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Can Anyone Beat Jeff Bezos?

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Re: Can Anyone Beat Jeff Bezos?

#81

Post by kogepathic »

Y7ZCQtNo39 wrote: post #63
thinkling wrote: post #31

Earlier quoted context omitted.

People said this 20 years ago about Microsoft. They were king of the PC, imposing a Windows (and Office-) tax on every other business. They were trying to extend that dominance to the internet: Internet Explorer, CitySearch, Expedia, MSN portal, MSN Shows, MSN Messenger, you name it. They were building interactive TV, software for cars, and a mobile phone platform. For a while they were building a bill presentation a…

So you're saying Amazon is no different -- they'll try and take on nearly every industry, but will really only have one core competence in 20 years?

> So you're saying Amazon is no different -- they'll try and take on nearly every industry, but will really only have one core competence in 20 years?

I think that 20 years ago people couldn't see a competitor coming along that could disrupt Microsoft, because they were so big and into everything.

But that's because no one foresaw the coming of the smartphone. Microsoft is still king on PCs, but the PC market has been in decline for years. Back in the early 00's no one predicted the iPhone and Android, and what a massive impact they would have on the PC market.

I would argue that Microsoft actually has two core competencies today: Office, and services (e.g. Windows/Azure). But yes, they definitely went from "king of everything" to "well enterprise still uses them" remarkably quickly.

tl;dr - Something will likely disrupt Amazon, but it's difficult for us to predict what that will be until it happens

Re: Can Anyone Beat Jeff Bezos?

#82

Post by biocomputation »

kogepathic wrote: post #81
Y7ZCQtNo39 wrote: post #63

Earlier quoted context omitted.

So you're saying Amazon is no different -- they'll try and take on nearly every industry, but will really only have one core competence in 20 years?

> So you're saying Amazon is no different -- they'll try and take on nearly every industry, but will really only have one core competence in 20 years? I think that 20 years ago people couldn't see a competitor coming along that could disrupt Microsoft, because they were so big and into everything. But that's because no one foresaw the coming of the smartphone. Microsoft is still king on PCs, but the PC market has bee…

Totally agree.

Amazon's problem is that it has a very large surface area. To competitors, that can be a feature or a bug.

Re: Can Anyone Beat Jeff Bezos?

#83

Post by sah2ed »

caseysoftware wrote: post #65
refurb wrote: post #38

Earlier quoted context omitted.

the _best case scenario_ for this economic model leads to a terrible status quo Terrible status quo? You realize that competitive pressure is what drives progress right?

People forget that just 20 years ago - August 1997 - Apple was on the verge of going under. Microsoft kept them afloat with a massive (at the time) $150M purchase. Microsoft was in the middle of their anti-trust fight so they couldn't afford to lose a "competitor" no matter how absurdly mismatched they were. iMacs, iPods, and eventually iPhones fundamentally changed everything. The economic behemoths regularly change…

> Microsoft was in the middle of their anti-trust fight so they couldn't afford to lose a "competitor" no matter how absurdly mismatched they were.

That's one possible explanation. I think a much more plausible explanation was that Steve Jobs needed a significant amount of capital infusion to turn-around Apple but he needed the terms to be reasonable, which was why he leveraged on his longstanding friendship with Bill Gates even though they were (unequal) competitors at that time.

It's next to impossible to get any form of capital for a dying company, whether debt or equity without having cut-throat clauses included to protect the investors' capital.

Re: Can Anyone Beat Jeff Bezos?

#84

Post by adventured »

seagullz wrote: post #78
saryant wrote: post #67

Earlier quoted context omitted.

DARPA is a government agency.

sure, that makes it state-managed monopoly or whatever else you call it; keeping to the topic, any competition?

What did DARPA have a monopoly over exactly? They were and are a defense research agency.

Re: Can Anyone Beat Jeff Bezos?

