When Jeff Bezos announced the new Kindles yesterday, he said the devices are irrelevant and will only be a vehicle for services in the near future.
Amazon’s strong point has never been its hardware. They’ve met with mild global success with Kindles. On the other hand, AWS is making them tons of money, so Bezos would want to focus on services.
Bezos also underestimates the power of the client. Internet has a long way to go before becoming a basic human need like electricity.
Amazon’s services are only popular in US. They have little experience/presence in global e-commerce. If they ever plan to venture out of the US, how will they make its $79/yr Prime membership work in other countries (two-day free shipping for 15M items)?
Bezos himself said that it takes five to seven years for a new business to either break even or become profitable. And its year five of the Kindle.Its difficult to know if being the loss-leader has actually worked for Amazon or not. In future, I guess they will focus more on digital services (no warehousing and inventory costs) than physical goods for the global market.
Here’s a great article on Amazon’s strong and weak points.