131–140 of 150 posts
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I'm waiting for Amazon Prime to start bundling server time.
That would only make sense for a very small portion of their users, and confuse a great many. I think the more likely path is going to be services like their photo library, which can clearly make use of AWS, but doesn't directly expose it to customers. I could see some sort of backup service happening in the near future, and someone else mentioned Echo.
I wonder how much of that is people forgetting to shut down unused EC2 instances
It really feels like they design the thing to make that happen. I got stung for over $100 just as a casual user, because I never guessed that I had to click through all the (slow loading) regions to see the instances and volumes and snapshots I might have burning money. The web interface is a total clusterfuck.
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Maybe taxes on profits were created so that companies invest their profit instead of hoarding it or giving it to shareholders, creating jobs and infrastructure in the process. As far as I'm concerned, Amazon is using its profits (or lack thereof) exactly as intended.
If you returned it to shareholders they would be reinvesting it too (just somewhere else). You can return capital to investors tax efficiently using share buybacks. Haven't looked at Amazon's annual report in detail so can't tell if they are reinvesting profit in areas that will have high return or not.
What if the share price is not undervalued, the investors would get hurt if you do a buyback.
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Bezos long ago figured out that the best tax strategy in modern America for a public company is to operate without profit. The company operates with a relatively (to the revenue) small loss, maintaining positive cash flow by issuing and selling additional stock. Selling new stock is (remarkably) tax free. The dilution is negligible since the stock is valued by the revenue (not profit so much). Everybody benefits: exe…
If the point of a business is compensating its employees, that might be a strategy. However, that isn't the point of the business. The point of the business is to generate money for the shareholders. Over the short/medium term, shareholders might be content with growth and revenue. Over the long term, without profits the business has nothing for shareholders. It really isn't a tax strategy any more than being unemplo…
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Walmart is cheaper. Significantly cheaper. You don't have to pay $100-$300 per year plus Amazon's typical 10-20% price premium* in exchange for "free" 2-day shipping. If you live in the right place you can pick up the goods same-day from Walmart, maybe even on your commute, so for some people it's more convenient too. * The usual caveat about everything varying with geography applies here too, I'm sure.
Is "in-store pickup" really that popular? When I need something in a few days (or later), I'll order it from Amazon when I think about it. If I need something "now" or today, I'll just drive to the store and go get it. I, personally, don't really see the point of the "in-store pickup" -- why order it online if I have to go there to get it anyways?
Sometimes I'll "click and collect" just to be sure that the item is in stock. For example I did a price comparison recently to buy a bike saddle, it was cheaper (including postage) from Halfords and I can add stopping there to my journey for very close to zero cost (except time). If I'd ordered it from Amazon then I'd probably be out and end up having to travel to my local postal distribution office, less convenient and more expensive.
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Issuing stock is not the principle way they maintain positive cash flow. The float between the time their customers pay them and the time they have promised to pay their vendors creates enormous, ever-increasing operating cash flow: https://hbr.org/2014/10/at-amazon-its-all-about-cash-flow/ They are essentially borrowing from their own customers (or maybe more accurately, vendors), at zero interest, to continually bu…
Incidentally, this is pretty much how Warren Buffett made his first billions with Berkshire to the best of my understanding. He realized that insurance generated enormous carry, and if you were able to better utilize that (say, by buying other companies and improving them) then you had a pretty winning strategy.
Buffett has done well by choosing companies and people that are good at avoiding losing money.
If Amazon had a viable competitor, the profits of float investments would be the ammunition in the resulting price war. Amazon's margin is someone's opportunity.
Earlier quoted context omitted.
Bezos long ago figured out that the best tax strategy in modern America for a public company is to operate without profit. The company operates with a relatively (to the revenue) small loss, maintaining positive cash flow by issuing and selling additional stock. Selling new stock is (remarkably) tax free. The dilution is negligible since the stock is valued by the revenue (not profit so much). Everybody benefits: exe…
If the point of a business is compensating its employees, that might be a strategy. However, that isn't the point of the business. The point of the business is to generate money for the shareholders. Over the short/medium term, shareholders might be content with growth and revenue. Over the long term, without profits the business has nothing for shareholders. It really isn't a tax strategy any more than being unemplo…
If so, then it's natural that stock price increases when revenue increases, albeit at a discount to actual profit depending on what your expected revenue:profit conversion ratio is.
The interesting part is the next step. Someone buys a stock expecting to benefit from the exchange (sell at a higher price that one purchased it for). Thus, if the stock price is correlated with revenue, and Amazon can increase revenue even without increasing profit, stockholders will still be happy.* Stockholders are looking for increased value for their stock, not any particular metric thereof.
*This is assuming Amazon finances the revenue increases through free cash flow (as mentioned elsewhere) rather than diluting stock
Can someone explain how Amazon is different (in investor mindset, not legality) from a Ponzi scheme? It seems like retail companies (and even some startups) exist solely by churning investors with new money. Everyone invests based on expected profit at the end of the rainbow, and a lot of money is made selling to the next set of investors who want to carry on rainbow-chasing. If Amazon were to stop and start making a…
I'm trying to understand why large companies use AWS for their primary infrastructure. Both AWS and Azure are obscenely expensive when compared to buying servers and colocating them somewhere. The cloud model works well for bootstrapped startups, but anyone with the resources to buy and manage their own servers is crazy if they use AWS or Azure as their primary server platform.
Eh, I think the bar is a lot higher than that, especially if you have to meet external compliance standards with yearly audits, or have to have good disaster recovery with multiple datacenters. Those kind of things get very expensive if you are under a certain scale.
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I don't think someone has designed taxes around incentives. In most countries wages are more heavily taxed than products, which balances the spending towards buying more things rather than employing more people. It seems very stretched, but some ecologists suggest to tax petrol more heavily and tax wages less, so it would be easier to employ more people for a task than throw more petrol at it (I use petrol in terms o…
What about tariffs? They're designed to incentivize buying products made at home. What about "sin" taxes? They're designed to incentivize good behavior? (Some) taxes are definitely designed around incentives.
Thus, taxes on sins can produce higher revenues than taxes on more price sensitive goods or activities would.