The Amazon Runoff

Happy Monday.

If you’ve been wondering where Amazon HQ2 might land, The Wall Street Journal is reporting today that the company is in late-stage talks with cities that included Crystal City, Virginia; Dallas, Texas; and New York City.

Apparently the talks with local officials in some of the other 20 cities on the shortlist, including Denver, Toronto, Atlanta, Nashville, and Raleigh “have cooled.”

You can just hear the mayors, chamber of commerce heads, and real estate developers screaming in the jaws of potential victory and the agony of possible Amazonian defeat (depending on their respective locales, of course).

The story also hints that an announcement could be made as soon as this month, and cites an interview Amazon CEO Jeff Bezos did recently with author Walter Isaacson about how the company was going about making its decision:

For a decision like that, as far as I know, the best way to make it is you collect as much data as you can, you immerse yourself in that data, but then make the decision with your heart.

LATE-BREAKING UPDATE! The Journal is now reporting that Amazon plans to split its second HQ evenly between two locations rather than picking one city for HQ2. 

The driving force behind the decision to build two equal offices in addition to the company’s headquarters in Seattle is recruiting enough tech talent, according to the person familiar with the company’s plans. The move will also ease potential issues with housing, transit and other areas where adding tens of thousands of workers could cause problems.

Under the new plan, Amazon would split the workforce with 25,000 employees in each city, the person said.

Hindi Commerce

Happy Tuesday, and for those of you in these United States I hope you had a very happy and productive Labor Day holiday weekend.

For those of you who were not in these United States, I hope you enjoyed the break away from your peers and colleagues here in these United States.

Now on to some tech news… The New York Times is reporting that Amazon is making it’s local website and apps available in India’s most popular language, Hindi.

According to the article, users of the India site or app will be able to choose Hindi as their preferred language, much as American users can choose Spanish.

The Times writes that Amazon is already the number two player in India’s $33 billion e-commerce market and says it has about 150 million registered users. But with so many Hindi speakers, English simply was not going to get the job done.

The story also suggests that if the Hindi versions of its sites and apps are successful, Amazon plans to quickly at options to shop and other major Indian languages.

Namaste, Jeff Bezos.

Amazon PillPack

CNBC is reporting that Amazon will acquire online pharmacy PillPack “in a deal that could disrupt the U.S. drugstore business.

PillPack’s core business is the packing, organizing, and delivery of drugs, and sends consumers packages with the specific number of medications they’re supposed to take at specific times.

CNBC writes that:

The deal is the strongest indication yet of Amazon’s intent to move further into the health-care industry. It threatens to remove one of the few distinguishing factors pharmacy chains have relied on to fend off Amazon, the sale of prescription drugs. Retailers like Walgreens Boots Alliance, CVS Health and Rite Aid have seen their so-called “front of store” sales threatened as shoppers increasingly buy household staples online or from convenience stores.

PillPack is currently licensed to ship prescriptions in 49 states, and apparently PillPack had been in previous discussions with Walmart about a sale for less than $1 billion.

Terms of the Amazon deal were not disclosed.

Amazon Check

Amazon is talking with major banks about building a checking account-like product for its customers, according to a report from today’s Wall Street Journal.

The talks are allegedly focused on creating a product that would appeal to younger customers and those without bank accounts, but would apparently not involve Amazon itself becoming a bank.

Big picture strategery-wise, it imeans Amazon is continuing to work itself down to the very end of the consumer retail chain, near to the endpoint where people ingest and exhale their dinero. It would also have the derivative benefit of Amazon potentially cutting out another middleman (the bank), or at minimum minimizing the fees it pays. 

As the Journal article points out, Amazon would also get valuable data on customers’ income and spending habits across the board.

And as for the JPMorgans and other banks that may come aboard the Amazon checkbook-like safari, hey, keep your friends close and your enemies closer.

Amazon Delivers…Well, Even More

Happy Friday.

