Amazon is a company that is hard to define. Originally built as a book seller, the company has since grown into an immense online warehouse, filled with anything you could ask for.
It now manufactures phones, a tablet, has given birth to a range of e-readers, and much more. And all while making virtually no profit, essentially being bankrolled by investor money in place of profits.
In 2014 alone, the company made a loss of over $400 million and continues to do so, as all available revenues are ploughed back into generating double-digit growth.
Almost every major technology company in America has a single goal, or at least a single product line that generates the bulk of revenue and is therefore focused on by the company.
For Apple it was the iPod – and is now the iPhone. For Google it's search, for Facebook it's advertising based on 'likes', for Microsoft it's Windows, and for Twitter it's promoted tweets or trends.
Contrastingly, Amazon has no such single ambition. The company has its fingers in many pies across a seemingly infinite array of markets – but has it spread itself too thin?
Earlier this year, Amazon attempted to enter the smartphone space with the Fire Phone, a high-end handset to rival Apple's iPhone and Samsung's Galaxy range. In Q3 2014, Amazon announced that it was taking a $170 million write down on unsold stock of the Fire Phone.
Before this, many outlets in the US dropped the on-contract price of the Fire Phone to 99 cents in an effort to shift the phone; a plan that obviously hasn't worked as well as anticipated. Of course, Amazon has previously had success with hardware in the form of Kindles, which lead the e-reading space, and the Fire range of tablets – so why should phones be different?
The answer is that Amazon strayed from what it knows, and it's paid for it. Kindles and tablets are content consumption devices and Amazon sells content – books, films, music, and so on – so understands the market and the needs of those who buy the devices.
Phones are content consumption devices, but also communications devices and this is an area of which Amazon has very little knowledge. TechRadar gave the Fire Phone two and a half stars, summarising, "The Fire Phone is a shopping tool for Amazon with some phone features baked in." And this is exactly Amazon's problem: the phone was only "baked in," not an integral part of the experience.
Apple CEO Tim Cook expressed a minimalist sentiment to Charlie Rose in an interview this summer saying that Apple "can lay all the products [it] sells on a table" and yet Apple is inline to make $180 billion in revenue during 2014, a number other companies (especially those outside of the oil business) can only dream of.
Granted, the operational structure and product portfolio of Apple is entirely different to that of Amazon, and so the comparison isn't entirely fair. But there's much to be said for a simplistic set of ideals and projects. Many of the things that Amazon invests in – drones, for instance – have very little future revenue-making potential on a large scale, and investors are starting to get worried.
After Amazon announced its Q3 results, shares dropped 10% as investors balked at another quarter without profits; another quarter where their money subsidised a business running at-cost.
There are companies with a large portfolio of products that still generate vast incomes, such as Microsoft and (to some extent) Amazon. Where they differ, however, is profit. Microsoft has a headcount of over 100,000 and still manages to make billions in profit per quarter due to a profitable core business of selling licences for Windows to PC vendors and consumers.