#85

Post by adventured »

RestlessMind wrote: post #77

"Your margin is my opportunity" - with that kind of attitude, Bezos is indeed a tough competitor. However, what puzzles me the most is the fact that investors are letting Amazon chug along with barely any profits. Can someone please explain to me how Bezos is able to pull off a P/E of 240 for AMZN, when the company has been around for 20+ years and no longer considered a startup (i.e. no more hyper growth phase)? For…

The particularly big leap Amazon made in its market valuation, was actually one very specific thing: AWS.

That tripled its market cap from ~$150 billion to where it's at now. Specifically when they started revealing how big it was, how fast it was growing, and the operating income numbers.

December 2014, the stock was at $300. Now it's $959. Nearly all of that gain is from that single thing, speculation about its future worth that is.

It's not the retail business or Echo or tablets or Kindle that did it. Those are not generating huge amounts of operating income.

The market is appraising (drooling about) AWS as being worth an extraordinary sum. Businesses are typically valued based on future projected earnings. For AWS that might be akin to $50-60 billion in sales and $16 billion in operating income (with a very rich multiple given our current market bubble). 20x multiple on $16b in operating income, there's $320 billion of Amazon's $460 billion. I'm not arguing AWS should be worth that, I'm saying the very inefficient market, filled full of mediocre investors and fools, is saying it is. One could argue the future operating income estimate might be high, but the market is frothing at the mouth right now, we're one or two notches (on a 10 notch scale) away from entering a euphoric insanity again given the market's (eg S&P 500) extreme PE ratio presently.

Throw in Kindle, Prime, Echo, Tablets on that AWS $300 billion valuation. The traditional retail business is being valued at maybe $50 to $80 billion right now. If you look at the operating income projections for Amazon for the next few years, analysts are forecasting it's going to skyrocket, and that's solely based on AWS. Here's what's really going to happen: severe disappointment. We've witnessing peak Amazon in terms of market valuation in this general time frame (whether that's $500x billion or $700 billion, this particular market bubble represents the highest valuation Amazon will have for the next ~15 years, something equivalent to the stagnation Microsoft's stock enjoyed post dotcom bubble). Bezos becoming the world's richest briefly, is equivalent to the economic bubble peaks when someone decides to build a new world's tallest skyscraper nicely timed with the next crash.

Re: Can Anyone Beat Jeff Bezos?

#86

Post by colordrops »

ams6110 wrote: post #17
kbos87 wrote: post #10

I don’t think that the world can quite fathom how dangerous Amazon actually is to virtually every industry. When it comes to purveyors of physical goods, Amazon has the power to reshape the fabric of our streets and neighborhoods in ways few people can fathom. Say goodbye to grocery stores and ground floor retail if they get their way. They are just smart enough to do it slowly enough where they don’t have any jarrin…

For me, Amazon is a long way off from threatening my local supermarket and other local retailers. Would I buy clothes from Amazon? No, I like to try them on first. Returning stuff by mail is a pain. Would I buy expensive home furnishings from Amazon? No, I like to see, touch, try these things before I spend a lot of money. Would I buy perishable groceries from Amazon? No, because deliveries happen when I'm at work an…

> Returning stuff by mail is a pain

for now.

Re: Can Anyone Beat Jeff Bezos?

#87

Post by WalterBright »

rtpg wrote: post #13
kbos87 wrote: post #10

I don’t think that the world can quite fathom how dangerous Amazon actually is to virtually every industry. When it comes to purveyors of physical goods, Amazon has the power to reshape the fabric of our streets and neighborhoods in ways few people can fathom. Say goodbye to grocery stores and ground floor retail if they get their way. They are just smart enough to do it slowly enough where they don’t have any jarrin…

I understand the dangers of monopoly, but I wish there was a stronger argument here. We've seen this sort of thing happen before, with Walmart. And none of these arguments worked! Walmart is big and dominant. It killed off smaller places, but people don't care because it has mostly everything and is cheap. "This convenient good thing is actually bad!" isn't super convincing I guess.... EDIT: the ultimate irony being…

Consider software. Free market capitalism has driven the price of it to literally zero! How amazing is that?