I’ll say it again. Don’t look at the Dow.

Okay, maybe just a peek. After yesterday’s 1,000+ rout, and at last count, it was heading back north, slowly but surely.

But if you’re a long-term investor, you shouldn’t play these peak and valley games, right? Stop paying attention to that ticker and get back to work!

As for getting back to work, guess who’s getting into the delivery business? I’ll give you one guess.

No, not Domino’s pizza (at least not yet). Amazon!

The Wall Street Journal reported this morning that Amazon.com is preparing to launch its own delivery service for businesses, putting it in direct competition with UPS and FedEx.

No, to answer your inevitable question, there is not a single business or industry won’t consider entering and disrupting.

Amazon’s push into logistics reflects its growing ambitions across a wide range of new businesses beyond online retail. The company runs a dominant cloud-computing services division, a Hollywood studio and a massive marketplace and logistics operation for sellers. Last year, it acquired Whole Foods for roughly $13.5 billion, transforming it into a brick-and-mortar grocer overnight.

The new service will be called "Shipping with Amazon," and will have the company picking up packages from businesses and shipping them to consumers.

It is the latest move by Amazon to create its own freight and parcel delivery network. In the last couple of years, Amazon has expanded into ocean freight, built a network of its own drivers who can now deliver inside homes and leased up to 40 aircraft while establishing an air cargo hub.

But as the Journal story reports, there’s steep (and deep-seated) competition from the incumbents:

It remains to be seen whether Amazon can successfully deliver packages for other businesses on a broad scale. UPS and FedEx have built out massive networks over the course of decades to allow them to deliver across the U.S. And it is expensive. UPS this year alone is​ ​
planning to spend up to $7 billion on upgrading its delivery network.​

In a related story yesterday, Amazon said it would begin delivery of Whole Foods groceries via its "Prime Now" service. Shortly, Whole Foods’ customers in Austin, Dallas, Virginia Beach,a nd Cincinnati will have the option of one – and two-hour grocery deliveries.

I guess that means I can finally stop stocking up on grocery bags?!

Holiday Shopping And Streaming

Santa brought Turbo a new (used) set of vintage 1988 Ben Hogan “Redline” blade golf clubs…whether or not they’ll do anything to help lower his handicap remains to be seen!

Well, I hope you and yours are having a happy holiday season, wherever in the world you may be.

I just returned from a wonderful visit to see my parents and some extended family up in my hometown of Denton, Texas, where we were treated to our first white Christmas in three years, the snow billowing down starting around mid-day Christmas Day, and plunging the Dallas/Ft. Worth roads into a virtual ice skating rink.

As for the Christmas holiday shopping season, Sarah Perez with TechCrunch just reported that Amazon.com once again came out on top, in terms of online satisfaction.

No big surprise there.  I conducted a large portion of my own holiday shopping via Amazon, and received everything I ordered within a few days. I also treated myself to a set of Ben Hogan 1988 “redline” blade golf clubs, which I discovered on eBay for a very agreeable price. Unfortunately, the weather in Texas has kept me off the golf course (now back in Austin, I hope for that to change in the next few days!).

Of course, if you were trying to watch movies on Netflix on Monday, you might have found yourself watching a blank screen. Due to an Amazon Web Services outage, Netflix viewers were treated to bags full of coal starting around 3:30 PM on Monday, AWS’s third major outage this year.

Myself, I went on a “Redbox” binge over the holiday, discovering some recent titles for $1.20 a pop (including the latest Spiderman!), only to discover they’ll be bringing some competition to the streaming realm with the introduction of “Redbox Instant,” expected to go into private beta sometime soon. Redbox Instant is expected to match Netflix’s monthly streaming subscription price of $8 U.S.

