year Amazon will probably spend twice as much on television as HBO, a cable channel. Its own-brand physical products include batteries, almonds, suits and speakers linked to a virtual voice-activated assistant that can control, among other things, your lamps and sprinkler.
Yet Amazon’s shareholders are working on the premise that it is just getting started. Since the beginning of 2015 its share price has jumped by 173%, seven times quicker than in the two previous years (and 12 times faster than the S&P 500 index). With a market capitalisation of some $400bn, it is the fifth-most-valuable firm in the world. Never before has a company been worth so much for so long while making so little money: 92% of its value is due to profits expected after 2020.
That is because investors anticipate both an extraordinary rise in revenue, from sales of $136bn last year to half a trillion over the next decade, and a jump in profits. The hopes invested in it imply that it will probably become more profitable than any other firm in America. Ground for scepticism does not come much more fertile than this: Amazon will have to grow faster than almost any big company in modern history to justify its valuation. Can it possibly do so?
It is easy to tick off some of the pitfalls. Rivals will not stand still. Microsoft has cloud-computing ambitions; Walmart already has revenues nudging $500bn and is beefing up online. If anything happened to Jeff Bezos, Amazon’s founder and boss, the gap would be exceptionally hard to fill. But the striking thing about the company is how much of a chance it has of achieving such unprecedented goals
A new sort of basket-case
This is largely due to the firm’s unusual approach to two dimensions of corporate life. The first of these is time. In an era when executives routinely whinge about pressure to produce short-term results, Amazon is resolutely focused on the distant horizon. Mr Bezos emphasises continual investment to propel its two principal businesses, e-commerce and Amazon Web Services (AWS), its cloud-computing arm.
In e-commerce, the more shoppers Amazon lures, the more retailers and manufacturers want to sell their goods on Amazon. That gives Amazon more cash for new services—such as two-hour shipping and streaming video and music—which entice more shoppers. Similarly, the more customers use AWS, the more Amazon can invest in new services, which attract more customers. A third virtuous circle is starting to whirl around Alexa, the firm’s voice-activated assistant: as developers build services for Alexa, it becomes more useful to consumers, giving developers reason to create yet more services.
So long as shareholders retain their faith in this model, Amazon’s heady valuation resembles a self-fulfilling prophecy. The company will be able to keep spending, and its spending will keep making it more powerful. Their faith is sustained by Amazon’s record. It has had its failures—its attempt to make a smartphone was a debacle. But the business is starting to crank out cash. Last year cashflow (before investment) was $16bn, more than quadruple the level five years ago.
If Amazon’s approach to time-frames is unusual, so too is the sheer breadth of its activities. The company’s list of current and possible competitors, as described in its annual filings, includes logistics firms, search engines, social networks, food manufacturers and producers of “physical, digital and interactive media of all types”. A wingspan this large is more reminiscent of a conglomerate than a retailer, which makes Amazon’s share price seem even more bloated: stockmarkets typically apply a “conglomerate discount” to reflect their inefficiencies.
Many of these services support Amazon’s own expansion and that of other companies. The obvious example is AWS, which powers Amazon’s operations as well as those of other firms. But Amazon also rents warehouse space to other sellers. It is building a $1.5bn air-freight hub in Kentucky. It is testing technology in stores to let consumers skip the cash register altogether, and experimenting with drone deliveries to the home. Such tools could presumably serve other customers, too. Some think that Amazon could become a new kind of utility: one that provides the infrastructure of commerce, from computing power to payments to logistics.
A giant cannot hide
And here lies the real problem with the expectations surrounding Amazon. If it gets anywhere close to fulfilling them, it will attract the attention of regulators. For now, Amazon is unlikely to trigger antitrust action. It is not yet the biggest retailer in America, its most mature market. America’s antitrust enforcers look mainly at a firm’s effect on consumers and pricing. Seen through this lens, Amazon appears pristine. Consumers applaud it; it is the most well-regarded company in America, according to a Harris poll. (AWS is a boon to startups, too.)
But as it grows, so will concerns about its power. Even on standard antitrust grounds, that may pose a problem: if it makes as much money as investors hope, a rough calculation suggests its earnings could be worth the equivalent of 25% of the combined profits of listed Western retail and media firms. But regulators are also changing the way they think about technology. In Europe, Google stands accused of using its clout as a search engine to extend its power to adjacent businesses. The comparative immunity from legal liability of digital platforms—for the posting of inflammatory content on Facebook, say, or the vetting of drivers on Uber—is being chipped away.
Amazon’s business model will also encourage regulators to think differently. Investors value Amazon’s growth over profits; that makes predatory pricing more tempting. In future, firms could increasingly depend on tools provided by their biggest rival. If Amazon does become a utility for commerce, the calls will grow for it to be regulated as one. Shareholders are right to believe in Amazon’s potential. But success will bring it into conflict with an even stronger beast: government.
By Michael Krewson
A diagram shows how an Amazon drone could land on a sloping surface while keeping its main frame level, thanks to telescoping landing legs. (Amazon Illustration via USPTO)
Amazon’s inventors are taking a page from Inspector Gadget’s playbook to design drones with adjustable landing legs and reconfigurable propellers.
Those two design tricks are the focus of patents issued today. It’s hard to say whether they’ll become features on Amazon’s delivery drones, still in development. But surely there’s a chance someone will make use of the innovations, right?
