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Technology Stocks : Amazon.com, Inc. (AMZN) -- Ignore unavailable to you. Want to Upgrade?

To: Tom Kearney who wrote (64783)	6/27/1999 1:38:00 PM
From: Eric Wells	Read Replies (1) \| Respond to of 164684

>>The net will change even more radically. We can barely imagine what it may become, yet.<< This is very true - we have no way of anticipating what the internet will be 10 or 20 years from now. And in my view, this fact poses an additional element of risk for current internet companies. As Amazon and others work to effectively keep their e-commerce businesses going, they will also be forced to quickly adapt to new technologies that are introduced into the marketplace. Some of these technologies will be specific to certain areas of commerce - and as such, a company that is spread too thin may have problems. For example, look at what is happening today with MP3. How much longer will it be before we don't buy music CDs, but rather download MP3 music streams into MP3 players such as those made by Diamond Multimedia? MP3 technology and the internet together make it easier for artists to publish and sell their own music. Sure, Amazon may be selling MP3 streams five years from now instead of music CDs. However, the market may evolve differently - in that artists may be able to find a way to publish and sell their own music on their own web sites - and either bypass Amazon completely, or greatly reduce Amazon's margins. We will see similar technology for books - but probably not for 10-20 years. When one of the hardware manufacturers finally perfects an electronic bookreading device (something with a high quality display, that you can drop from four feet without having it shatter, and costs under $50), then paper bound books will begin to disappear (this will probably happen very gradually). How will this impact Amazon's book business? The economics are similar to what Amazon will face with MP3 - in that in the future, books may be downloaded in streams over the internet to bookreading devices - and authors may bypass publishers and distributors completely by distributing books over their own web sites. I believe there is some likelihood to this scenario, especially for well-known authors (whose books sell the most). In the last century, Mark Twain felt he was being gouged by his publishers, and so he set up his own publishing company and distributed books by subscription - and he made quite a bit of money doing so. The internet, if it is combined with electronic bookreaders, will stand to make self-publishing and distribution all the more profitable for an author. It is hard to speculate on how this will impact Amazon - Amazon might act as a distributor for electronic books - but this scenario may negatively impact Amazon's margins. I've provided only two examples here on how new technologies might impact Amazon's business - and both of these examples are very speculative. I would think that it would be difficult enough for Amazon to keep ahead of the game in just these two areas - but they will also have to be focused on technological developments in other areas as well - auctions, pharmaceuticals, etc - and in the numerous other areas into which they are expanding that they have not made known publicly. I think there is the risk that Amazon may be spreading itself too thin. Again - it's only a risk - how much of a risk, I don't know. Thanks, -Eric Wells