Walter, perhaps we are unfair to Bezos sometimes and I'll give him the benefit of the doubt that he did get into this because he had an idea and wanted to build something lasting. However, I think there were many uncertainties in his plan as it was a whole new way of selling. I doubt he had any real basis for determining the costs of doing business in this "new" way or the potential. I believe that the costs, especially marketing costs, are much greater than anticipated as is the competitive threat (which is why the marketing costs can't come down enough to make it profitable). They are also changing their model in that they are building more distribution infrastructure and, most importantly, holding more inventory. Both of these things take capital. It is good that they can adjust as they learn the developing dynamics of "e-tailing", but it is important to realize that these adjustments are an effort to find the model that works. IMO, they have not found it.
Now, as for ethics, consider this. Earlier this year, when Kleiner Perkins was actively distributing shares to their partnership investors (many big Silicon Valley names, BTW), John Doerr (KP's top dog) was trotting around to conferences and such talking up the wonderful potential of the Amazon "franchise" or "brand" and spouting the same long list of totally unquantifiable, subjective, unprovable reasons why Amazon will rule the "e-tailing" world that all the analysts spout now. It all sounded great, but there is still no way to demonstrate how Amazon will accomplish any of its grand dreams. But, most importantly, while he was saying all these things, he was passing out the stock certificates so that Scott McNealy, Andy Grove and a long list of other Silly Valley insiders could sell.
You write:
The only possible way to win this battle is to drive the competition out and be the last one standing, even if one ends up considerably bloodied.
Consider what you are saying here - that there are going to be big losers in the battle for the e-tail dollar - someone win win, but at what cost - and, others will go down in flames. Is this the kind of high risk commercial battlefield where you want to pay such a high price to bet on one competitor as if they had already won?
The goal is to dominate the market, become profitable, and win big for the investors.
I'm sure that is or was the goal, but if the first two can't be achieved - something that is far, far from assured - they will do their best to make sure the early investors get to walk away from the table with their winnings.
The most important factor here is to keep the competition unaware of the next move. By constantly surprising the competitors and making unexpected moves, advantage is gained.
Again, I agree, but these tactics also work on Wall Street. Keep that PR machine working to keep investors on their toes, especially the bears.
Regards,
Bob |
