That means that yes, at some point you’ll be able to run your little WordPress-powered blog on the biggest server farms on the planet. But it also means that major companies will be able to use Google’s famously reliable services to run their enterprise-scale “big data,” backend, and, yes, consumer web projects, all in the PHP language that that is increasingly penetrating corporations.

I talked to one of the three founding fathers of PHP and current Zend CEO, Andi Gutmans, about the implications for PHP.

It’s a busy time for the Gutmans, the open-source programming language, and Zend, the company Gutmans formed to offer commercial support and tools for PHP. Engine Yard just recently added PHP to their Platform-as-a-Service as well. And Zend is expanding quickly in the enterprise as it has recently released integrated development tools for cloud-enabled mobile applications.

But Gutmans, though busy, is thoroughly upbeat.

And for good reason: The biggest web company on the planet just added support for the most widely used programming language on the planet. And in that support is a massive implied compliment to PHP — the first non-Google programming language to be supported by Google App Engine — and a potentially major boost to Zend’s business.

VentureBeat: Did Google talk to you before adding PHP to Google App Engine?

Source: John Koetsier

Andi Gutmans at ZendCon 2012.

Andi Gutmans: I don’t know how to answer that. I was aware that they were going to make that announcement … I’ve worked with the product manager on the project before.

VentureBeat: Google didn’t formally brief you?

Gutmans: Let’s put it this way: It’s not a surprise that a platform-as-a-service (PaaS) player that’s serious about gaining market share added PHP support. Google App Engine was almost a science project for the first few years, only supporting languages that Google used internally.

But in the past few months, there’s been a real attitude from Google that we’re going to go and compete with Amazon and with Microsoft, and we’re going to do it all fronts. They’ve become very aggressive on differentiating on performance and billing.

VentureBeat: What does this announcement say about PHP?

Gutmans: We have internal jokes about PHP’s web penetration and have used the stat that PHP runs 39 percent of the web because it was the only number we could get from Netcraft.

But I love Google’s stat, that 75 percent of the web runs PHP. No one knows the web better than Google.

If they’re trying to gain market share and gain it quickly, there’s no other language to do it with. And this is the first non-Google language they’re supporting.

VentureBeat: How’s that feel? And how are your customers reacting?

Gutmans: I’m definitely excited about it.

When any player does something like this — especially Google — it’s a huge validation. We got emails from some of our largest customers, saying this is great … it gives our enterprise customers a higher sense of confidence. And that stat that 75 percent of the web runs PHP is great for Zend – anything that is good for PHP, by proxy is good for Zend.

In addition, they said that PHP was their top-requested feature, which means the developer community was very supportive of us.

VentureBeat: Will you offer Google App Engine Support within Zend Studio, so developers can publish to Google right from within their Zend development environment?

Gutmans: We don’t know yet … it’s early and we’re exploring what kind of relationship we can have with Google.

We do support Google Compute Engine — that’s a full integration and some of the larger companies who run PHP already use it — but Google App Engine is just launched, it’s still in experimentation mode.

VentureBeat: What took Google so long to add PHP support?

Gutmans: I can’t speak for Google, but my assumption is that I felt that Google App Engine in the first few years was something they knew they wanted to do really well but … they kinda went down the simple easy route.

But we’ve seen a significant acceleration in the past 12 months. This will be a $20 billion market by 2016, and they moved from testing the waters to being very very aggressive right now.

We recently surveyed 5,000 PHP developers, asking them where in the cloud do you think you’ll deploy. Fifty-one percent said Amazon Web Services, but Google was 21 percent … and we just support Compute Engine right now.

It wasn’t even on the list last year, so that’s a big jump.

VentureBeat: What does this mean for the little guy building in PHP or hosting a WordPress blog?

Gutmans: I think it gives another option for the guys who do the small stuff, who are using shared hosting for $20/month.

What’s really great for the small developer is that it’s a nice value proposition — you can start at a lower cost. And, it’s a modern platform versus shared hosting, which is quite constrained.”

VentureBeat: So what does this mean for PHP overall?

 Gutmans: The number of requests that Google got from developers was very very significant. It exemplifies what we’ve been talking about … that PHP is very broadly adopted, but also by enterprise.

And that is driven by web, mobile, and cloud, which is where PHP’s sweet spot is. We’re seeing a strong tailwind behind us.

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“Enterprises’ need for public cloud is much different than startups,” Newvem CEO Zev Laderman told me yesterday. “Azure is exactly the perfect extension of the data center.”

Newvem is well-known for its Amazon Web Services offerings, offering startups optimization services, security checking, and overall cloud management — including the first-ever iPhone app for managing your cloud services. Now, Laderman said, the company is returning to its roots in enterprise with a similar offering for Azure. It’s the fruit of an 8-month effort, and it’s a signal that Microsoft’s cloud offerings are hitting a needed an lucrative market niche in a way that Amazon is not.

“Azure is a billion-dollar business,” Laderman says. “Azure is Microsoft’s best-kept secret in the enterprise.”

Newvem’s new offerings on Azure include visualization of your cloud costs, inventory, and usage trends, methods to create dynamic views of your cloud usage and align them to business objectives for very granular optimization recommendations, and pattern-recognizing tools that identify and highlight consumption patterns, such as regular peaks, bursts, and trends.

Private beta participant Linkury agrees, saying that Newvem for Azure gave the company “visibility into specific Windows Azure inventory that we use,” and that “it’s a great time-saver and has helped us to better plan and forecast our usage.”

Source: Newvem

Your cloud dashboard.

The lure of Azure, according to Newvem, is that Microsoft is already huge in the enterprise, and corporations can seamlessly move workloads between owned servers and cloud servers as required. So a company that begins a speculative new project can start serving its computing needs on Azure and then, once workloads stabilize, move the workload into the corporate data center.

That helps enterprises be as nimble and quick to market as startups, since projects can begin immediately without the need for purchase, installation, and configuration of owned hardware and software solutions. But it also enables enterprises to manage costs effectively. If the project isn’t successful, there’s no unused hardware left lying around. If it is, and if via Newvem’s optimization offerings IT management determines that costs could be lower in the data center, projects can easily be moved back inside the four walls.

To Laderman, that’s a key differentiator between Amazon and Azure.

“That’s important for Microsoft,” he says. “They win both ways, because they’re both in the cloud and in the enterprise.”

Source: Newvem

Your cloud utlization heatmap.

Microsoft is very “partner-centric” and has been a key supporter during the 8-month project, Laderman says, especially Bill Hilf, Microsoft’s general manager for Azure.

Microsoft is supporting Newvem in its enterprise marketing channels, will put Newvem’s solution in the Azure store, and will help Newvem go to market via joint sales efforts … all indicators of Microsoft’s commitment to deploying its cloud solutions in the enterprise, and partnering with companies who have complementary services.

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Apple has built a massive and fast-growing $16 billion annual revenue stream in digital content alone, Apple analyst Horace Dediu says.

The company announced that quarterly iTunes revenues topped $4 billion — including $2.4 billion in content alone — in its latest earnings report. Based on historical numbers alone, that’s a $16 billion annual run rate, thanks to Apple’s 500 million iTunes users. But since it also has grown at a fairly steady 29 percent per quarter for the past six years, it’s also an underestimate of the annual value of the iTunes ecosystem.

And it gets better as users have more Apple devices.

“Apple users spend about $1/day for each Apple device in use,” Dediu says.

Source: Horace Dediu

iTunes digital media revenue by product segment.

All of which means that Apple is still king of the mobile ecosystem, at least as far as monetization is concerned. Users have currently downloaded 49.9 billion apps, and Apple is currently running a contest which will see the downloader of the 50th billion app win $10,000 in iTunes cash. While Google Play is growing faster than Apple’s app store, Apple still leads in downloads, and it holds a 2.6-times revenue advantage.

