There are a few ways of thinking about Amazon, here is one: they can invest back into new products in the same way Google do but at a larger scale since they don't have the pressure of returning profits to shareholders and Amazon's distribution and infrastructure is more likely to be complementary to followup hits than Google's search ad business.
In this hit based model, they can afford more than a few misses and they have already had plenty of hits (AWS, Kindle).
As an investor your question is: would you rather Amazon invest $50-300M trying things out with the advantage of their brand, position and infrastructure - or do you want them returning that money, pay tax on it only for you to have to find somewhere else to park it?
> No one makes money selling media for consumption anymore.
This couldn't be further from the truth. Cable is dying and tech and media companies are currently running a multi-billion dollar race in working out who will own whatever platform is next (Amazon buying streaming rights, building tablets and phones etc. is part of their version of what they hope next platform will be - winner(s) take hundreds of billions in market cap).
It is so untrue that as soon as Time Warner dropped their print and cable businesses Murdoch offered $85 billion for the content business that remained and they turned him down.
> they can invest back into new products in the same way Google do but at a larger scale since they don't have the pressure of returning profits to shareholders
Can you elaborate on this? Google tries plenty of "moonshots" that may never return profits to shareholders
I meant that Amazon are doing the same as Google. They have similar revenue, Google has twice the margin but is banking $10B+ p.a while Amazon spend all and beyond. They are both maneuvering to capture these new markets using their existing advantages.
For some reason Google investing in projects makes a sense for a lot of people, while for Amazon it doesn't even though it has produced business lines outside of their main that have more revenue and margin than anything Google have done.
In this hit based model, they can afford more than a few misses and they have already had plenty of hits (AWS, Kindle).
As an investor your question is: would you rather Amazon invest $50-300M trying things out with the advantage of their brand, position and infrastructure - or do you want them returning that money, pay tax on it only for you to have to find somewhere else to park it?
> No one makes money selling media for consumption anymore.
This couldn't be further from the truth. Cable is dying and tech and media companies are currently running a multi-billion dollar race in working out who will own whatever platform is next (Amazon buying streaming rights, building tablets and phones etc. is part of their version of what they hope next platform will be - winner(s) take hundreds of billions in market cap).
It is so untrue that as soon as Time Warner dropped their print and cable businesses Murdoch offered $85 billion for the content business that remained and they turned him down.