How does Amazon run at low/zero profit yet still dominate esales, web services, etc?

[Bernard Murphy]

There has been a lot of debate back and forth recently on how we shouldn't buy the Amazon magic beans, the company is a dog masquerading as a runaway success, and so on. Much of this centers around Amazon having zero or close to zero profitability, hence the stock isn't a good buy.You may have seen this before, but in case you haven't or in case you have forgotten, below is a nice summary of what Jeff Bezos is really doing - investing all profits back into R&D, with the explicit and stated goal to reduce his profitability to the point he doesn't have to pay taxes.You can (and maybe should) debate the social value of this approach, but there's no questioning the value to Amazon. As a tech company they need to invest heavily in R&D and they need to expect more turkeys (eg Fire) than successes (eg AWS), because that's the reality of tech investment.

Here's the article: Amazon: Expensing R&D Hides The Economic Earnings - Amazon.com, Inc. (NASDAQ:AMZN) | Seeking Alpha

 

[Arthur Hanson]

I have written in SemiWiki before about the ethics of the Silicon Valley culture over Washington DC culture. Our government delivers only about 15 cents on the dollar for many of its endeavors have negative value. The US ranks 37 in quality of medical at 400% of the cost of other modern countries, we rank 35th in primary and secondary education at great costs and have a military that hasn't won a war since WW II at the cost of the next twenty countries combined and makes more enemies than friends by making almost all places worse when we leave than when we arrive. We have a prison population the size of Russia and China combined at staggering direct and indirect costs and most of this is related to drugs less dangerous than alcohol and tobacco with most enforcement against the poor and working class. Far from protecting us, the police have made our world more dangerous through supporting and lying about failing prohibitions. No matter what, our government almost never delivers real value as shown by the Big Dig and the new SF bay bridge. Government employees live in a world with little or no accountability for performance, efficiency or value. I am glad that Amazon/Bezos doesn't pay taxes, for he uses the money far more efficiently than government and delivers real value. I would rather Amazon use the money any day than hand it to a government that is now focused on failure and not only tolerates it, but rewards it. The Silicon Valley culture is our best hope no matter where it resides. Our government has given us an empire in decline in almost every metric including average family income. The government doesn't deserve even one thin dime they take from us and I'm glad Amazon doesn't give them more money to waste. If you have any doubt about any statistics, Google them and check for yourself. The Silicon Valley culture with all its flaws is the only thing keeping this nation afloat. The war on poverty has actually almost doubled the number of poor in the last forty years. More than any soldier or policeman, the people of Silicon Valley are keeping this country afloat and are true heroes. Amazon, Google, Facebook are just a few of the organizations of the Silicon Valley culture trying to take us into a brighter future through participating in a culture that quickly leaves failure behind and rewards success.

 

[tty2]

I have written in SemiWiki before about the ethics of the Silicon Valley culture over Washington DC culture. Our government delivers only about 15 cents on the dollar for many of its endeavors have negative value. The US ranks 37 in quality of medical at 400% of the cost of other modern countries, we rank 35th in primary and secondary education at great costs and have a military that hasn't won a war since WW II at the cost of the next twenty countries combined and makes more enemies than friends by making almost all places worse when we leave than when we arrive. We have a prison population the size of Russia and China combined at staggering direct and indirect costs and most of this is related to drugs less dangerous than alcohol and tobacco with most enforcement against the poor and working class. Far from protecting us, the police have made our world more dangerous through supporting and lying about failing prohibitions. No matter what, our government almost never delivers real value as shown by the Big Dig and the new SF bay bridge. Government employees live in a world with little or no accountability for performance, efficiency or value. I am glad that Amazon/Bezos doesn't pay taxes, for he uses the money far more efficiently than government and delivers real value. I would rather Amazon use the money any day than hand it to a government that is now focused on failure and not only tolerates it, but rewards it. The Silicon Valley culture is our best hope no matter where it resides. Our government has given us an empire in decline in almost every metric including average family income. The government doesn't deserve even one thin dime they take from us and I'm glad Amazon doesn't give them more money to waste. If you have any doubt about any statistics, Google them and check for yourself. The Silicon Valley culture with all its flaws is the only thing keeping this nation afloat. The war on poverty has actually almost doubled the number of poor in the last forty years. More than any soldier or policeman, the people of Silicon Valley are keeping this country afloat and are true heroes. Amazon, Google, Facebook are just a few of the organizations of the Silicon Valley culture trying to take us into a brighter future through participating in a culture that quickly leaves failure behind and rewards success.

Did you just ignore the actual thread question to soapbox about politics.. on a semiconductor forum?

 

[Arthur Hanson]

tty2, the article brought up the issue of spending on R&D to the point of reducing profit to the point of not paying taxes. It is our patriotic duty to pay as little taxes as possible so we aren't handing it to a government that is degenerating at a rapid rate and wastes resources at an ever increasing rate. The government is not Darwinian like the Semi sector, so can waste an ever larger amount of resources. Spending on R&D and doing it economically is a fine art, not to little and not to much. The semi sector has touched on every facet of our economic lives with an ever accelerating rate of progress. The semi industry has to be involved in everything from education of its work force, to materials, and with mems in every facet of the physical world. I can't think of another sector that literally touches everything like the Semi sector. It is the foundation now that keeps this nation afloat economically, despite the best efforts of a malfunctioning government. This is why it's better to put the money into R&D instead of paying taxes. The article brought up the subject of paying taxes and I just responded on why we should pay as little as legally possible. You and the supporting linked article missed this point entirely. It is everyone's duty to use resources as wisely as possible for a better, cleaner, fairer world and the Semi sector that touches literally everything does it far better. There should be no question whether R&D and an efficient Semi industry should have first claim on our resources, THEY HAVE EARNED IT.