Monday, June 15, 2009

No. 4 in NW100 | Amazon.com reveals its technology prowess

Amazon.com started off 15 years ago (has it been that long?) with the goal of being "Earth's biggest bookstore." Now that it sells way more than books -- HDTVs, patio furniture, cereal and more -- Amazon looks more like the Wal-Mart of cyberspace.

But the Seattle company has always been as much technology developer as retailer, even though it's worked hard to keep the gears and flywheels of its Web sites invisible to consumers. As books, music and other media increasingly shift from the physical to the virtual world, Amazon's tech DNA has been expressed more and more.

The most obvious way, of course, has been the Kindle e-reader. No one knows precisely how many Kindles Amazon has sold or how much it has made on them -- the company isn't saying, and Wall Street estimates are all over the map. But the gizmos, and the 275,000 titles available for them, have made it clear that Amazon will fight to hold onto its dominance of the online book world.

"They certainly wouldn't let someone come in and take that market from them the way Apple did with music," said Colin Sebastian, an analyst with Lazard Capital Markets in San Francisco.

The same determination -- to be a big player in the media marketplace whether or not the media in question are actual physical objects -- shows up in other recent Amazon moves:

• The introduction of the Kindle DX, a larger e-reader intended for newspapers, magazines and textbooks.

• The purchase last year of online used-book site Abebooks.com; audiobook company Audible, video-game maker Reflexive Entertainment; Shelfari, a book-oriented social-networking site; and even Fabric.com, which sells sewing supplies online.

• The testing of an on-demand video service.

So far Amazon has proved to be remarkably recession-resistant. Sales in the quarter ended March 31 were up 18 percent, to $4.89 billion, and Amazon booked a $177 million profit.

"People tend to flock to the brands they trust, and Amazon definitely has one of the best brands on the Internet," Sebastian said.

But challenges, actual and potential, abound: eBay's efforts to regain its place as the Internet's premier retail destination; established retailers' continued expansion online; and the determination of several states to collect sales taxes on Amazon purchases.

Copyright © 2009 The Seattle Times Company

Jason Kiwaluk

Mower & Shoveller,

Ideation | Ecommerce | Fintech | Innovation | Strategy | Opinionated Agitator RevenueWire,FuturePay+PayMotion

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