AMAZON!!!! Say it ain't so!!!!
"Amazon's Ambitious Bets Pile Up, and its Losses Swell"-- The New York Times
Why do we think that in the digital world innovation comes at a profit loss?
And why do we ascribe digital brilliance to every so-called "innovation" from companies like an Amazon or a Napster, to go back a bit in history.
And finally when will we kill the digibabble around profits and innovation -- stop talking about old and new; dinosaurs and the evolved; digital and nondigital....
Bottom line: When will we really begin to advance our world through the opportunities that technology has given us instead of creating outsized wealth for a select few, the carrot of which dangles enticingly in front of the next line of ideas and world-changing potential...
To begin -- let's get real. Most of what we call technology development is really the application of technology -- semantics? Maybe... but in my mind critical to understanding potential, valuation and, most importantly, what serious innovation comes next.
Many, including The Wall Street Journal, have written about the frivolous pursuit of quick exit money obsessing over Silicon Valley, and a cursory field trip to any app store makes the case as well.
So I thought it might be interesting and of value to see what really helped to drive Internet innovation -- for the good and bad -- and understand how that innovation helped create value - as in real profits for the companies involved. And, I might add, interesting to see their digibabble quotient -- that is, how much do they rely on using technology obfuscation as a driver for their own profits versus the companies' real and honest returns on investment.
It amazes me how few actually talk about or honestly report on one of the key sources of so much of what we take for granted today -- the adult entertainment industry, also known as porn.
Now before you knee jerk -- gamers contributed as well as did others and time would have no doubt eventually played a role, but credit where credit is due.
To that end I refer you to a 2009 article from The Guardian -- "The Porn Pioneers."
"The rising numbers of web entrepreneurs think they are doing everything for the first time. Their talk is scattered with phrases like 'first-mover advantage' and 'groundbreaking business model'. But what few people care to recognise, at least not publicly, is that most of these business models and indeed the technologies fueling the new economy were discovered and perfected by the first 'first-movers' of them all, the online smut vendors."
A 2008 article from PCWorld.com breaks it down further -- "Thank You, Porn! 12 Ways the Sex Trade Has Changed the Web," written by Dan Tynan:
From online payments to streaming videos and optimization on the good -- and malware and spam on the bad -- to Paris Hilton on the truly frightening prurient desires drove innovation -- or more to the point the understanding of those desires and insight into the audience drove true advances and applications to meet real needs.
I am going to stop here and let you follow this track if you are interested.
Because, you see, my point was not to praise the porn industry but rather to point out that innovation on the Web can be had with profit -- huge profit -- and that profit can be made without crowing about technology and innovation. The users don't care; they only want to get what they want. But as none of these companies are publicly traded, they have to make money -- real money to make more money, what a novel concept -- but one that seems so old... dinosaur, old economy... n'est-ce pas?
I mentioned Napster. Sharing music was not an innovation; giving it away for free certainly was not either. Of course I give it credit for its applied technology on the technical side -- but then Napster blew it....
Amazon is no different -- of course it can drive sales; give it away for free and they will come -- but look at how little technology has to do with its negotiations and development and so-called innovative ideas -- subscription models (not based on profit); warehouses (so old-fashioned); expensive, nonworking hardware (so Microsoft); price-cutting commodity services (so last century telecom) and on and on...you get the point.
I find it ironic and a sign of the digibabble times we live in that it takes an author, Douglas Peterson, a best-selling one at that, to comment: "Amazon has to change the way it thinks about its problem of trying to be profitable."
Digital is everything... but not everything is digital -- my readers know my mantra.
But I'd argue strongly that it's time to demand that innovation -- as in applied technology -- be profitable from the start and leave our investment dollars for real technological innovation -- the kind that we can afford to lose money on -- because it might just change the world -- not just our shopping habits or the wealth of key investors.
At the end of the day...Listen:
"It doesn't make a difference what temperature a room is, it's always room temperature." Steven Wright
Call it what you want - retail is retail and people are people and needs are needs....
What do you think?
PS - I call your attention to one of the big winners at the recent Cannes Festival of Creativity who is using amazing applications of technology to combat the worst Porn Criminals in the world.
Follow David Sable on Twitter: www.twitter.com/DavidSable