Company / division: Amazon
More than 33 Million Customers Have Used Amazon Payments to Make a Purchase (Feb 7, 2017)
Amazon put out some new numbers around its third party Payments platform today – volume nearly doubled in 2016, 33 million customers have now used it, over half those using it are Prime members, and around a third of transactions were on a mobile device. There’s good growth here for Payments, which doesn’t get much press but has made quiet but steady progress since its launch. But it’s also worth putting in context – the leader in the space, PayPal, reported 197 million active customer accounts as of the end of 2016, up from 179 million a year earlier, so Amazon may be growing but it’s way behind. Amazon, of course, has over 300 million active customer accounts itself, but most of those only use their accounts to shop on Amazon.com. All the more interesting, then, that the two companies are apparently in talks about working together in some way.
via Amazon
97 companies file opposition to Trump’s immigration order – TechCrunch (Feb 6, 2017)
Last week, Recode reported that several big tech companies were drafting a letter to the Trump administration on immigration, though I still can’t find confirmation that this letter has actually been sent. However, those tech companies and many others have now filed an official friend of the court brief in the lawsuit being brought against the administration by the states of Minnesota and Washington. This steps things up a notch, formally putting the 97 companies behind the brief on the other side of a court case from the administration. As with the early condemnations of the executive orders just over a week ago, Amazon is notable by its absence, as is Tesla (whose CEO Elon Musk has continued to sit on the advisory council Uber CEO Travis Kalanick vacated last week). Tesla’s absence is consistent with Musk’s overall stated strategy of trying to bring change from within, but Amazon’s absence may simply be due to the fact that it weighed in on the case separately earlier in the process (though Microsoft has participated at both stages).
Update: this tweet explains that Amazon was asked not to sign the amicus brief because it was a witness in the original case.
via TechCrunch (more coverage on Techmeme)
Amazon Reports Fourth Quarter 2016 Financial Results (Feb 2, 2017)
Amazon had a somewhat disappointing quarter relative to analyst estimates, as growth slowed in its core e-commerce business. Unit shipment growth, which had been above 25% for the last five quarters, dropped suddenly to 24%, which impacted overall growth rates, as those dropped for the second quarter in a row. The International business had significant losses for the second straight quarter as Amazon invests more heavily overseas in fulfillment, market entry, and extending services like Prime video globally. AWS grew at a healthy clip, though margins are flattening at around 26% lately. As usual, executives on the earnings call were not helpful in understanding or predicting the big swings in both growth rates and investment levels, though guidance for Q1 looks fairly light. The official explanations are the anniversary of a leap year in 2015, which added 150 basis points to growth, and currency headwinds, which are being mentioned more frequently again on earnings calls lately. But it looks as though Amazon may be expecting slightly slower growth in Q1 too. Dropping back down to the high teens and low twenties growth rates Amazon saw in 2014 and 2015 wouldn’t be the end of the world, but it would be a rather different trajectory from the one it’s been on for the past year and a half, and investors would react accordingly.
via Amazon
Target has stunned its employees by suddenly shutting down two big innovation projects – Recode (Feb 2, 2017)
Amazon got lots of attention around its Amazon Go store concept a few weeks back, though it’s still an extremely limited pilot program. Target, on the other hand, seems to have just killed off its own similar initiative out of nowhere. It’s obviously tempting to view this as some kind of response to Amazon’s moves, but given Amazon’s tiny presence in physical retail it seems far more likely Target simply felt the project wasn’t delivering meaningful results and its innovation budget was best spent elsewhere. Having said that, if physical retailers can’t at least attempt to compete with Amazon in innovating on their home turf, it doesn’t bode well for their ability to stand up to it more broadly.
via Recode
Amazon is building a $1.5 billion hub for its own cargo airline – Recode (Feb 1, 2017)
Yet another story about Amazon’s deepening investment in shipping infrastructure (see also ocean liners). Its Prime Air freight investment is an existing strategy, but Amazon is leasing the planes and has been using existing hubs, whereas this new $1.5 billion investment is to create its own hub in Kentucky. Amazon’s claim that it isn’t looking to compete with UPS gets harder to believe all the time.