Re: Can Anyone Beat Jeff Bezos?

#88

Post by peteretep »

ams6110 wrote: post #17
kbos87 wrote: post #10

I don’t think that the world can quite fathom how dangerous Amazon actually is to virtually every industry. When it comes to purveyors of physical goods, Amazon has the power to reshape the fabric of our streets and neighborhoods in ways few people can fathom. Say goodbye to grocery stores and ground floor retail if they get their way. They are just smart enough to do it slowly enough where they don’t have any jarrin…

For me, Amazon is a long way off from threatening my local supermarket and other local retailers. Would I buy clothes from Amazon? No, I like to try them on first. Returning stuff by mail is a pain. Would I buy expensive home furnishings from Amazon? No, I like to see, touch, try these things before I spend a lot of money. Would I buy perishable groceries from Amazon? No, because deliveries happen when I'm at work an…

    > And with anything Amazon, I'm worried
    > about counterfeit goods.
They need to get on this; they've lost ~ a thousand dollars from me this year that I've spent in previous years where I'm worried about if I'll get the real thing or not.

However:

    > Would I buy clothes from Amazon?
There's plenty of stuff I don't need to try on though. All undergarments and many shoes and pants where I know what I want already I get from Amazon.

    > Would I buy perishable groceries
    > from Amazon?
I used to buy everything from Ocado when I lived in London. I'd have rather bought it from Amazon, and when they can (and maybe that's now, I'm living in Asia right now) schedule deliveries like the other supermarkets, I'll switch.

Re: Can Anyone Beat Jeff Bezos?

#89

Post by WalterBright »

rtpg wrote: post #13
kbos87 wrote: post #10

I don’t think that the world can quite fathom how dangerous Amazon actually is to virtually every industry. When it comes to purveyors of physical goods, Amazon has the power to reshape the fabric of our streets and neighborhoods in ways few people can fathom. Say goodbye to grocery stores and ground floor retail if they get their way. They are just smart enough to do it slowly enough where they don’t have any jarrin…

I understand the dangers of monopoly, but I wish there was a stronger argument here. We've seen this sort of thing happen before, with Walmart. And none of these arguments worked! Walmart is big and dominant. It killed off smaller places, but people don't care because it has mostly everything and is cheap. "This convenient good thing is actually bad!" isn't super convincing I guess.... EDIT: the ultimate irony being…

And before Walmart there was Sears, the unstoppable behemoth of its day.

Few remember today the fear that people had of the unstoppable juggernaut that was IBM before 1990 or so.

Nobody remembers that before IBM there was RCA.

Re: Can Anyone Beat Jeff Bezos?

#90

Post by sah2ed »

RestlessMind wrote: post #77

"Your margin is my opportunity" - with that kind of attitude, Bezos is indeed a tough competitor. However, what puzzles me the most is the fact that investors are letting Amazon chug along with barely any profits. Can someone please explain to me how Bezos is able to pull off a P/E of 240 for AMZN, when the company has been around for 20+ years and no longer considered a startup (i.e. no more hyper growth phase)? For…

My layman understanding is that investors think Amazon still has enormous room to grow because Amazon's current market share of the entire US retail industry (online + offline retail) is about 7%.

The one thing that will make online shopping appealing to far more consumers is same-day and eventually 1-hr deliveries, irrespective of your location in the continental US and the only way to do this reliably is when fulfilment is automated end-to-end.

For fulfilment to be fully automated, self-driving cars and trucks need to be a reality as that is the only way to cap shipping costs in order to guarantee Amazon's promise of low prices.

In order words, investors think Amazon's market share will grow even more as distribution costs start to fall when the shift from human to self-driving trucks becomes economically and technologically feasible.

Self-driving cars are still at least decade out, IMHO. Add another decade for regulations (e.g. which party is directly liable in X types of accidents?) and infrastructure (e.g. cooperative signalling, standardized charging stations etc) to catch up. This is why Jeff Bezos likes to stress that it is still Day 1 at Amazon.

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