It’s also an interesting metric for Amazon to evaluate itself by.

Amazon sells Kindle devices at or near cost in part because it hopes to make extra revenue on digital content — perhaps $3 per user per month – via its own app store and its digital media offerings, such as TV shows and movies. Its newly launched virtual currency Amazon Coins should help with that mission, and with 11 million to 12.5 million Kindles sold through Christmas 2012, and perhaps 15 million sold to date, that would translate into just over half a billion dollars in revenue.

And at Apple-like numbers of $40/user/year, it would be $600 million dollars.

All of which could help explain why Amazon is hitting digital media hard and buying technology to make all of its Kindles full-color, with responsive screens.

And why Apple, Amazon, and Google are increasingly hard-core competitors in their three-way battle to own your devices … and your wallet.

Image credit: 401(K) 2013/Flickr

Amazon’s Kindle Fire is in glorious living color, but its original and still-strong-selling Kindle and cousins, the Kindle Paperwhite family, are still irritatingly stuck in 1950s-style black-and-white.

That may soon change.

As The Digital Reader found, Amazon has bought recent Samsung acquisition Liquavista while attempting to hide the fact by routing the acquisition through a limited liability corporation registered in Delaware, which is in turn linked to a holding company named CSC: “Corporation Service Company.”

Very tricksy, Amazon.

Amazon confirmed the purchase with a short emailed statement, saying:

We are always looking for new technologies we may be able to incorporate into our products over the long term. The Liquavista team shares our passion for invention and is creating exciting new technologies with a lot of potential. It’s still early days, but we’re excited about the possibilities and we look forward to working with Liquavista to develop these displays.

Liquavista has built a screen technology that approaches the efficiency of traditional e-reader black-and-white e-ink screens while offering the color of LCD and other full-color screen technologies. In other words, you can have your cake and eat it, too: gorgeous full-color screen plus long-lasting battery life.

That might be just the technology that Amazon needs to kickstart conversion of its full e-reader line to a full-color and quick-response screen, as e-ink is also notoriously slow to refresh.

And that is important, because Amazon is doubling down on digital content, hoping to drive both sales and margin growth by selling digital media like movies and TV shows, apps, in-app purchases, and games. The company just launched its new virtual currency, Amazon Coins, today, attempting to increase the rate at which Amazon customers buy things that don’t have to be expensively stored, packaged, and shipped.

And you can’t sell much digital content on a slow black-and-white screen.

While Liquavista’s screen tech won’t be cutting-edge enough to run Samsung’s Galaxy phones and tablets, which need the best screens available, it is advanced enough for Amazon’s Kindles, The Digital Reader says, which are primarily budget, mass-market devices.

And advanced enough to move Amazon’s low-end devices beyond being ghettoes for books, and towards being able to handle all the full-color and full-motion media that Amazon can sell.

Image credits: Devindra Hardawar/VentureBeat

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Amazon launched its first digital currency today with a giveaway: 500 free Amazon Coins for every Kindle Fire customer. The coins, which are worth $5, can buy games, apps, and in-app purchases.

Kindle Fire customers who wish to buy apps or make in-app purchases can purchase Amazon Coins at a rate of 100 for every $1, but they can also get up to a 10 percent discount. Buying 10,000 coins earns you the full discount, and will cost Amazon customers $90.

One caveat: Amazon Coins are only available in the U.S. right now.

“Today is Day One for Coins,” Amazon VP of apps and games Mike George said in a statement. “We will continue to add more ways to earn and spend Coins on a wider range of content and activities.”

Source: http://www.flickr.com/photos/olivepress/6348546698/

Amazon Kindle Fire

Amazon announced the virtual currency back in February, when the company also said it would give away tens of millions of dollars worth of free Coins to customers. That’s a hint about the number of Kindle Fires sold — 10 million Kindle Fires would account for $50 million in free coins — as Amazon has never given device sales figures.

Virtual currencies can be useful for gift purposes, for children’s allowances, and for, perhaps, making it easer for customers to spend actual money since they may feel they are only spending virtual money. However, it is another layer of complexity, both for people and for the company issuing the currency, and mobile competitors Apple and Google have not released virtual currencies.

One of Amazon’s biggest goals is expanding the sale of digital content.

A full 12 of the 15 business highlights the company chose to include in its first-quarter 2013 annual earnings release were digital-content related. And that’s what Amazon Coins is all about: increasing the sale of virtual goods, which don’t have to be warehoused, packaged, mailed, and delivered.

As Mike George said:

“We are giving Kindle Fire owners $5 worth of Coins to spend on new apps and games, or to purchase in-app items, such as recipes in iCookbook, song collections in SongPop or mighty falcon bundles in Angry Birds: Star Wars.”

One important point for developers: They’ll receive their full 70 percent revenue share when customers buy items with Amazon Coins, even if the users earned a 10 percent discount on their initial coin purchase.

Image credit: Brian Sawyer/Flickr

Sept. 9 - 10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Cameron Peron is VP Marketing at Newvem, a cloud operations optimization service.

Amazon has launched a series of local Amazon Web Services summits across in key cities across the world. Capitalizing on the re:Invent conference in November of last year, the AWS summits are a great forum for local AWS users to learn about featured AWS services and meet partners exhibiting at the event itself.

The AWS Summit in San Francisco a number of days ago lived up to this expectation. Here are 5 insights from Amazon senior VP of web services Andy Jassy’s keynote, and the exhibition itself.

It’s all about the enterprise

Adoption of the public cloud by the enterprise was a key message through the introductory keynote.  In sharp contrast to the keynotes delivered in re:Invent in November, Andy Jassy emphasized the public cloud as part of an enterprise’s IT and cloud strategy as opposed to a complete alternative to on-premise and virtual private cloud.

Andy highlighted use cases of AWS services that the enterprise can use to both move workloads to the AWS cloud as well cooperate between on-premise and AWS environments.

Security = priority #1

Jassy stated that AWS is committed to providing a secure public cloud, highlighting the addition of advanced security controls, certifications and accreditations.

No doubt this was a direct message to enterprise level CIOs that are considering moving small variable workloads to the public cloud, but need to deal with security and compliance risks that run deep into their respective organizations.

Redshift, redshift, redshift

The keynote contained many use cases and examples of using AWS RedShift, a data warehousing and data analysis solution.

Based on an hourly pricing model, RedShift enables AWS customers to analyze large volumes of data with their existing business intelligence tools.  The RedShift use case was a common theme throughout Andy Jassy’s address, use cases delivered throughout the keynote, and breakout sessions. RedShift follows in the footsteps of enriched AWS services such as OpsWorks and Trusted Advisor.

Cost is still the driver for onboarding new business

Throughout the keynote Jassy championed many organic AWS services, as well as solutions provided through the AWS Partnership Network that enable companies to scale once on the AWS cloud.  Despite this, low cost is still king.

Just as Werner Vogel discussed cost savings in the beginning of the New York City keynote, Jassy emphasized that AWS lowered prices 31 times in the absence of competitive pressure to do so.  In line with the success of the Amazon.com model, Jassy implied that that AWS will continue to reduce prices.

Jassy also offered examples of customers reducing costs by using solutions beyond EC2, highlighting that Foursquare reduced their analytical cost by 50 percent with AWS.

Launch of the AWS Certification Program

Jassy also shared the launch of an AWS program that certifies solutions architects, SysOps Admin, and developers.

To qualify, applicants must complete an exam that covers both proficiency in AWS as well as general IT knowledge and experience.  The program should complement and reward AWS users who have championed both onboarding and scaling AWS within their organizations by mandating and regulating their skill sets throughout the career.

