Investors question Amazon strategy
In a press release on Thursday, Amazon disclosed its financial results for Q3 of 2014. Sales are up 20%, the company announced. But the company also sustained a net loss of $437 million, or $0.95 loss per share, compared with a $41 million loss in the same quarter of 2013. While CEO Jeff Bezos did not seem concerned in his statements, investors have reopened questions regarding Amazon’s strategic direction.
The losses aren’t an overt surprise – Amazon has adopted a reinvestment strategy for the past five years to spur growth. Some of its more recent big expenditures include an over $1 billion acquisition of popular streaming site Twitch; launching a grocery delivery service focused in the U.S.; and entering the smartphone market with the Amazon Fire Phone.
Despite its expansion into different sectors, Amazon has lost the confidence of investors. Share prices plummeted over 10% in after hours trading after the earnings release. Perhaps this had something to do with Q4 operating income projections, as the company expects anything from a $570 million loss to a $430 million gain.
Amazon’s public image has also taken a hit recently. According to the New York Times, Amazon’s scrap with fourth-largest book publisher Hachette, in which Amazon discouraged sales of Hachette books, could have had something to do with the company’s losses. Furthermore, Amazon’s Fire Phone was a complete bust. The phone, released in July, has only sold 35,000 units compared to a standard $1 million units in the first month for a high end smartphone, forcing a write off of $170 million.
“We’ve certainly been in several years now what I would call an investment mode,” said Amazon’s CFO Thomas Szkutak in a post-earnings release call with analysts. With his acknowledgement that “we have to be very selective about the opportunities that we pursue,” it seems that Szkutak understands investor pressure is rising and a change in tactic may be around the corner.
With Christmas, and typically the most lucrative season for e-commerce, on the horizon, projections of losses have investors wondering when Amazon will halt reinvestment and return money to its backers.
Ello stands by core philosophy
New social media platform Ello’s recent growth has many split on whether it is the Facebook of the future or a temporary fad. The site has always promised to respect users’ privacy by refusing to collect data and to remain free of advertising. Now Ello has made its claims legally binding.
Reincorporated as a Public Benefit Corporation, Ello is legally restricted from ever selling advertising space, selling user-specific data to third parties, and has the right to impose such rules on any potential acquirers.
Despite binding itself to strict legal guidelines, Ello is reportedly set to raise $5.5 million in Series A funding from the Foundry Group, Bullet Time Ventures and FreshTracks Capital.
This show of investor confidence in the social media site and its ethical demands is a big boost for Ello, which faces the task of monetization while also adhering to its core principles.
Paul Budnitz, co-founder and CEO of Ello, is confident that the company can succeed even without conventional revenue streams. The site plans to use a “freemium” model in which users can customize their own social media experiences by paying a slight additional cost for premium features and add-ons.
Company executives and investors point to ‘freemium’ successes like LinkedIn and other Public Benefit Corporations like Patagonia and Ben and Jerry’s as models for growth. With over a million users now and three million on the waiting list, (the site is still in Beta testing phase) according to the New York Times, growth has been unprecedented. Time will tell whether Ello can emerge as a viable social media contender, but the company has boldly answered a crucial question: yes, it will indeed live up to its claims as an ad-free, privacy conscious platform.
Google’s new Inbox
Despite the introduction of remarkable new technologies like the Nexus smartphones and tablets, Google revealed Wednesday that it has also been revamping something familiar to everyone – email. With a new mobile application called Inbox, Google is attempting to reinvent the email system.
The app is simple, yet potentially game changing. It shows emails in more of a ‘Facebook newsfeed’ format, making it easy to scroll through and can automatically categorize similar types of emails, like hotel reservations or flight bookings. The app uses Google Now’s intelligence to show you the information that is most important to you, and can double as a smart to-do list, with functionality for email reminders and snoozing.
Perhaps most impressive is the Assists feature, which aims to make life easier. According to Google’s official blog, “Inbox helps you cross those off your list by providing Assists—handy pieces of information you may need to get the job done. For example, if you write a Reminder to call the hardware store, Inbox will supply the store’s phone number and tell you if it’s open. Assists work for your email, too. If you make a restaurant reservation online, Inbox adds a map to your confirmation email. Book a flight online, and Inbox gives a link to check-in.”
Inbox is a way to combat the cluster and overflow of emails that most working professionals experience on a daily basis, according to Google. While the current Gmail has many helpful organizational functions, Inbox attempts to be more proactive with its functionality.
The app is not available to everyone just yet. Google sent out the first round of invites to Gmail users on Wednesday, who will have the capability to invite friends. Less patient enthusiasts can also request the app by emailing email@example.com.
From the company’s blog, it seems there is much excitement surrounding the new app. “Gmail’s still there for you, but Inbox is something new. It’s a better way to get back to what matters, and we can’t wait to share it with you,” Google said.
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