Whatever your preference, it certainly looks like more and more Americans will be viewing filmed entertainment on devices other than their TVs. Another TechCrunch story reports that one in four Americans now owns a tablet computing device, with such devices now even having overtaken the number of e-reading devices like the Kindle (again, I did my fair share here over the holidays, giving out two Kindle Fire HDs as family gifts. Now I can only cross my fingers my family will use them!)

Regardless of your preference, the story goes on to say that one in three people in the U.S. now owns some kind of tablet or e-reading device, and this data before the full gamut of holiday shopping data has hit analysts’ spreadsheets.

One such analyst, Strategy Analytics, has Apple’s iPad still leading the pack, with Amazon and Samsung quickly narrowing that lead.

So what did Santa bring YOU for Christmas, and better yet, what did Santa YOU give others???

Pay As You Go

Thus far, this has been a pretty “mobilized” summer, with news breaking every day about the increasingly important role mobile computing is playing in our business and personal lives.

Today, we heard about the new Samsung Galaxy 10.1 tablet (even Walt Mossberg kinda likes it!), and TechMeme has early screenshots and guestimates about what the newer, smaller iPad’s going to look like.

But devices aren’t the whole picture. Infrastructure, application lifecycle management, security and privacy, and other related issues are key to mobile success. And, until these devices are enabled with an easier payment capability, money will be left on the table.

Lots of it.

Ironically, it’s been Apple that has been the closest to providing such a system thus far, with their Apple ID linkage to our credit cards.  But that’s just for the stuff I buy from Apple…what about everybody else?

So today, the Wall Street Journal’s Robin Sidel explained that more than a dozen big merchants are expecting to announce their plans to develop a mobile-payments network that would go up against the likes of Google.

Called the “Merchant Customer Exchange,” the new venture is being led by Wal-Mart, Target, 7-Eleven Inc., and Sunoco, and will attempt to find its way to a more standarized mobile payment system.

Though this may move may be an intended counter to Google’s Wallet capability on the Android platform, Sidel’s story reminds us we also have another joint venture called Isis, led by a number of telcos, as well as the recent $25 million investment by Starbucks in mobile payment start-up Square, also in the running.

And of course, let’s not forget some of those other existing systems which have millions of credit card accounts, including Amazon, whose 1-Click payment capability stands apart, and PayPal, with their unique person-to-person payments capability.

In this emerging roulette wheel of mobile payments, I’m not quite sure where I’d place my bets just yet, as the wheel’s just getting going.

But there’s a lot at stake.

I just attended comScore’s quarterly webcast on the “State of the U.S. Online Retail Economy.” For the second quarter of this year, nearly one in ten of all e-commerce dollars spent were done so via a mobile or tablet device.

Moreover, nearly two in five tablet owners have purchased something online via their device in the past month (a number more than double of that of smartphone owners).

One wonders if that smartphone purchasing number might not be a few percentage points higher were it easier to hand over one’s payment information via smartphone handsets.

Looking at the bigger picture for a moment, comScore also reported in the webcast that the channel shift to online appears to be accelerating, with online sales overall up 15 percent for the quarter, while on a comparable category basis, offline sales only increased two percent.

At the forthcoming IBM Smarter Commerce Global Summit in Orlando (see this post for more details), IBM has some 20+ sessions that contain a mobile component, including one entitled “Mobile Payments, An IBM POV” (IB-3440).

That event will be held September 5-7 at the Walt Disney Swan and Dolphin Resort in Orlando, Florida, and you can learn more about it here.

All About The Content Razorblades

The Interwebs platform wars continue to escalate.

Not days after I read Ken Auletta’s fine New Yorker piece on the U.S. antitrust suit against Apple and several book publishers for alleged price fixing — a scheme that clearly had Amazon and its Kindle Fire in its gunsights — do we discover that Amazon is working with Foxconn on its own mobile mousetrap, one that, like the Fire, would presumably provide easy access to all kinds of compelling content from Amazon’s vast cloud of digital entertainment.