In other words DevOps and other AWS users can add AWS certification alongside experience and proficiency in code, such as Ruby and Python.

Cameron Peron is VP Marketing at Newvem, a cloud operations optimization service designed for cloud users. Offering a business view into a company’s public cloud operations, Newvem actively tracks cloud health in order to help reveal and solve cloud irregularities related to cost, security, utilization and availability.  Follow Cameron at @cameronperon

Still there?

Sorry for the big shocker. Almost a year after reports that Amazon was testing smartphones in Asia, half a year after rumors Amazon was buying a smartphone chip processor, a year after more reports that Amazon was building its own smartphone, five months after unveiling a notifications system that would look really nice on a smartphone, and six months after probably wild speculation that Amazon was going to unveil a smartphone for the pre-Christmas shopping spree in 2012, there’s yet another report that Amazon is building a smartphone.

But this one has a 3D screen.

The Wall Street Journal says that Amazon is building at least two smartphones, including a high-end model with 3D graphics and retina-tracking technology so that users can navigate content by “using just their eyes.” Plus an audio-only “streaming content device.”

Harrumph.

Amazon is almost certainly working on a smartphone and almost certainly planning to release it in 2013. There’s just too much smoke for there not to be fire. And having made its bet on digital content being the growth engine of the company’s future success — 12 of the 15 highlights in Amazon’s recent earnings release were about digital content — a smartphone that makes use of Amazon’s recently expanded app store and burgeoning virtual shelves of ebooks, TV shows, movies, and all other forms of digital content makes way too much sense.

But a couple grains of salt.

Amazon hasn’t made its bones in the tablet market by offering the absolutely latest and greatest technology but by presenting a solid product at a rock-bottom price. So I’m a little skeptical about all the wild 3D speculation — especially because that could be a sweet datapoint plant for the company to identify leak sources. And, in reality, a company the size of Amazon, like Apple, is working on many different projects at any given time. Some of them will come to market, and some of them won’t.

One company that can’t be happy about Amazon impending smartphone plans, however, has to be Google. Amazon has essentially hijacked Android for its Kindle offerings, taking the open-source mobile operating system that Google has developed, stripping out the Google app store, Google apps, and Google branding, and replacing them with its own offerings. Amazon will doubtless adopt the exact same strategy with any smartphone play — as Samsung might as well.

And, given the fact that Kindle is probably the leading Android-based tablet, it has the potential to do well in smartphones as well.

Of course, incumbent leader in Android sales Samsung might have a thing or two to say about that.

Image credit: Brian Sawyer/Flickr

This weekend Amazon launched its Appstore in China, beating Google itself to the punch. Amazon’s AppStore is based on Android, but Google’s own app store only provides free apps to China, not paid apps.

This is the latest move in Amazon’s worldwide expansion. In April the Amazon Appstore hit more than 200 new countries, including Canada, Mexico, and Brazil. It also arrived in India, China’s parallel in population growth. China has more than 1.3 billion people.

Amazon is eager to expand its audience, but the growing Chinese market is now too large to ignore. According to Flurry, China just became the world’s largest smartphone market, having an estimated 246 million smartphone devices compared to the U.S.’s 230 million. In comparison, India has only 19 million active smartphone devices.

Amazon’s Appstore expansion also gives it a bigger platform for its Kindle Fire Amazon Coins currency, its rumored Kindle TV set-top box, and future Kindle Fire HD devices.

The Amazon Appstore launched two years ago with about 4,000 apps including a free version of Angry Birds Rio. It now has only about 75,000 apps, which, according to some developers, is one of its advantages.

Photo credit: Steve Jurvetson/Flickr

Notable this year is Apple, with its whopping $156 billion in 2012 sales, jumping into the top 10 for the first time in its 37-year history. And Google, with its big $50 billion year, bulled its way up almost 20 spots to hit No. 55. Perhaps most impressive, however, is Facebook, which with the youngest CEO in the Fortune 500 made the list for the very first time at 487.

Ranking companies by income is a fairly arbitrary measure, since it reveals little about how much companies actually earn, but it does show scope and scale. A grain of salt is definitely indicated, however, as Google’s profits, for instance, are many multiples of Dell’s despite that Dell is ranked No. 51 and Google is No. 55.

Here are the 41 technology companies that Fortune included on its list.

• 6: Apple
• 15: HP
• 20: IBM
• 35: Microsoft
• 49: Amazon
• 51: Dell
• 54: Intel
• 55: Google
• 60: Cisco Systems
• 80: Oracle
• 131: Xerox
• 133: EMC
• 176: Computer Sciences
• 163: Jabil Circuit
• 194: Qualcomm
• 196: eBay
• 218: Texas Instruments
• 222: Western Digital
• 240: SAIC
• 267: CDW
• 270: Liberty Interactive
• 302: Applied Materials
• 304: Motorola Solutions
• 318: Micron Technology
• 326: Corning
• 327: Broadcom
• 352: Congnizant Technology Solutions
• 379: Symantec
• 408: NetApp
• 420: Sanmina
• 429: Harris
• 436: Booz Allen Hamilton Holding
• 441: NCR
• 473: Priceline.com
• 464: AMD
• 477: Avaya
• 482: Facebook
• 487: SanDisk
• 489: Pitney Bowes
• 494: Yahoo
• 499: CA Technologies

A couple of caveats:

I have not included telecommunications companies such as AT&T and Verizon, although a good argument can be made that they are now, primarily, technology companies, simply because Fortune did not classify them in any recognizable technology category. And I have included retailers like CDW and companies like Pitney Bowes, which Fortune classifies in categories like Computers, Office Equipment, and Information Technology Services.

One interesting note: While Facebook has the Fortune 500′s youngest CEO, Dole Food’s David Murdock, at 90 years old, is the Fortune 500′s oldest CEO.

photo credit: mikesolita via photopin cc

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Barnes & Noble has thrown in the towel and abandoned its Amazon-style Android strategy, finally agreeing to add Google’s app store, Google Play, to the Nook tablet.

“We are offering our customers even more great entertainment on our award-winning tablets,” Barnes & Noble CEO William Lynch said in a statement. “Now with access to more than 700,000 apps and the best reading experience available, NOOK HD and NOOK HD+ are must-see products for entertainment lovers.”

Similar to Amazon, Barnes & Noble has extensively customized Android, stripping out numerous Google features such as Google Play, default installs of Google apps, and more, isolating the Nook experience in a Barnes & Noble ecosystem.

The only problem?

Barnes & Noble only ever managed to get something like 10,000 apps on Nook, resulting in an unsustainable poverty of apps compared to platforms such as iOS, Google Play, or even Amazon’s proprietary app store, which currently sports about 75,000 apps, and has a thriving app ecosystem. Popular games like Temple Run — one of the top 50 apps of all time on iOS — never touched the Nook platform.

B&N chief executive Lynch is essentially admitted as much, highlighting the fact that now Nook will have Google Play’s full complement of more than 700,000 apps. But the addition does not come without some cost.

First, to install Google Play, device makers also have to agree to install several Google-created apps, such as YouTube, Chrome, Google Search, Google Maps, and Gmail. Those apps will now be automatically installed on existing and new Nooks via an automatic over-the-air download, which means that Nook users will find some new apps on their devices without their request or action.

More critically, B&N has been selling Nooks — much as Amazon — on the razor and blades philosophy: Sell the razor cheap, and make it up on digital blades, or content such as books, music, apps, and movies. With this new Google-centric tactic, that strategy is now at risk.

Just how much remains to be seen, but the fact is that the old strategy was not working anyways, simply due to the fact that B&N did not have the scale to attract enough developer interest, and therefore enough apps.

