Jeff Bezos’ Risky Bet [the broken link was removed]
In my view Amazon is doing some very interesting innovation. As with most true innovation it is not easy to understand if it will succeed or not. I believe Amazon uses technology very well. They have done many innovative things. They have been less successful at turning their technology into big profits. But I continue to believe they have a good shot at doing so going forward (and their core business is doing very well I think). Innovation often involves taking risks. Bezos is willing to do so and willing to pursue his beliefs even if many question those beliefs. That means he has the potential to truly innovate, and also means he has to potential to fail dramatically.
* Bezos on why Amazon is entering the services business: “For 11 years, we’ve been operating a web-scale application, with high reliability, in a high volume, low margin business, very conscious of our cost structure. I always think high volume, low margin businesses are more defensive – we look at the absolute dollar level of profit and free cash flow…we’re good at it, we know how to do it, and we think it can be a meaningful financially attractive business one day.
* Bezos on Amazon’s biggest costs: “Our biggest cost is not power, or servers, or people. It’s lack of utilization. It dominates all other costs.”
Update: Smugmug explains how using Amazon S3 saves them $500,000 a year [another update: the broken link was removed]