No year is ever really ‘slow’ for a company that sometimes ships more than 300 items per second, but 2014 was a particularly breakneck year for Amazon. It acquired the live game-streaming platform Twitch, launched free unlimited photo storage for Prime members, introduced Fire TV, unleashed Amazon Prime Music, started funding original TV shows like Transparent, and began selling the new Kindle Voyage, the Echo, and the Fire HDX 8.9.
Unfortunately, that’s only the highlight reel. Amazon made plenty of missteps to counterbalance its wins in 2014, making it a year of frenetic activity for the company, and an interesting one to look back on.
Hatchette cuts and the Fire Phone burns
First, the elephant in the room: the long awaited, critically panned Fire Phone. For all of Amazon’s pronouncements about doing things its own way and listening to consumers, few of its customers were moved by the Fire Phone’s novel but worthless 3D perspective, expensive price tag, slow performance, or its exclusivity to AT&T.
Thanks to the failure of the phone, Amazon’s third quarter earnings were awash in red ink, which will likely bleed into its fourth quarter results as well. A major competitor had its initial public offering (Alibaba) in China, the FAA poured cold water on CEO Jeff Bezos’ ambitions of drone delivery-by-air, and Bezos’ inner circle will lose a key member this coming June — Amazon CFO Tom Szkutak, who announced his resignation.
In other developments this year, negotiations with book publishers like Hachette, driven in part by the price of ebooks, turned particularly nasty. Amazon and Hachette eventually resolved their differences, but not before Amazon released a particularly aggressive open letter, arguing that “when a thing has been done a certain way for a long time, resisting change can be a reflexive instinct, and the powerful interests of the status quo are hard to move.” Amazon also urged the public to contact Hachette’s CEO and include talking points like: “We have noted your illegal collusion. Please stop working so hard to overcharge for ebooks.”
For his part, Bezos shrugged off the punches Amazon took in 2014. In a recent public interview conducted by Business Insider editor and CEO Henry Blodget, Bezos explained that “One of my jobs is to encourage people to be bold. It’s incredibly hard. Experiments are, by their very nature, prone to failure. A few big successes compensate for dozens and dozens of things that didn’t work.”
A big push into original content
Amazon made plenty of those high-stakes gambles in 2015, including pushing deeper into content than it’s ever gone before.
For instance, undaunted by its fights with the publishing industry, Amazon launched Kindle Unlimited, a subscription service that gives users access to more than 600,000 ebooks and audiobooks for $10 a month.
Amazon’s acquisition of 3-year-old Twitch turned out to be a content play, too. The company said that in July alone, more than 55 million unique visitors viewed more than 15 billion minutes of content on Twitch, which were produced by more than 1 million “broadcasters.”
New original TV shows also appeared on Amazon Prime Video, the streaming service attached to Amazon Prime. And this year, those TV offerings improved substantially, with critically acclaimed shows like Mozart in the Jungle and Transparent.
Jill Soloway, whose Transparent is about a family patriarch played by Jeffrey Tambor who decides to live the rest of his life as a woman, told Digital Trends she felt enabled by Amazon to take chances with the show. Amazon doesn’t yet have the cachet of a TV service like HBO, she explained, so the company needs shows that turn heads. “It’s a mandate,” she explained, “for me to go to my riskiest spaces as an artist.” Amazon, meanwhile, also unveiled the pilots that will premier in 2015, which among other things will see Amazon launch its first docu-series pilot, The New Yorker Presents, produced in cooperation with The New Yorker magazine.
Robots and devices galore
Amazon also continued to hone its legendary shipping operation with impressive automation in its eighth generation fulfillments centers scattered around the United States. They’re packed with high-end computer systems, more than 15,000 Kiva robots, and advanced systems that can unload and receive an entire trailer of inventory in as little as 30 minutes.
On the hardware front, Amazon’s Kindle line of ebook readers and multi-purpose tablets continues to have plenty of fans. The Echo, a voice-operated virtual assistant, has both won fans and elicited head scratches. GeekWire notes that even customers who aren’t in awe of the Echo still acknowledge its potential. A CNet reviewer called it a good start, but still a work in progress.
Amazon also attacked Google’s Chromecast with its own Fire TV Stick, a smaller version of the larger Fire TV. Its free remote app for Android and Fire Phone allows users to search by voice, and an iPhone version is on the way.
Amazon is still a mystery novel with surprises looming
How does such a mixed bag look for Amazon as a business? Blogger Benedict Evans explains that Amazon runs on a “mix of four overlapping factors”: capital expenditures in new distribution, low prices, operating losses at new ventures and offsetting profits at established ventures.
“We have very little idea, from the outside, what the mix is,” Evans writes. “All we know is that Bezos diverts any profit that arrives at the bottom of the [profits and losses] back into these to keep the final result at zero. But at least two offer a switch that can be ‘pressed’ for profit without any damage to the business or any conceptual problem. To put this another way, Amazon is lots of different startup ecommerce businesses on one platform. All the profits from the ones that work are spent on new, loss-making ones.”
In other words, few things are ever certain for Amazon. And though we already know a few tidbits about its future, like the next-generation Fire Phone coming in 2016, we’re no doubt in for an interesting year ahead as Amazon continues to churn out surprise after surprise in 2015.