In addition, as Time notes, Microsoft is a part owner of the Nook business, having invested $300 million into B&N in 2012. Technology and business do make for some odd bedfellows.

Image credit: Ricardo Bilton/Venturebeat

Amazon stock is up down $10 in after-hours trading today as the company reported first quarter sales that grew 22 percent to $16.07 billion — and income that decreased 37 percent to $82 million.

It’s like the opposite of Winston Churchill’s Battle of Britain quote: Never were so many products sold for so much money by such a huge company for so little profit.

For years, Wall Street has been giving this company a pass for never-ending promises for the future — essentially, startup style economics and pricing — and it still is, 16 years after Amazon was founded. While sales grew to $16 billion, free cash flow decreased 77 percent to just $177 million. Part of the reason for that, of course, is Amazon spending $1.4 billion on corporate office space and property in Seattle. The quarter’s income of $82 million compares to the year-ago quarter’s $130 million — already not a huge amount of profit for sales in the mid-teen billions.

But there is a considerable amount of truth that Amazon is still very much in land-grab mode. And the company’s earnings press release highlighted that aspect.

In fact, a full 12 of the 15 highlights Amazon chose to feature in its earnings release are related to digital content, cloud services, and Amazon’s vehicle for delivering that content and services, the Android-based Kindle Fire. And Amazon CEO Jeff Bezos’ first quote in the release is about content — television content, no less:

“Amazon Studios is working on a new way to green light TV shows. The pilots are out in the open where everyone can have a say,” Jeff Bezos, founder and CEO of Amazon.com. “I have my personal picks and so do members of the Amazon Studios team, but the exciting thing about our approach is that our opinions don’t matter. Our customers will determine what goes into full-season production. We hope Amazon Originals can become yet another way for us to create value for Prime members.”

Interesting.

Guidance for the future is not much better, with Amazon CFO Tom Szkutak saying that the company estimates income for the coming quarter at between $0 and $350 million. Which doesn’t really appear to be much guidance at all — a very Szkutakian quality, apparently.

Wall Street, at least seems to be buying it.

For all its vaunted reality-distortion-field capabilities, Apple’s got nothing on this company.

Photo credit: public.resource.org via photopin cc

That’s a very good thing — if you’re an app developer.

According to the analytics firm App Annie, which launched Amazon app store analytics in beta last month, 19,000 developers are now publishing apps to Amazon, as opposed to 180,000 using Google Play and 210,000 who are publishing apps to Apple’s iOS app store. The lower number of apps and the fewer developers focusing on Amazon make for a less crowded marketplace in which there’s a little more room to grow.

“While Amazon Appstore is the new kid on the block, we hear great things from developers about their ability to monetize from the store,” App Annie CEO Bertrand Schmitt said in a statement.

Source: App Annie

The top 10 paid apps in the Amazon app store – U.S.

App Annie unveiled its fully baked solution recently — just after Amazon announced an impending expansion of its app store to 200 countries — and today released the results of a 1,500-developer survey focused on Amazon’s app store.

The top three reasons developers release apps for Amazon start with convenience. After all, Amazon Kindle runs Android underneath that Amazon skin, and it’s easy to port apps to Amazon’s store. Second, however, is the hope of more sales, as Amazon just announced earlier this month that it is rolling out to 200 more countries, including Australia, Brazil, Canada, Mexico, India, South Africa, and South Korea — which buys a lot of apps. And the third reason is that when it comes to Android tablets, Kindle Fire is, well, on fire.

Amazon does not disclose Kindle sales numbers, but in January Localytics said that the number of Amazon Kindle Fires grew 322 percent in the holiday quarter — quadrupling the growth of the next-leading Android tablet, a Galaxy Note II from Samsung. This means that as Android increasingly penetrates the tablet market, Amazon increasingly penetrates the Android ecosystem.

There is one down side to the Amazon app store, however: price point.

App Annie says that the top 400 apps on Amazon have an average price point almost half that of Google Play and iPad, and even less than iPhone, even though smartphone-focused apps are typically cheaper than tablet-focused apps. The average price of the top 400 paid apps on Google Play is $3.55. On iPad, that’s a slightly cheaper $3.39. But on Amazon’s app store, that’s a much lower price point: $1.73.

Which shouldn’t come as a shock, I suppose: Amazon is the U.S. Internet’s superstore, and sharp pricing has been built into its business model since the beginning.

But it is something to keep in mind.

Microsoft stock, which is down a penny today, jumped from under $30 to over $31 almost immediately overnight, and has climbed almost 11 percent over the last month. That’s part of a fairly steady rise over the last quarter which has added over $30 billion in value to the company.

According to the Wall Street Journal, Ubben said that Microsoft “is a dominant software company … and in the long term it will win out,” and that in five years, Microsoft’s investments in web and cloud could transform the company into the largest cloud company in the world. Just five days ago, Microsoft announced general availability of its Windows Azure Infrastructure Cloud — a cheaper cloud than Amazon and Rackspace. 

The company has had challenges with Windows 8 adoption which some have blamed for historically slow PC sales in the last quarter, although it is investing more in Windows 8 for tablets and smaller touch devices.

In any case, Microsoft appears to be doing something right. At least, if you can trust Wall Street.

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Mobile app analytics source App Annie announced today that it is adding Amazon Appstore statistics to its existing Google Play and iOS analytics solutions. The service is currently in beta release.

And what the data shows is that the top apps on Amazon are very, very different than Google Play.

All of Amazon’s top 10 paid apps are games, including three Disney titles: Where’s My Water and two versions of the super-popular Temple Run app (Oz and Brave). And while Mojang’s popular Minecraft game is near the top in both stores, the key difference is that Google Play’s top 10 selling apps include seven utilities, including Swiftkey Keyboard, the top-selling app in the U.S.

When it comes to free apps, social networking and communications apps dominate Google Play: Facebook is the top app, Instagram is at number three, Facebook Messenger is at five, and Skype and Twitter are at eight and nine. On Amazon, Facebook barely cracks the top 10, and no other social networking or communications tool comes close.

One of App Annie’s goals, of course, is to show developers where the big opportunities are. Based on the early returns, the main thing Amazon customers want from the company’s app store is games.

Analytics for the Amazon Appstore are important, since Amazon’s Kindle family is almost certainly the best-selling Android family of tablets in the world. Amazon doesn’t release Kindle sales statistics, but the Kindle Fire HD 7-inch dominates web use by Android devices, and ABI Research has calculated the total number of Kindle tablets in the market as of January as up to 12.5 million.

Distimo, which also provides app store analytics, already includes Amazon Appstore numbers in its privately available data.

Image credit: Blake Patterson/Flickr

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

With the new Galaxy S4, Samsung is moving farther and farther away from Google. In fact, you have to wonder, will Samsung turn into the new Amazon?

Just look at the new Galaxy S IV, unveiled yesterday.

It has AirView to control your phone as if it was an Xbox and the camera was Kinect; facial recognition technology to pause video when you glance away or scroll a document based on your gaze; S Translator to translate text, as if there was no Google Translate; Galaxy S Voice Drive, which emulates Apple’s Siri; and if you want to get apps on your Samsung Android phone, Samsung’s pushing its own Hub app store, with nary a mention of Google Play.

The reality is that Samsung’s position as the premier Android device developer in the world gives it a ton of clout. And it seems to be using that power to ween users from Google.

We have seen this movie before.

Amazon almost certainly owns the Android tablet market, except its tablet doesn’t really run Android. Or, at least not the version of Android that Google produces. And, instead of connecting to Google services and the Google app store, Amazon’s Android products link into Amazon’s media ecosystem and Amazon’s private app store. Which is a brilliant if somewhat parasitic business model.

