Amazon: Getting in an Elephant Fight
October 7, 2008
I find Amazon fascinating. In the last two years, the company has figured out how to spend much, much less than Google and Microsoft on engineering and infrastructure. In the same period, Amazon has out innovated both Google and Microsoft in cloud computing. The cherry on top of this technical confection is that Amazon can defray the cost of the plumbing needed to run its ecommerce business. MBA programming genius Jeff Bezos is the person whom I describe as the smartest man in the world. It’s up to you to determine if my characterization is accurate. Amazon is an elephant and so are Apple, Google, and Microsoft in my opinion–big beasts in online and revenue generation.
When elephants fight, only the grass gets trampled.–Alleged Zulu proverb.
A story ran on September 24, 2008, in Xconomy Seattle, an interesting Web site that reports on “business and technology in the exponential economy”. The article “In Google’s Phone, a Major Clash between Amazon, Apple, and Microsoft Heats Up.” You must read Gregory T. Huang’s article here. Mr. Huang has focused on Amazon’s on-going efforts to snag deals and I assume revenue from the three giants stomping around in the cloud computing, mobile services, and online hypermarkets; namely, Apple, the leader in consumer gizmos and online music sales; Google, the business model and infrastructure champion in Web search and advertising plus other initiatives; and Microsoft, the 21st century reprise of the 1980 version of IBM.
I can’t summarize this compact, information filled article. I would like to cite one of Mr. Huang’s points that struck me as dead on:
[Amazon's] music store, currently a distant #2 to Apple’s iTunes, offers some 6 million songs from the four major labels plus thousands of independent labels. The G1 partnership could push Amazon over the hump and position it squarely as Apple’s chief music competitor.
And what about Amazon’s Microsoft play in cloud computing with Amazon running Windows servers as a service on Amazon Web Services? Mr. Huang wrote, quoting an individual from Seattle-based software firm Cozi and founder of SnapTune:
The basic strategy is to suck all the oxygen (licensing revenue) from Microsoft and Apple, leaving only oxygen for Google (ad revenue) which they alone could dominate.
In my little Kentucky hollow, I will kick back and watch these elephants fight. I recall the African proverb my guide to Soweto told me as we walked a long a narrow dirt street to his aunt’s six by six: “When elephants fight, only the grass gets trampled.”
Stephen Arnold, October 7, 2008