Books, movies, gaming apps…Amazon’s play suggests that the Internet industry is moving into the razor/razorblade club, with the devices being the razors, and the razorblades being all that vast digital content.

I, personally, mostly don’t care which razor I use. I’ve owned tablets and smartphones both Android and iOS now, and most recently have given a Kindle (not the Fire) a test drive.

The most important element for me in the digital content wars are the depth and sophistication of the content libraries themselves.

That is to say, help me move beyond Amazon and Apples’  57 Channels On Demand and Nothing On!

Amazon’s bookstore, of course, has virtually the world’s book population at your disposal, so no complaints when it comes to reading (although I do agree we need healthy, competitive alternatives to the Amazon reading ecosystem).

But when I go into my Amazon Prime movie library, which lets me watch some movies for free with my Prime subscription, it’s like dragging the bottom of the movie barrel.

To some degree, I see the same problem with Netflix, although Netflix has seemed to have worked more diligently to expand its library.  Amazon Prime, on the other hand,  just added a bunch of new episodes of William F. Buckley’s “Firing Line.”

Woo hoo, where do I renew my subscription??!

The cloud providers may be lining to try and lock in as many denizens as they can via their device and subscription services, but the form factor is less important than the catalog function.

What’s kept me from cutting my own cord on the TV is the fact that the Netflix’s and Amazons of the world don’t have enough diversity of content (never mind live event access to major sporting events, which for my money are msotly worth the high cost of monthly cable subscriptions alone).

So if the Apples and Googles and Amazons really want to move these markets, they need to quickly hire some sophisticated business development executives and hard-driving attorneys who can  make some negotiation headway in the hills of Hollywood’s film libraries  rather than try to draw lines around the device footprints.

It’s never about the razors, always about the razorblades.

Into The Amazon Digital Jungle

Whoa, what ants got into Amazon.com’s pants this quarter??

Amazon announced earnings earlier today, and though profits for the first quarter dropped 35 percent to $130 million from last year’s same quarter, revenue jumped 34 percent to $13.2 billion, beating the Street’s expectations.

Is this a bellwether indicator for e-commerce en generale, or is it isolated to the ‘Zon?

Hard to say, but The Wall Street Journal is reporting that part of Amazon’s spending has gone towards making itself operate more efficiently.  If you remember, Amazon spent a cool $775 million to buy Kiva Systems last month, which is intended to help them automate and lower their warehouse operations costs.

The Journal story’s also highlighting the fact that the e-commerce market in general “has been strong,” with Amazon reporting particularly good sales for digital goods, including e-books and online video (which, read, means little to no distribution costs other than bandwidth!)

In Amazon’s earnings press release, Amazon pointed out that “9 out of 10 top sellers on Amazon.com were digital products — Kindle, Kindle books, movies, music and apps.”

In the quarter, Amazon also introduced a new version of its Kindle for iPad app, which is the #5 free iPad app of all time and the #1 free books app on iPad.

The Amazon left jab strikes Apple on the chin! Pow!

The Kindle, retailing for $199 through Amazon, continues to be the company’s best-selling product, and the most “gifted.”

I may have even contributed to the strong quarter with a few Amazon purchases meself, come to think of it!

For my money (what little I have left of it after shopping with Amazon), this digital trend is a larger barometric indicator — folks are finally getting more comfortable with consuming books and other media in digital formats, and though it certainly has a negative impact on the “traditional” media industries on one side of the balance sheet, that starts to get offset as the digital column increases.

Of course, I haven’t even gotten to some of the social commerce trends which Amazon is also likely benefiting from (mentions via Facebook, Twitter, etc.) and their own leading adoption of customer ratings and reviews.

Click, mortar, AND pixels is the name of the game for smarter commerce, something IBM thought leaders will be discussing at the upcoming IBM Global Smarter Commerce Summit in Madrid May 22-24^th.

More on that in a prior post here.

