Amazon did a lot of funky stuff this year and its paying off

Holy hell, it’s been a year for Amazon. Jeff Bezos’ former-online-bookstore dumped $13.7 billion to buy a bunch of grocery store, that speaker you talk to in your living room that Amazon attains is really popular and a bunch of server farms Amazon runs generate more than $10 billion in revenue annually.

The confluence of all these things has led to an incredible rise in its stock on the year — one that might be even more impressive than Apple’s slow marching toward reaching a$ 1 trillion marketplace cap( presuming the iPhone X narrative plays out the style they hope ). Amazon is nowhere near as big as Google or Apple, but at the same hour, its core business is an online retail operation that operates with razor-thin margins. For the most component, Bezos has gotten the benefit of the doubt from Wall Street, and its strategy of joyously the investment in new operations appears to be playing out as hoped.

Let’s get to the chart 😛 TAGEND

And with all this, its founder and CEO Jeff Bezos is making a run at becoming the richest human in the Local Group. Amazon invests in a lot of wild operations, like buying Whole Foods, and all of these big moves are starting to coalesce into something that actually makes a little bit of sense as the company seems to become the backbone of the route people operate a lot of their daily lives through the internet. Whether that’s buying stuff online, buying groceries, watching movies, listening to music or even employing services that are running on Amazon’s invisible infrastructure, the real Amazon is becoming an absolute force in the everyday life of nearly every internet consumer.

So, because Amazon did all the stuff this year, we’re just gonna work through each one bit by bit, starting off with probably its most important one.

Amazon’s server business is booming

Were it not for AWS, Amazon probably would not have posted a profit in the string of quarterss that it did. We’ve noted this before, but here’s the money chart again 😛 TAGEND

While Amazon is increasingly facing a lot of competitor from Microsoft’s Azure, as well as Google Cloud, “its one” of the original infrastructure operations that dedicated birth to modern internet services, helping startups get off the ground with servers that they didn’t have to buy themselves. It was also one of Amazon’s most ambitious gambles, and one early instance of how Amazon was willing to bulldoze its route into new markets orthogonal to its core business model.

The bet paid off, with AWS now on track to generate more than $10 billion annually. More importantly, that $10 billion annually comes with a fairly healthy margin — though, over period, that margin may slip down. For the time being, though, it’s an impressive business compared to the razor-thin earnings that Amazon might produce from its retail operations and a good data point as its media services like video or music start to play out.

And, as usual, recurring revenue is a story that Wall street love. Amazon is a company that people will often tell you not to gamble against, and its stock is up more than 50 percent on the year thanks to an array of businesses that all appear to be demonstrating growth and the company’s recent-ish ability to turn a profit. Amazon can thank AWS a lot for that.

Amazon’s play for the vocal internet

Amazon also said the Echo, its voice-enabled speaker, was the best-selling product on Amazon for the holiday season, with millions of devices sold. This is a pretty big deal for Amazon, as it may have stepped into one of the single-best new interfaces for the internet as a whole — as well as reducing the friction further for buying stuff on Amazon. And for a service that is essentially the hub of online commerce in the U.S ., having an Amazon-sold item is also a pretty good look for the company.

Even if the devices are relatively cheap, locking customers into the Amazon ecosystem, in the end, is likely much more valuable than selling a bunch of internet-connected speakers. Amazon Prime dedicates Amazon an opportunity to turn its shoppers from once-in-a-bit purchasers to a dependable stream of recurring incremental revenue. Amazon doesn’t do much in terms of disclosing how Prime performs, but at the same period, a reliable recurring revenue model is something that Wall street love — and something that’ll keep them happy and off Bezos’ back.

We’d love to show you a chart here, but the best we’re gonna get is some kind of vague large number from Amazon. So for now, be skeptical, but assume that it’s big and has a lot of possibilities ramifications for the future of the internet( as much of Amazon’s operations do) — especially as companies like Google and Apple nip at its heels.

Amazon buys a bunch of grocery stores

Amazon constructed one of the biggest and splashiest acquisitions of the year, second only to Broadcom’s move to acquire Qualcomm and boosting the fabless semiconductor market into a single division( which is an equally very large bargain ). It acquired Whole Foods, a trendy grocery store chain that has a strong brand, for $13.7 billion — and it went through! This was both wildly, in a very Amazon style, expected and unexpected( and was definitely not a good thing for Blue Apron, which was prepping to go public at the time ).

Whole Foods gives Amazon a decide of local waypoints for groceries, but also storefronts to get its products in front of consumers. It can apply its wealth of data to reorient the prices of products in such a way to get customers in the door for their staples while getting them interested in other products. And, maybe, more importantly, it can stick its own products in those stores, like the Echo.

While this gives Amazon a big business right away, it also offers Amazon yet another opportunity to lock consumers into the Jeff Bezos Sphere of Influence. We don’t know the full ramifications here just yet, but it’s another example of how Amazon was ready to merely crash its way into a new market that sort of makes sense in the Amazon grand scheme of things.

Amazon, in the end, is defining itself up for a future where it serves as the backbone of how customers interface with products they use in their everyday life the hell is, in some manner, connected to the internet. These moves may seem drastic and have a very long runway to play out, but if you ask a lot of people in tech which stock they would keep from the FAANG group( Facebook, Apple, Amazon, Netflix and Google ), you’re probably going to get Amazon as an answer. And then they’ll reference that Tweet wherever that says Amazon grew x thousand percentage since it ran public( because, in hindsight, I guess we altogether should have seen this coming, and the future played out precisely as it was supposed to ). So as we head into 2018, we’ll see if Amazon actually fulfills that destiny.

Also, Amazon should buy a coffee shop

Seriously, Jeff, buy a coffee startup. Maybe don’t expend as much as Nestle did on Blue Bottle. Or do. Whichever. There can only be good things that come of this.

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