PHIL SIMON
Phil Simon
As my recent phone problems have reminded me, few large companies can consistently do things right on a regular basis. Comcast and Verizon have ceaselessly irritated me over the last few weeks with frustrating policies, antediluvian information systems, bad data, and ostensibly indifferent attitudes towards customers. These companies have a hard enough time providing just a few products and services.
I started thinking to myself, is it possible for one company to do everything? I had that in my mind as I read an interesting interview in Fortune with Amazon.com CEO Jeff Bezos. The company has been expanding its offerings and has come a long ways from its days as a dot-com poster child. These days, Amazon is offering a great deal more than just books, CDs, DVDs, and physical goods. It’s no longer just a “B2C” company; its recent forays into cloud computing and the horribly titled Infrastructure-as-a-Service (IaaS) mean that it has become a “B2B” company. And it has no intentions of stopping.
Amazon has has no intentions of stopping.
From the interview:
Fortune: Speaking of picking up new skills to address consumer needs–you’ve addressed some customer needs by making substantial forays into cloud computing with S3, Elastic Compute Cloud, and the Relational Database Service. What’s next for cloud?
Bezos: One of the things you’re seeing is that companies without any legacy are no longer building any data centers. They’ve already stopped. So that’s a testament to how powerful this model is. That the only people still building these data centers are the people that are temporarily corralled into that model because of their legacy. That model is more expensive, less flexible. It’s not just more expensive, but it’s also capital expenditures instead of pay-as-you-go variable costs like it would be if you were using Amazon web services.
Mixed Feelings
Amazon is an amazing company, but can it be all things to all entities?
I have mixed feelings about this. Part of me thinks that companies with extra compute power and resources might as well sell them. On the other hand, I wonder if Amazon will one day stray from the values that have allowed it to get to this point: specifically, amazing customer service. Based on what Amazon is doing, can it concurrently and effectively be a:
- consumer retail company
- publishing company
- film production company
- grocer
- reseller of web services
Simon Says
And that’s not it. I was absolutely amazed to read about the number of irons that Amazon has in the fire. In a way, I suppose, this is similar to the Google model of trying ten ideas, hoping that one will pan out. It seems to me, though, that Google doesn’t try to tackle so many different types of problems so far outside of its core competency (search).
What do you think?
Wow… I knew Amazon did a lot, but I had no idea just how diverse they have spread themselves. Its always a trade off between “innovation or stagnation” and spreading yourself too thin. I’m a great believer in selling your by-products which is a great alternative trend to traditional horizontal and vertical diversification. It makes sense to me that an online retailer with massive infrastructure can go and sell some of its tech by-products which I guess have been developped for in-house consumption such as SaaS and IaaS offerings; and to offer complimentary products such as the Kindle… but real diversification from core competences is always a tough call.
I guess Amazon believe they have reached sufficient critical mass and see themselves as the next Google type behemoth. Sounds like they are trying to adopt a similar philosphy to Google in doing good and “not being evil”; but as Google found as their core team got thinner and thinner it becomes harder and harder to maintain the standards that made them great in the first place.
My gut feel is that they’ll do well in areas closest to their core skills and less so where they have weaker internal expertise. Always good not to have all your eggs in one basket I suppose.
Good luck to them.