Platform Warriors, Come Out And Play-Ayy

My daddy always told me, never bring a knife to a gun fight.

Actually, he didn’t tell me that, but it sounds like something he would say.But what happens when everyone brings a knife to the knife fight??

That sounds a little something like what’s happening with the emerging Platform Wars of 2011.

Google, Facebook, Apple, and Amazon are lining up in the back alley, emotions are heating up, and somebody’s about to get hurt…the only question is, who?

Are the platform war stalwarts ready to rough and tumble it in the virtual streets? WAR-YERs, come out and PLAY-AYY!

The most recent tidings that suggest evidence of this: A machination that allegedly keeps Google+ invite links from appearing on Facebook user news feeds.

CNET’s Josh Lowensohn filed about this recently, and it just sent me cracking up.  No matter its origin or even veracity, it’s the kind of Silicon Alley back alley knife fight we’re going to see a lot more of.

No, Johnny, you can’t play on our side of the playground…you’re not one of the cool kids!

I’m having flashbacks to the OS/2 and Windows wars of the early 1990s (although we in OS/2 land lost that one pretty soundly – although I still miss my beloved Warp toolbar!)

Only this time around, the knives are much bigger and much sharper, and the stakes are that much higher. This time around, it’s not only the ruling consumer IT platform at stake: It’s also the mobile, publishing, and entertainment industry hubs.

Another analogy: This is three dimensional chess with moving pieces, and Deep Blue is nowhere to be found to help figure out what the next move should be.

This all kinda reminds me of that infamous 1979 cult classic, “The Warriors.”

If you know the movie, you remember that siren call: “WAR-YERS, come out and PLAY-AYY!!!”

But instead of the Gramercy Riffs and the Turnbull ACs, we’ve got the Googlers and the Facebookers and the Amazonians and the Applers.  Although imagining Mark Zuckerberg holding a Bowie knife kinda makes me laugh.

Get out your baseball bats, boys and girls, there’s gonna be a rumble!!

In any good rumble, though, you have to keep an eye out for the alliances that are forming –- they could be critical in the coming clash.

Facebook and Microsoft, which put in an early $150M stake, then FB’s acquisition of ConnectU, FriendFeed, Beluga, and a host of others.

Google, first with dMarc, Postini, DoubleClick, YouTube, and now their Motorola Mobility acquisition, which gives them an aggressive mobile and ITV set-top play (someone had to do something to revive the Google TV patient, who was dead on arrival at the Beverly Hills ER).

Amazon, with their acquisition spree of Zappos, Audible, Woot, Lovefilm, the Book Depository, and a host of other vertical commerce and entertainment plays and formidable portfolio of credit-card carrying members (including me) who are loyal to a fault.

Apple, with their vertical integration and fortress-like wall around their hardware and software, not to mention their PR office and social media team and brilliant business development in music and entertainment (maybe Steve Jobs could go teach the President a thing or two about negotiating?)

Apple’s competitive differentiation is the Great Wall of Apple. Steve Jobs doesn’t have  to get along with the other kids in the sandbox — his is only big enough for one genius!

Me, I’ve never been an operating system one-trick pony, and so I figure I’ll play the same quadfecta for the looming platform knife fight.

I’m on Google+ and use Google search every day; I use Facebook to keep in touch with people from high school I hoped I’d never hear from again; I have several Macs, 4 iPods, an iPad, and an Apple TV, and I still don’t know how to get my music from one machine over to another; and Amazon…well, I wouldn’t short that stock anytime soon, as I’m sure I’ve probably given them more sheckels than any of the other platform warriors over the years.

Yes, it’s gonna be a wild ride out to Coney Island.  Director Tony Scott in 2008 suggested he was going to make a remake of “The Warriors,” only this time he said the movie would take place in Los Angeles and would feature thousands of gangs.

Methinks he might want to consider moving the setting up to Silicon Valley and settle for four Goliaths instead of a few thousand Davids.