via Recode
Walmart is going after Amazon Prime with free two-day shipping and no membership fee – Recode (Jan 31, 2017)
Walmart is making two changes to its free shipping program: eliminating the $49 annual fee, and lowering the minimum purchase amount that qualifies for free shipping from $50 to $35. This doesn’t give the impression of Walmart coming from a position of strength, but rather one of weakness, where it has to keep making concessions and changes to try to make its equivalents to Amazon’s Prime service look more enticing. Of course, there’s also an argument to be made that Amazon’s Prime service works so well psychologically precisely because it has a hefty annual fee – once you make that commitment, you’re more likely to purchase lots of things through the site to justify and make use of the money already spent. Removing the membership fee means that users have no special reason to prefer Walmart over Amazon for any given purchase. At this point, I don’t think many people are choosing Amazon for shipping alone – they likely just think of Amazon as the default option for online retail, and if they happen to be Prime members (which many American households are) that seals the deal. Short of going all-in on free shipping a la Zappos, I’m not sure that any changes Walmart makes to its shipping policies and prices will move the needle meaningfully.
via Recode
Silicon Valley’s responses to Trump’s immigration executive orders, from strongest to weakest – The Verge (Jan 28, 2017)
This is a good summary of the responses from the tech industry so far to President Trump’s executive orders on immigration from Friday. It also does a nice job sorting the responses by strength – there’s quite a range in the responses, from those focusing narrowly on the practical impacts on employees of each company to those issuing broader moral condemnations of the policy. This certainly won’t be the last we hear on this topic. It’s notable that as of right now Amazon is one of the major holdouts among the big consumer tech companies.
via The Verge
PayPal Has Been Talking With Amazon on Payments, CEO Says – Bloomberg (Jan 27, 2017)
This is an interesting but not unexpected development – PayPal already powers lots of payments for e-commerce purchases online, and the biggest past barrier to doing the same with Amazon was the close ties between PayPal and eBay. With that relationship now severed, PayPal is free to pursue this opportunity further, and with Amazon the largest e-commerce retailer in the US and a number of other markets, that could be a big boost. It’s less obvious that it will make a huge difference for Amazon, since it has credit cards on file for many of its regular customers, but it could well help reduce friction for occasional or first-time users, potentially providing a wider funnel for eventual Prime members. The other interesting wrinkle here, of course, is that even without the eBay angle, these two companies still compete with each other for web payments – Amazon has a much smaller third party payments platform which is used as an alternative to PayPal by some online retailers.
via Bloomberg
Apple Officially Joins Partnership on AI (Jan 27, 2017)
I commented on the reports that Apple was about to join the Partnership on AI yesterday, so I won’t revisit all of this today. Two notable things from today’s announcement, though: Apple’s representative will be Tom Gruber, who runs Siri at Apple, and that may be indicative of where Apple sees ownership of AI residing within the company (it has no formal head of AI); secondly, Apple has been involved with the Partnership from the outset, but hadn’t formalized its membership until today. That might signify that there were some details of Apple’s membership which needed to be worked out before it felt comfortable joining -I’d love to know what those were. Separately from Apple’s involvement, it’s worth noting that the board now has representatives from a number of other organizations beyond tech companies including several universities. So the Partnership won’t just be about driving the agenda of the tech industry here.
SpaceX, Uber Reach New Heights In Lobbying Spending – BuzzFeed (Jan 25, 2017)
These numbers get crunched every year, and are always an insight into the sometimes complex relationship between tech companies and the US government, as well as the very different strategies pursued by the various companies – Apple spends far less than some of its peers (less even than Facebook, which is a fraction of its size), while Google is always a big spender. The other thing I’m always struck by is the relatively tiny size of the spending – even Google’s $15.4m lobbying spending is minuscule in the context of its overall business – Apple’s spend was a fraction of a hundredth of a percent of its revenue for the year. It’s also interesting to see which issues the companies lobbied on: Apple lobbied mostly on technical issues directly related to its business, while Google lobbied more broadly on trade and immigration policy as well as several technical topics. All this will obviously potentially get a lot more complicated under the new administration, which has so far had a much more adversarial tone towards big tech companies than its predecessor.