The idea for the landing gear, credited to Nicholas Kristofer Gentry, adapts the sort of telescoping feature long used for camera tripods: When a drone lands on a sloping surface, its legs can expand or contract to keep the drone’s frame (and, not incidentally, its payload) level.
“The landing gear assembly may also operate as a landing dampener to absorb shock resulting from a landing of the UAV [unmanned aerial vehicle] to absorb safe delivery of fragile items,” the patent says.
The patent even covers ideas such as building spikes, screws, suction cups or magnets into the landing legs. Such features could help the drone stay put while it’s sitting on icy, slippery or metallic surfaces.
This diagram shows how the angle of a drone’s propeller tips (seen at upper left) can be adjusted for different flying conditions during a trip from Boston to New York. (Amazon Illustration via USPTO)
The other patent published today focuses on the tips of a drone’s propellers. The originators of this idea, Brian Beckman and Allan Ko, suggest building in a mechanism that can change the slant of the propeller tips, effectively creating “winglets” like the upturned tips on a Boeing 737’s wings.
Winglets can increase flight efficiency by minimizing the spinning vortices of air that are created as a flat surface slices through the air. However, there are some situations where winglets reduce flight stability – for example, if there’s a strong crosswind during takeoff or landing.
The patent lays out a scheme in which the drone can adjust the angle of its propeller tips to strike the right balance for its flying conditions. And that’s not all.
“Those of ordinary skill in the pertinent arts will recognize that the systems and methods of the present disclosure may be utilized to realign or readjust any attribute of a reconfigurable propeller, including not only cant angles of blade tips with respect to blade roots, but also blade pitches, blade lengths, blade rake angles, or any other attribute of the propeller,” the inventors say.
The applications for both patents were filed back in 2015. Amazon traditionally doesn’t comment on its patent filings, and there’s no evidence that the features have been built into the prototypes that the company is currently testing (or putting on display at this week’s SXSW conference in Texas).
Nevertheless, the concepts sound a lot less far out than some of the other ideas that Amazon has patented, such as flying warehouses and parachute package drops.
By Michael Krewson
Amazon is putting the finishing touches on a concept for new Seattle area grocery stores called AmazonFresh Pickup, according to permit filings reported by GeekWire.
E-commerce giant Amazon has filed permits for stores in the Seattle neighborhoods of Ballard and SoDo, according to GeekWire's images from the Seattle Department of Construction and Inspections.
Amazon did not formally announce the stores to the technology blog, but CNBC is reaching out for comment.
Signs for the store exteriors read, "Shop online. Pick up here," and "Relax while we load your groceries," according depictions in the permits. GeekWire also visited the planned locations of the stores, where there are awnings for drive-up grocery pickup.
Based on previous permits, GeekWire posits that there will be about 15 employees at each location, and three to five workers will be dedicated to bringing orders out to parked cars with an average wait time of 5 minutes.
Amazon has recently experimented with several retail concepts, including a smart convenience store, Amazon Go. Amazon has also explored permits for drive-up grocery stores in the Bay Area, according to Silicon Valley Business Journal.
Amazon CEO Jeff Bezos has said the company's tech savvy — especially artificial intelligence — allows the company to do things like sort fresh strawberries better than the human eye.
A new report reveals that construction work is almost done on Amazon’s upcoming drive-up grocery concept, AmazonFresh Pickup. Two locations are in the works, both in Seattle, according to GeekWire, which based its report on city permits filings. Each store includes an awning for drivers to park under and a brick-and-mortar store where employees put orders together, the report said. Amazon has not commented on the project. But signs that appear to be motion-activated and that read “Your order is order on the way” are installed in front of the parking spaces at one of the locations, the report said. In another hint that the stores are getting closer to opening, a film crew was working at the SoDo site Monday morning. They wouldn’t say what they were doing, but Amazon has in the past included promotional videos to introduce new concepts, such as the one released when the company announced the Amazon Go automated convenience store last year.
Permit records also point to what could be the web address for the online shopping portion of the experience: www.amazon.com/pickup. For now, the address redirects to a page that doesn’t load.
Yea- they are transplanting pig heart valves in humans... why? Because human flesh is closer to that of a pig than that of a monkey! Ha-ha-ha....no evolution from monkeys... And from the scientist's statement - the laughter must have developed independently - not in the same branch.... because these birds are separated by millions of years from dinosaurs with no other birds doing this behaviour. To me, this proves that they were created that way!
I suspect that more blood will be spillt by false religion in future and she will be riding the "beast" more intensely.... just speculation..... I am looking at what is going on in the middle east at present with millions of refugees and indiscriminate killing in the name of 'religion'. I saw a news article today which also shows that Hindu faith becoming more violent and positioning itself in the political arena. It seems that most religions are now becoming "nationalistic" for their religion and becoming firmer in their quest to be "bedfellows" with politics. This will expose them to be a false religion. At present Buddhists monks are leading followers to kill muslims in Myanmar...... an indication of how far we are in the timeline of the end.
The Ockermans attend a Jehovah’s Witness Russian congregation in Keizer
AN INTERNAL MESSAGE - Our Bethel - houses want, we have to stop postings about RUSSIA ! The first Brother's already got into prison ;-((Circuit Overseer told the congregation tonight to listen only to the GB on this issue. Go to j.w.org we can find out what is true there.