Samsung may very well be moving down this road.

The Korean company has made at least two attempts to create its own smartphone operating system: the now-abandoned Bada mobile OS, and Tizen, an effort with Intel to create a Linux-based OS for smartphones that is ongoing. But a simpler and cheaper solution might be the Amazon model: Accept the Android OS from Google with a smile and a nod, strip out as much Google as you can, load up as much proprietary software as you can, and ship, ship, ship.

Wham, bam, thank you ma’am!

“All signs are pointing to Samsung trying to pull off a Great OS Escape within the next year or two,” analyst Aapo Markkanen wrote this morning. “Doing it with an Android fork would be far too risky … so the hero’s role is now reserved for Tizen.”

That’s one reason, according to Google’s just-former Android head Andy Rubin, Google acquired Motorola: a hedge against any one Android partner getting too big, too powerful.

The big question now as we come off a year in which Samsung sold 400 million phones globally is this: Is that hedge big enough?

You can bet Google execs are asking that question. And you have have to start wondering when investors will start to factor that risk into Google stock, which is currently near a five-year high.

photo credit: Louish Pixel via photopin cc

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

In 2013, we’ll download 10 apps for every single woman, man, and child on planet Earth.

Half of those apps will be Android apps, which will have 58 percent smartphone app share, according to ABI Research, and 41 percent of those will be iOS apps. Apple’s iPhone will account for 33 percent of smartphone app downloads, ABI says, while the company’s iPad will take 75 percent of tablet app downloads. Windows Phone and tablet devices will account for the majority of the rest, with BlackBerry taking about a 2 percent share.

Add it all up, and about 35 billion Android apps will load to devices in 2013, plus another 29 billion iOS apps.

That is a lot of apps.

While Google’s Android is clearly doing well in smartphones, the future of its tablet aspirations is not yet as clear. Only 17 percent of tablet downloads in 2013 will be on Android tabs, ABI says, which compares poorly to iPad’s 75 percent tablet app share.

“The most pressing issue for Google is how much of this handset momentum will ultimately trickle down to tablets, where Apple is holding the fort remarkably well,” ABI analyst Aapo Markkanen said in a statement.

Source: Jennifer Van Grove/VentureBeat

Jeff Bezos and the Kindle Fire

Interestingly, Markkanen says that Amazon, which is a major Google frenemy, might be helping Android the most in the tablet space, since its Kindle Fire is almost certainly the best-selling Android-based tablet on the market. The enemy part is that Amazon’s Android is a de-Google-ized version of Android which taps into Amazon’s content ecosystem, not Google’s.

The friend part is that since Kindle Fire is giving Android at least some degree of tablet momentum, app developers are more likely to build apps for Android-based tablets, which they can then sell on both Google and Amazon app stores.

But Google needs more Android tablet partners to do well if it wants Android’s share of app downloads to increase.

“The question is becoming, is there enough critical mass with Android partners, led by Samsung?” Jeff Orr, another ABI analyst told me over the phone. “And, are there going to be more vendors who can make a move and break away from the pack?”

Another big question: How will wearables affect the market?

Google is coming to market with Glass in 2013, the company has said, and it’s a perfect chisel to pry Apple fans out of the iOS ecosystem. But Apple is countering with iWatch, conceivably. Both will stimulate an explosion in apps designed either to work with them or on them.

“We’re certainly looking at wearables,” Orr said.

photo credit: schnaars via photopin cc

Sept. 9 - 10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Updated 1:16 p.m. Pacific

Amazon.com and you’re (not) done? Well, for a while today.

Amazon.com was not exactly down, but the site might as well have been. All product searches were coming up error 400, though as for 1:16 p.m. Pacific today, it appears as if the problem has been fixed.

Twitter is blowing up about the problem, which is more than a little embarrassing for a company that prides itself on providing uptime assurance in the cloud for thousands of web-based businesses:

wow, all my searches on Amazon are coming up with error code 400! wonder what’s going on there.

— Empty Mirror (@EmptyMirror) March 1, 2013

Realistically, however, this is not a cloud failure or a web serving error. It’s a programming or configuration error, a bad request being sent to the server. Amazon should have it fixed shortly.

These are two of the biggest stats in Alibaba’s newest visual overview of the Chinese e-commerce market. Alibaba is China’s online shopping giant — the company sold over $175 billion worth of products in 2012, and it owns TMall, which manages online sales for thousands of Chinese companies, as well as Taobao, which is, roughly, the Chinese version of eBay.

Alibaba, which Yahoo partially owns, made history in 2012 by racking up $3 billion in sales in a single day.

Sixty percent of those 242 million Chinese have incomes of less than $320 a month, but the average Chinese user spends almost as much online as U.S consumers: $1,054 — mostly because online prices are cheaper than in a store.

Alibaba reports that 54 percent of Chinese shop online at TMall — its own online shopping mall — with only 3 percent shopping at Joyo Amazon, which is Amazon’s Chinese division. Interestingly, 68 percent of what they buy is clothing and accessories, with much lower rates for digital goods, consumer electronics, and media.

Alibaba predicts that 2013 will be the year that Chinese e-commerce surpasses U.S e-commerce, with $265 billion in sales compared to a projected $230 billion for America, and that total Chinese online sales will reach $445 billion in 2015.

All the details in visual form:

photo credit: Sprengben [why not get a friend] via photopin cc

“Our goal is to make Cloud Player the most widely compatible cloud playback solution available, giving our customers the capability to buy their music once and enjoy it everywhere,” said Steve Boom, Amazon’s well-named VP for digital music.

Sounds familiar?

It should, because Apple has said similar things on multiple occasions. The difference is that Amazon actually has the capability to make it happen, as it not only has its own devices but also builds software for other company’s devices, such as iPhones, iPads, Android phones and tablets, and more.

Cloud Player stores all your Amazon music purchases and up to 250 imported songs or free. If your music library is larger — and whose isn’t — you can import up to 250,000 songs into Cloud Player and store them for $25 per year in a feature similar to Apple’s iTunes Match.

You can safely bet that Cloud Player will not be music-only for long, as Amazon continues to invest in digital content of all kinds.

But Amazon isn’t exactly doing the happy dance today. Like all software companies, it has glitches, and one in its ubiquitous Kindle iOS software is causing an annoying issue for iPhone and iPad users: It’s deleting their book libraries. Amazon acknowledges the issue, and it says that it does not currently recommend that users install the update.

Getting all your books deleted is not necessarily catastrophic — users can simple resync with Amazon, presumably when an app update-to-the-update is released, to redownload all their content.

But it is annoying and time-consuming, and it could be seriously dangerous for those users who have sent PDFs and other documents to their Kindles via Amazon’s send-to-Kindle functionality. If you don’t have backups for those files, it’s possible you’d lose them for good.

The issue? Amazon issued a statement to The Verge:

“We have identified an issue with the app update that may cause your app to become deregistered. To register, enter your Amazon account e-mail address and password and all your Amazon content will be available in the cloud. We have submitted an update fix for this issue and are working with Apple to release.”

photo credit: AJC1 via photopin cc

Cloud care is free.

Half of cloud deployments are insecure and vulnerable to attack, and a third are not properly set up to maintain service if Amazon Web Services has downtime, says cloud optimization company Newvem. Which is why Newvem is releasing a free version of its analytics product to pinpoint problems in small and medium-sized business’s clouds.

A sample Newvem report

“We’re just amazed at how exposed many small and medium-sized customers of Amazon are,” Newvem CEO Zev Laderman told me yesterday from Tel Aviv.

The free services that Newvem will now offer include emergency triage, activity diagnostics, and cost efficiency reports. The reports will highlight security risks, show where companies can improve availability options in case of Amazon cloud issues, point out where backups are needed, and expose situations in which companies can resize their cloud usage and potentially move to a lower service level to save money.