via BuzzFeed
Amazon Expands Into Ocean Freight – WSJ (Jan 25, 2017)
Amazon seems to be treating building its own shipping infrastructure as a major strategic goal at present, from running its own planes to shipping its own sea freight. That’s partly about leverage over the traditional companies it has historically outsourced these jobs to, and partly about flexibility and control over the infrastructure it needs to get the job done. The further Amazon goes down this route, the harder it becomes for anyone to compete on a level playing field – Amazon’s logistics and distribution infrastructure is reaching a point where it’s becoming a massive competitive advantage.
via WSJ
‘Manchester by the Sea’ Nomination Makes Oscar History for Amazon – Variety (Jan 24, 2017)
Amazon has become the first streaming service to have a movie it owns nominated for best picture at the Oscars. This follows years of Netflix and Amazon content receiving nominations for TV awards, and Netflix has previously earned nominations in other categories. The catch here is that Amazon released Manchester by the Sea in theaters, so it feels much more like a traditional release than most of Netflix’s movies (The Little Prince, a Netflix-owned movie that didn’t debut in theaters, was not nominated in the best animated feature category despite being well received). So although there’s some symbolism here, it’s mitigated a little by the fact that the movie still received a traditional theatrical distribution (and did well there). It is ever clearer, however, that Amazon and Netflix (and potentially others) will continue to grow as a force in movie acquisition – the Sundance Film Festival is underway at the moment and we’re likely to see several more big buys there as the streaming companies beef up their libraries with exclusive content.
via Variety
Alexa and Google Assistant have a problem: People aren’t sticking with voice apps they try – Recode (Jan 23, 2017)
Call this a rare bit of cold water poured on the hot topic of voice assistants and especially Amazon’s Alexa. The data here suggests that the third party “Skills” available through Alexa have essentially zero staying power, with most abandoned very quickly after the first use. I suspect that’s partly down to the awkward syntax you have to use to invoke Skills on Alexa, and partly down to the fact that most of the Skills are novelties at best, with many providing very little utility at all – the number of Skills available is one that Amazon likes to tout and reporters dutifully report, but is largely meaningless while this is the case. In addition, none of this really says anything about the usefulness or sticking power of the built-in functions, and that would be a great subject for a survey. I would guess that people stick with the core functions a lot more than these Skills, or return their devices because they’re not using them – the latter was my own eventual outcome when testing the Echo.
via Alexa and Google Assistant have a problem: People aren’t sticking with voice apps they try – Recode
Amazon launches Pivot a new training program to help employees in danger of being fired – Business Insider (Jan 19, 2017)
Amazon has gained a reputation over time for treating its employees poorly – the New York Times famously did an in-depth investigate piece on this topic as it relates to Amazon’s white collar employees, and it talked about Amazon’s Performance Improvement Plan for underperforming employees. This article talks about a new program intended to benefit those placed on a PIP by helping them develop their skills, and can be seen as an effort by Amazon to help those with poor evaluations rather than merely taking the first steps towards an eventual dismissal for cause. The PIP process was far from the only element of working in a white collar job at Amazon that the New York Times wrote about, and of course Amazon pushed back against some of the other allegations in the report. And then there are the working conditions in blue collar jobs at Amazon’s warehouses and fulfillment centers. So this is part of changing the narrative, but only really addresses one small piece of it.
Target Announces November/December Comparable Store Sales Down 3% – Target (Jan 18, 2017)
This is Target’s preliminary press release for fourth quarter sales, which provides November/December comparable sales data in percentage growth terms, and the picture isn’t great. Comparable store sales were down 3% year on year for the last two months, and even though digital (online) sales were up 30%, that couldn’t make up the difference, and total transactions were flat while fourth quarter revenue will be down. The reason is that digital sales still make up only a tiny minority of Target’s overall sales – 5% in the 2015 holiday season, so a lower share than e-commerce’s overall share of US retail sales. That number will certainly be higher for 2016, but it highlights the challenge all big brick and mortar retailers have to face in Amazon: even if they’re able to match its strong growth in online sales, their physical retail operations still take an even bigger hit.
