July 9-10, 2013
San Francisco, CA

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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

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Updated 2:58 p.m. Pacific with new Amazon stock price data.

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.

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July 9-10, 2013
San Francisco, CA

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Google, Microsoft, Facebook, and Apple are not just engines of technological innovation in America — they’re also the path to Forbes’ World’s Billionaires list, which was just updated. But there is a little catch.

You gotta be a man.

Eleven of the world’s richest billionaires are wealthy primarily because they founded a technology company or own a significant stake in a technology company. That includes people like Bill Gates, who founded Microsoft and is worth $67 billion (and would probably still be the world’s richest man if he had not given away so much of his wealth). And CEOs like Larry Ellison, who founded Oracle and is currently the owner of not just a small Hawaiian island but also a fortune valued at $43 billion.

One problem?

Not a single woman is on the top 10 billionaires list, and just one woman is in the top 11. And that is due to inheritance more than founding a company:

1. Bill Gates: $67 billion
2. Larry Ellison: $43 billion
3. Jeff Bezos: $25 billion
4. Larry Page: $23 billion
5. Sergey Brin: $22.8 billion
6. Michael Dell: $15.3 billion
7. Steve Ballmer: $15.2 billion
8. Paul Allen: $15 billion
9. Mark Zuckerberg: $13.3 billion
10. Azim Premji: $11.2 billion
11. Laurene Powell Jobs and family: $10.7 billion

Facebook’s Mark Zuckerberg is the youngest top tech billionaire, at just 28, followed not all that closely by Google’s Page and Brin, both of whom are still thirtysomething but will only be able to say that for one more year.

An interesting question: Who will be the first woman to make it on the list due to her standing as a tech founder or CEO?

Yahoo CEO Marissa Meyer might be a top candidate, but her potentially $60 million compensation first-year package at Yahoo is only a drop in the billionaire’s bucket. She’s only like to make it if she gets a lot more stock-based compensation and Yahoo’s value goes through the roof.

That’s something that women like Change.org president and COO (and former Google exec) Jennifer Dulski is trying to change, as we reported a month ago. But given the 10-15 years it takes a company to attain the kind of scale that supports multibillion-dollar valuations, it may take us some time to see who successful they will be.

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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

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Amazon’s sales were up but its profits are down, as the company’s physical book sales growth slows and it continues to invest in new, digital products.

• 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

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Amazon‘s Q3 earnings in 2010 were $231 million, or 51 cents per share. Overall revenue for the quarter rose 44 percent, to $10.88 billion.

“September 28th was the biggest order day ever for Kindle, even bigger than previous holiday peak days — we introduced Kindle Fire for $199, Kndle Touch 3G for $149, Kindle Touch for $99, and our all new Kindle for only $79,” said Jeff Bezos, founder and CEO of Amazon.com, in a statement included with the earnings report. “In the three weeks since launch, orders for electronic ink Kindles are double the previous launch. And based on what we’re seeing with Kindle Fire pre-orders, we’re increasing capacity and building millions more than we’d already planned.”

While pre-order numbers have been encouraging, the release of the Kindle Fire is also likely to super-charge digital revenue through the purchase of apps, as well as new subscribers joining Amazon Prime for access to streaming movies, TV shows and other digital content. As many as 5 million Kindle Fire units could be sold during the holiday season according to analysts’ predictions.