Newvem tracks almost $250 million in Amazon EC2 usage annually and has 1,500 cloud clients who use its services to manage their increasingly sophisticated — and complex — cloud deployments. Enterprise clients and heavy cloud users get more trend analysis, can separate cloud usage by business group, get better Amazon reserved instance tracking and S3 analysis, which shows what storage capacity they have and what they’re actually using.

“The big guys who spend over $1,00,000 … they have everything they want,” Laderman says. “But the small and medium guys, there’s a big gap.”

This new product, Cloud Care, is aimed solidly at those small and medium guys, who might spend $1,000 to $5,000 a month on Amazon. Based on Amazon Web Services’ projected 2013 revenue of around $3 billion, that group likely consists of about 3,500 businesses that are using, but not necessarily optimizing, the cloud.

Amazon delivers its cloud services with what it calls a “shared responsibility” model. The problem is that the small and medium users don’t have the same level of resources as the big boys to devote full-time staff to ensuring they keep up with their side.

A sample report from Newvem

photo credit: bitzcelt via photopin cc

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July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Mick Jagger can’t get no satisfaction, but apparently a lot of 14-year-old boys can. So too, fortunately, can Apple, Amazon, QVC, and NewEgg clients.

While Amazon took top honors in customer experience firm ForeSee’s latest mobile shopping satisfaction index and Apple came in second, the big surprise was Victoria’s Secret. The hot lingerie retailer took a top-five position for the first time. (See the full list of the top 25, below.)

So is lingerie shopping on-the-go the new new thing, I asked ForeSee chief executive Larry Freed?

“Either that or there’s a lot of 14-year-old boys on mobile devices,” he joked. ”Actually, though, we see a lot of people in-store taking pictures and sending them to a friend for an opinion, or checking size and color availability.”

Amazon also leads in online retail satisfaction, and perennially does well. Apple put in a strong showing after sliding in last quarter’s online retail numbers, and home shopping giant QVC, electronics retailer NewEgg, and — of course — Victoria’s Secret rounded out the top five.

The secret of Amazon’s success, it turns out, is fairly simple.

“Both in the web and mobile they do a great job of being focused on the customer,” Freed says. “They offer great selection with competitive — not the best, but competitive — prices.”

There’s a lesson in that for other m-commerce retailers. While overall customer satisfaction with mobile stores is getting better, retailers who want to improve their stores need to focus on four key areas: price, merchandise, functionality, and content. Price needs to be reasonable, sure, but scope of merchandise available is also an opportunity to delight customers, as too many retailers present too few of their product selection on their mobile sites. Functionality and features of your mobile store also matter (more is better, as long as usability is maintained), and accessibility to content about the products is also critically important.

[Editor's Note: Mobile commerce, and how to be more successful at it, is one of the themes of our upcoming Mobile Summit in Sausalio. Find out more here.]

And your mobile site needs to work with and be integrated into all your other channels.

“A lot of times customers are starting on the web,” Freed says. “But sometimes it’s the store. It’s worth remembering that today’s consumer is not only multi-channel but also multi-device … moving from a work computer to a home PC to a mobile phone to a tablet … and consumers expect that to be seamless.”

That’s a tough job for retailers, particularly for non-logged-in users. But as fast as mobile commerce is growing — and it does have significant amounts of growing to do — the expectations are rising even quicker, Freed says.

And what about every bricks-and-mortar retail’s favorite bugaboo, showrooming?

“It’s a glass half full, glass half empty syndrome,” says Freed. “Consumers are using a phone to get more information more often while in a store. But the challenge is to embrace showrooming … to offer a great experience in-store and a great experience on mobile so that they can negate the risk and maybe even turn showrooming into a positive.”

The top mobile retailers by customer experience, according to ForeSee:

photo credit: Ed Yourdon via photopin cc

The only problem?

You wasted a good chunk of that $50 billion on advertising that didn’t convert, didn’t show ROI, and wasn’t intelligently conceived. Ideagility founder and CMO Rahm McDaniel wants to change that.

“Our typical customer sees their overall spend decrease by double digits,” he told me. “And their conversion rates increase by double digits.”

Source: Ideagility

Conversion rates

The big boys, companies like WalMart and PC Mall and Amazon, spend millions of dollars on Google AdWords. So they have whole teams of brainiac advertisers constantly tweaking campaigns, editing ads, A/B testings copy, and generally doing everything you don’t have time to do. Which is why pay-per-click management software like Ideagility’s AgileBid makes sense: it makes the software do the work for you.

“Big companies tend to view little companies as small, stupid versions of themselves,” Ideagility’s CEO Ron McDaniel says. “Google has built this amazing advertising platform … but the learning curve of Adwords is too high for most business that do $1000/month on Adwords to be worth their time.”

Managing a PPC campaign is labor-intensive. You set up multiple ads, choose keywords that you’re targeting, and then iterate daily via multivariate testing to optimize three key metrics: click-through rate, conversion rate, and return on investment. Some keywords are worth more, because they convert at a higher rate and convert into higher-paying customers. Some keywords stimulate huge click-through, but poor conversion. Failing to optimize means failing to win: paying Google too much for advertising that does not efficiently accomplish your objectives.

So McDaniel, who built the software for AgileBid for his own use initially, created software to optimize AdWords spending regularly, repeatedly … forever.

“If you can make a 10 percent improvement on your bid process every day — which is what humans don’t do well — then that’s where the largest returns come from,” he told me.

Here’s how it works.

After initial set-up, AgileBid is constantly active moving dollars out of areas of negative returns, into areas of positive returns. Most of the keywords that you’re able to think of when setting up a campaign are the exact same keywords your competitors thought of, so they’re expensive, may not convert well, and don’t have great ROI. AgileBid is constantly looking for new, related keywords, and unexplored opportunities.

AgileBid spends about 20 percent of your budget on that testing. The hidden gold it uncovers in out-of-the-way keywords and ads is what drops your spend and boosts your conversion rates by double digits. That means if you’re spending $1000/month, you could reduce your ad budgets to $800 and still get better results.

Source: Ideagility

Ideagility dashboard

AgileBid isn’t for everyone, McDaniel is quick to clarify. Other PPC automation tools such as WordStream, Kenshoo, Marin, and Acquisio offer more features and more customizability. But that’s just the opposite of what AgileBid was intended to do.

“We’re like a 4-hour work week tool,” McDaniel says. “The problem isn’t that people don’t have enough features … what our customers have told us they don’t have time to mess with that stuff. So we give our clients a look at what’s happening, but not a lot of knobs and dials to turn.”

The results are impressive.

McDaniel says that the big AdWords spenders like Amazon, PC Mall, Overstock.com, Costco, and Macy’s average about 2 to 3.5 percent conversion rates. (That’s pretty good — I’ve personally managed PPC campaigns, and a single percent is generally considered par for the course.) AgileBid’s customers — typically small businesses without huge, well-known brands — convert at an astonishing 3.37 percent.

In other words, better than NeimanMarcus, Overstock.com, PC Mall, and Costco, and almost as good as Amazon.com and Macys.

In other words, impressive.

photo credit: faith goble via photopin cc

Only, CFO Tom Szkutak wasn’t really there to answer questions.

Is Kindle profitable?

What are attach rates on Kindle, an analyst asked, wondering if Amazon was selling covers or bags, as well as digital content to fill up the Android-based tablets. After all, if Kindles are being sold at a loss, Amazon needs to sell digital revenue to replace the missing dollars.