via Target 2016 Holiday Sales Press Release
Google expressed its displeasure to Huawei re allowing Amazon’s Alexa to be built into its U.S. flagship phone – Amir Efrati (Jan 17, 2017)
Amir is a reporter with The Information, and has done sterling work lately on Alphabet and Google. This little scoop was only released in a tweet rather than expanded on in an article, but it raises a couple of important issues that affect both Amazon and Google. Firstly, Amazon needs to get Alexa onto smartphones if it’s to achieve ubiquity for users, and Android is really the only option for integration. Secondly, Google will put increasing pressure on its OEMs not to install assistants that compete with the Google Assistant, but it hasn’t yet made that assistant broadly available for OEMs to use, while Alexa is freely available. There’s a three-way conflict brewing here between the two giants and Google’s OEM partners, and it probably won’t be pretty for any of them.
Amazon pours resources into voice assistant Alexa – Financial Times (Jan 16, 2017)
There are some very interesting estimates in here from Evercore about the financials associated with Amazon’s Echo and Alexa effort. The firm estimates that Amazon lost around $330m on the project in 2016, and that it will lose $600m in 2017, due to a combination of selling hardware at a loss and giving away developer access for free, despite the high cost of developing the underlying service. This hasn’t been talked about nearly as much as the consumer sales angle, but it’s worth noting – Amazon is treating Echo and Alexa as a loss leader, not a moneymaking enterprise in its own right. This is therefore not about selling Echo devices per se, but about using Alexa and Echo as a means to another end (or several) – more retail sales, a powerful consumer platform that can be used for a variety of other things Amazon wants to push, and so on.
via Amazon pours resources into voice assistant Alexa – Financial Times
Amazon Echo vs. Google Home vs. Microsoft Cortana vs. Apple Siri – Business Insider (Jan 14, 2017)
We’re going to see a lot more of this kind of thing in the coming months, accelerated by Alexa’s amazing performance at CES this year. But as I’ve argued previously, Amazon is only “ahead” in voice if you look at the category very narrowly – Echo is one endpoint for Alexa, and really the only one Amazon has with any meaningful numbers behind it, while Siri, Google’s various assistants, and Cortana each have many more users by virtue of much larger installed bases of devices. Amazon is only ahead if you narrow the market to home-based voice speakers, though it definitely is there. The big question remains whether Amazon can get into devices that leave the home in meaningful numbers, and whether the experience will be any good on smaller devices like phones. Meanwhile, it continues to be much easier for the major competitors to add a home speaker to their device portfolios (as Google has already done) than for Amazon to get out of the home.
via Amazon Echo vs. Google Home vs. Microsoft Cortana vs. Apple Siri – Business Insider
To take on Amazon, Walmart is streamlining its retail and web teams – Recode (Jan 13, 2017)
Every story about Walmart (or any other brick and mortar retailer) rejigging its e-commerce arm is bound to be seen in the context of Amazon’s dominance of the space, and Walmart has famously struggled in e-commerce despite its massive scale. At least two of these moves are about consolidating leadership of online and offline retail domains, which is a logical step (and one that Apple, for example, took a couple of years ago). Others reflect ongoing hiring from outside Walmart to strengthen its leadership team, and it looks like Jet is also being further integrated into the company, which was inevitable. Walmart won’t report its December quarter earnings until February 21st, but it will be well worth watching what impact, if any, Jet is said to have had on its performance.
via To take on Amazon, Walmart is streamlining its retail and web teams – Recode
Amazon to Create More Than 100,000 New Jobs across the U.S. over the Next 18 Months – Amazon press release (Jan 12, 2017)
This is just the latest in a series of announcements from major tech companies (not to mention car companies and others) about job creation in the US in the run-up to the inauguration of Donald Trump as US President in a week’s time. It’s worth putting the numbers in context a bit – 100k new jobs in the US in 18 months compares to around 135k new jobs created globally over the last 18 months. 180k US employees at the end of 2016 would be 57% of my estimate of 315k jobs globally, so 100k new US jobs suggests only a slightly higher run rate and ratio of US to global jobs to the past 18 months. As with a lot of the announcements we’ve seen lately, this seems mostly about highlighting existing job creation plans rather than some new direction.
via Amazon – Press Room – Press Release