“We have a multi-billion-dollar ebook business,” answered Szkutak in part, parroting the already-available press release. But he did add very helpfully that Amazon is “seeing good progress … but I can’t give specific numbers …”

Later in the call, when another analyst requested data on how Kindle is impacting Amazon’s overall gross margins, Szkutak simply refused to answer.

What’s up with Amazon Prime?

How is Amazon Prime doing, asked another analyst, seeking substantive information about Amazon’s “free” two-day shipping program, which costs $79 a year and also allows access to streaming movies and TV shows.

“The percentage of Prime customers has gone up,” Szkutak responded, vaguely. “We’ve launched a number of new services on the music side … the business is making good progress, but it’s still very early.”

How much does Amazon make from advertising?

Amazon seems to have buried Amazon Web Services revenue in a “Supplemental Revenue – Other” category, which includes Advertising Services and Co-branded Credit Cards … all of which makes perfect sense, of course. Credit cards and the cloud, side by side at last!

So an analyst asked how much Amazon made from advertising — an interesting question, because some product pages on Amazon’s site carry third-party advertising.

“Amazon Web Services revenue is growing very fast,” Szkutak replied, obliquely. “Some marketing services … is part of that revenue category.”

It would also be interesting to know precisely how fast AWS is growing, but unfortunately Amazon has obscured that number by including co-branded credit cards in the same revenue category. This couldn’t be intentional, could it?

What’s up with LivingSocial?

Amazon has been slowly reducing its investment in LivingSocial, another analyst mentioned. Would that continue, and what are Amazon’s plans with regard to daily deals?

“There’s not a lot I can specifically talk about as it relates to LivingSocial,” Szkutak unsurprisingly said. “But local is an interesting opportunity … a long-term opportunity,” he mentioned. Then in a weak moment of helpful clarification, he added that “we think about it over a long-term horizon.”

Really?

I mean, I’m aware that companies want to release only the information that puts them in the best possible light. And I’m aware that companies don’t want to release information that will be of competitive value rival firms. But as a public company, it’d be nice to see a little more openness from the largest online retailer in the Americas.

And guess what: if you’re an Amazon investor, it’s kind of critical to know how much the company is sinking into providing Kindle devices at or below cost, and how it intends to recoup the cash. It’s material to how you view the stock, and how you value it.

Note to self: skip the next Amazon earnings call.

photo credit: katie cowden via photopin cc

Shares went as high as $289, bouncing up from $261 before the release. For the quarter, revenue was up substantially to $21.27 billion, a 22 percent increase from the fourth quarter of 2011, but revenue decreased 45 percent to $97 million.

Amazon CEO Jeff Bezos largely credited the strong earnings increase to ebooks, which he said is now a multi-billion dollar category for Amazon — and growing at 70 percent annually. Physical books, in contrast, are slowing. While still growing, Bezos said the growth rate is down to 5 percent, which Bezos said is the lowest growth rate in Amazon’s 17 years of existence.

And one which seems likely to reverse into a decline in 2013, given the growth of ebooks and Amazon’s tablet sales.

Amazon said that its tablets have held the top four spots on the retailer’s sales charts ever since they’ve launched, and that its flagship device, the Kindle Fire HD, is the most popular item in the store. While the reality is that there’s a lot a retailer can do to influence what is most popular and what sells well — and Amazon certain has done that, positioning the Kindle Fire HD front and center on its home page even today — the reality is that the Kindle family, with price points from $119 to $299, is a pretty solid entry-level tablet device.

Source: Amazon

Digital sales at Amazon

However, the company still refuses to release actual sales data on the Android-based tablets — although third-party data suggests Kindle market share is growing fast and total device sales were likely between 10 and 12 million as of the end of 2012.

Digital media seems to be the future at Amazon, and the company reported increases in the amount of content available as Prime Instant Video now has 36,000 titles for viewers to choose from, and 23 million movies, TV shows, apps, books, and more in Amazon’s overall catalog. Amazon recently released a new mobile web store for digital music specifically for iPod and iPhone, clearly competing with digital music incumbent Apple.

Those popular Kindles have helped 23 authors who publish on Kindle to sales exceeding 250,000 in 2012 alone, and 500 books published on Amazon’s Kindle Direct Publishing platform have reached the top 100 Kindle books bestseller list.

Image credit: Jennifer Van Grove

• Sales: up 22 percent to $21.27 billion in the fourth quarter of 2012, the company reported, or 23 percent higher if difference in foreign exchange rates are excluded.
• Net income: down 45% to only $97 million, or $0.21 per share, compared with $177 million in 2011.
• Versus the predictions: Wall Street predicted earnings of 27 cents a share, down from 38 cents per share in the fourth quarter of 2011, and total revenue of $22 to $23 billion. Sales were expected to jump up from the third quarter, of course, due to the holiday shopping season.

“We’re now seeing the transition we’ve been expecting,” Jeff Bezos, founder and CEO of Amazon.com, said in a statement. “After 5 years, eBooks is a multi-billion dollar category for us and growing fast – up approximately 70% last year. In contrast, our physical book sales experienced the lowest December growth rate in our 17 years as a book seller, up just 5%. We’re excited and very grateful to our customers for their response to Kindle and our ever expanding ecosystem and selection.”

• Kindle Fire HD: It was the most popular item: top selling, most wished-for, and most-gifted. “At year-end, Kindle Fire HD, Kindle Fire, Kindle Paperwhite and Kindle held the top four spots on the Amazon worldwide best seller charts since launch,” Amazon said in a statement.
• Kindle authors: 23 Kindle Direct Publishing authors have sold at least 250,000 digital copies copies sold mark in 2012.
• Kindle books: More than 500 KDP Select books have reached the top 100 Kindle best seller lists globally.
• Amazon’s digital library: Now includes 23 million movies, TV shows, songs, books, games, and apps — up four million items from 2011.
• Amazon Prime Instant Video: licensing agreements with movie studios now give Amazon 36,000 movies and TV show episodes to show.

The past few quarters have not been stellar for Amazon (Q3 2012: $274 million net loss;  Q2 2012: $7 million income) but investors seem to like these results, as the company’s stock is up 6 percent in after-hours trading.

Source: Amazon

Amazon net sales, Q4 2011 to Q4 2012

photo credit: brianjmatis via photopin cc

Last year Apple was the 14th most trusted company in America, and Google was the 19th, according to the Ponemon Institute’s privacy report, released today. Facebook most recently made an appearance on the list in 2009, as did AOL, while Yahoo dropped off in 2010.

“There’s been a lot of media coverage about companies like Google, Facebook [and] Apple and privacy,” Ponenmon’s executive director, Susan Jayson told me this morning. “Consumers are concerned about their privacy, and this kind of media exposure, plus their personal experiences, all contribute to people getting concerned.”

That’s something the study, which reached over 7,000 Americans, made clear. Almost half, 49 percent, of respondents remembered receiving at least one data breach notification in the past year, telling them that some company had some kind of intrusion or leak that had exposed their personal data.

Identity Thief, the movie

People’s biggest concern is identity theft: 61 percent of respondents highlighted it as the most significant privacy-related threat. It’s become such a common fear that it’s the topic of an upcoming movie: Identity Thief.

“Protection against identity theft keeps coming up in our research,” Jayson said. “People are very concerned about becoming the target of a thief … which includes medical identity theft and credit card identity theft.”

And what should be the safest places sometimes are not. Jayson’s own mother-in-law had her credit cards and other personal information stolen when checking into a Toussaint, Arizona hospital, and identity thieves indulged in a multi-thousand-dollar shopping marathon at her expense while she was sick.

Perception is the biggest problem for today’s top technology companies, Jayon says. While giants like Google provide immense value, a huge amount of personal data is tied up in your Google identity, especially when linked to your Android-based mobile phone or tablet. Similarly, Apple’s iCloud is wonderful for backing up an old phone and restoring all your contacts, data, apps, and more on a new phone, but it comes at the cost of sharing a great deal of information that gets stored at a corporate data center. And while both Google and Apple have been very good about protecting people’s information, the worry seems to remain.

Facebook, of course, might be the company that knows the most about us, and it’s continually in the public eye for confusing privacy policies, real or imagined gaffes, and a perception that the company is always trying to make more data public.

“Companies are in a bind,” Jayson says. “They don’t want to tell criminals exactly what they’re doing, but they do want to let consumers know that they’re putting in safeguards. And people do love convenience — so they use crummy passwords but still expect companies to protect them.”

Interestingly, one of the biggest privacy challenges that people identified is their own government. ”People are getting concerned about government intrusion into their lives … government surveillance via drones, and agencies like the TSA and DHS,” Jayson told me.

Here are the top 20 companies in America for privacy, as rated by consumers:

photo credit: Jesus Belzunce via photopin cc

Which means that Apple is now one of the cheapest companies you can buy on the public market.

In after-hours trading, Apple’s share price dropped as low as $458, territory it has not seen since early 2012. At $458, Apple’s capitalization is only $430 billion, still big, but nothing like the $650 billion of just seven months ago.

But $430 billion is misleading.

Apple now has $137 billion of cash and cash equivalents which, added to its other assets, gives it almost $200 billion in assets. Take that $200 billion off the market capitalization, and you’re left with an Apple stock market value of just $230 billion. That’s for a company that made $41 billion in profit last year, and $13.1 billion in profit just this last quarter. And a company that has not just one but six multi-billion dollar product lines

For some comparables, that $230 billion valuation is similar to Google, which had just a bit more revenue for 2012 — $50 billion — than Apple had profit. It’s also in the neighborhood of WalMart, the low-price commodity sales retailer. And it’s just slightly more than Microsoft, whose main profit pillars in desktop operating systems and office productivity software are much more at risk in the current mobile revolution than Apple’s.

At a price-earnings ratio of under ten, Apple is insanely cheaper than Amazon, which sports an ridiculous P/E of 3,583, believe it or not. And cheaper than Microsoft, which at least is sane at about 15, and Google, with a slightly higher 23. None of which, when it’s all stacked up, seems to make any sense at all. As investor Mark Sigal wrote on his blog:

To say that investors are idiots, really is an unfair dig at idiots.

Investors reward future prospects more than past successes, true. But does anyone really think that the bottom is going to fall out of Apple’s business model entirely? When Apple just posted its largest smartphone market share percentage ever last quarter?

Apple should look at the low end and international markets, and Tim Cook would do well to stop avoiding those questions on earnings calls. But Apple is not going to evaporate overnight.

The stock market is crazy.

This is one of those weeks when Nintendo is going to have to sit down with all of its consoles and remind them that, despite all evidence to the contrary, it doesn’t have a “favorite.” Just because the Wii U and DSi aren’t getting any new content this week on their respective digital download services doesn’t mean they’re not special in their own way. It’s just that they’re not as special as the 3DS (or even the original Wii, to a lesser extent).

The headliner for this week’s 3DS-centric eShop update is the demo of Fire Emblem Awakening, the latest entry in Nintendo’s long-running turn-based strategy series. You can also get the full retail versions of kid-friendly minigame collection Finding Nemo: Escape to the Big Blue and Deer Drive Legends (which is unfortunately not an animal-driving sim but a hunting game).

Wrapping things up for the 3DS is a port of the Game Boy puzzler Kirby’s Star Stacker and Tokyo Crash Mobs, a game that proves that the DSi isn’t the only place to find totally weird things that are hard to explain. Basically, it’s a Zuma-style puzzle game where you throw people at other people in order to knock them out of line that uses a mix of live-action video and “wacky digital graphics” (according to the official site).

Finally, the original Wii finally gets an Amazon Instant Video app, so you can stream content from the online retail giant’s Netflix competitor. Hey, it’s something at least.

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GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

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July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Amazon needs to make only $3 a month on apps or content from each Kindle Fire it sells in order to generate a 20 percent profit, according to new estimates from ABI Research.

Amazon sells Kindle Fires below cost, and it’s been this since 2011. The razor-and-blades plan seems to be: Give away the device and make it up on digital content, such as books, movies, apps, and more. But positive results of this strategy have not been easy to see in the company’s quarterly reports, with Amazon having losses or just small profits for the last four quarters.

However, the plan may be starting to work, and it has prospects for getting better over time.

“Considering the probable margins of app and content sales, our research shows that Kindle Fire is a credible proposition,” senior ABI analyst Aapo Markkanen said in a statement. “We expect that there will be a certain level of ‘innovation plateauing’ in mobile hardware taking place over the next five years, and that would certainly work in Amazon’s favor. Its future devices are likely to require less cross-subsidy than the ones we’ve seen so far.”

But Amazon like isn’t making money on the Kindle yet, Markkanen told me.

“They need more scale, more revenue, and more margin,” he said. “For example, with Amazon Prime, Netflix only recently got margins to 10-15 percent — and Amazon Prime is still around 5-10 percent.”

There are signs of that happening soon, however, according to ABI, perhaps as early as 2014.

The Kindle Fire is by far the leading Android tablet on the market, having sold perhaps six million units last Christmas and capturing significantly more marketshare than other Android tablet during the holiday. All that hardware sold below cost is part of what is making Amazon’s margins so thin. According to Markkanen, that’s a defensive strategy to ensure that Apple and Google do not own its customers and present a barrier to Amazon’s growing digital commerce.

The question is: How much could all that digital commerce be worth?

Exact sales figures on Kindle are hard to get — mostly since Amazon does not release them. But the company did say Kindle Fires accounted for 22 percent of the U.S. tablet market in 2012, and the Kindle Fire seems to compete well against the iPad Mini. ABI calculates the Kindle Fire installed base as between 11 million and 12.5 million units as of the end of 2012, which could then translate to some $400 million a year in sales. That’s revenue up in the Amazon Web Services area. But it’s not here yet.

And of course, Amazon’s strategy is not just about its own hardware — it’s also on every other platform. In fact, Markkanen estimates that Amazon has amassed about 180 million downloads from the iOS, Windows Phone, and Android app stores for its Kindle, Price Check, and other apps.

Image credit: Amazon

But according to new data that app analytics service Localytics is publishing tomorrow, that’s not what’s happening. Rather, the big tabs are getting the lion’s share of the market, increasing their lead on other tablets.

That’s especially true for Amazon’s Kindle Fire and Samsung’s stable of tablets.

For example, the number of Amazon’s 7″ Kindle Fires that Localytics saw grew 322 percent from November to the end of December. Samsung’s Galaxy Note II grew 80 percent, it’s popular Tab 2 10.1″ tablet grew 78 percent, and the smaller Tab 2 7″ grew 72 percent. The Nook also grew, though not as swiftly, picking up an additional 62 percent.

Localytics provides data on user behavior for tens of thousands of apps that were installed on over 60 million devices as of mid-2012, which should form a significant enough sample size to at least be indicative of what’s happening in the market. Each device that runs any app that uses Localytics’ services registers as a unique devices in the company’s numbers.

The data also showed a move in iDevice market share. According to the company, the iPhone 5 now constitutes 18 percent of all iPhones in use, with the 4S still retaining the crown of most popular iPhone, with 40 percent of the market.

And the new iPad mini? Localytics’ data suggests it’s selling a little slower than the iPad 4, with the 4th-generation iPad clocking in at about eight percent of the overall iPad market, and the mini picking up six percent.

We’ll know for sure if those numbers are accurate in just a couple of weeks, when Apple reports its Q1 2013 results.