Amazon said to hell with what Wall Street wants – and is now unstoppable

Thanks to Mr Bezos and his obsession with investment over profit, Amazon has become an 800lb gorilla in every market sector in which it operates

(Getty)

There are very few large companies worth getting excited about right now. The exceptions are Google, Facebook and Amazon; these three are winning the internet, if such a thing is possible. For better and for worse they have created opportunity and innovation where none previously existed – always tightening their vice-like grip on users and customers alike.

Right now they are the big winners, and even Apple, despite its huge size and current ability to generate billions in cash, could end up reduced to the status of an also-ran. But even among the winners there has to be one ring to rule them. Despite Thursday’s results disappointment, the smart money is on Amazon.

Fourth-quarter numbers resulted in mild panic, or a buying opportunity depending on your point of view. Disappointment over a significant profit shortfall was valid – disappointment over sales was not. For the full year the company had sales of $107bn (£75bn), the first time it has broken through $100bn. Fourth-quarter sales of $35.7bn were very much at the high end of Amazon’s forecast range and were 22 per cent higher than in 2014. Most companies would kill for that kind of disappointment.

One person who is very unlikely to be panicking is Jeff Bezos. Like him or loathe him, nobody pays attention to long-term investment in sales growth quite like Amazon’s founder and chief executive. Even as a public company, the online giant has virtually ignored profits in favour of capital investment, which is anathema to Wall Street and the short-term earnings demands it places on businesses.

Mr Bezos is all top-line growth, not bottom-line growth, and to hell with Wall Street. That’s why his business will eventually become the largest and most profitable company on the planet.

Meanwhile, Amazon is no longer the company most people think it is. It is not a retailer, a bookseller or whatever else the company might have been. It is an information behemoth with an unmatched global logistics and distribution footprint. Thanks to Mr Bezos and his obsession with investment over profit, Amazon has become an 800lb gorilla in every market sector in which it operates.

The scary thing is that it still only controls only around 5 per cent of what is forecast to be a $2trn global e-commerce market in 2016. So there is still plenty of room for growth in retail even as the company transforms itself.

Nothing better illustrates that transformation than Amazon Web Services, a business that started off as a bit of an industry joke. How could an upstart bookseller possibly compete with real data specialists or persuade companies to outsource data storage? It has done both, and now supports thousands of other businesses while making a mint in the process. Amazon Web Services posted fourth-quarter operating income of $687m, more than three times the figure in the same period in 2014.

From being seen as a cheap alternative for smaller companies, Amazon’s list of Web Services customers now reads like a who’s who of publishing and tech. Even Netflix has given up owning its own data centres and streams its content via Amazon servers. The company’s position in data services is only going to grow, and it’s a huge market.

Whether or not its growth and power is a good thing or not is another debate. The fact is that it has spent 20 years investing in an infrastructure that will be hard if not impossible for other companies to match. Once it was local stores that Amazon forced out of business – now it’s Walmart and Macy’s that are closing doors. Everyone had better watch out.

Google Glass will be back – and with better vision

Pity anyone who spent $1,500 on a pair of Google Glasses last January; not for spending that much on a product that became pretty much defunct just days later, but for being an obnoxious show-off or unbearable oaf with far more money than sense. Probably both.

It has been a year since Google bit the bullet and pulled the plug on consumer sales of its one-heralded but doomed wearable computer. Last week the tech giant closed all its social media Google Glass outlets, with the exception of Google +, which hardly counts as social media. So anyone who bought a pair, known as “Explorers” to Google and “Glassholes” to everyone else, now has an internal support web page and almost nothing else to fall back on.

The biggest problem was not how much of a jerk people looked wearing Google Glass (and that was a significant problem); the real issues was how they behaved. Privacy and piracy were both legitimate concerns that led to wearers being widely mocked and banned from wearing them in places like the cinema or in casinos.

In many ways, the product was never going to be suitable for the everyday consumer market.

But all is not lost, neither was it ever lost. Google is not going to just allow the technology, amazing as it is despite its obvious flaws, to sit gathering dust on a shelf. Google Glass has still got fantastic potential with a myriad of uses: in security (think Luke Skywalker’s X-wing headgear), in medicine and in entertainment. With everyone in the tech world banking on virtual reality being the next big thing in entertainment, Google Glass has given the company a big advantage. It’s just a matter of putting it to the best use.

So Google Glass is not going to die. By ditching the last remnants of its first failed incarnation, the company is merely setting the stage for phase II – Project Aura, run by a Google employee called Tony Fadell. The name is probably a play on words, not virtual reality but “augmented reality”. Mr Fadell is not some nobody tech geek to have deadbeat projects fobbed off on to, either. He was the brains behind the iPod and Nest, the revolutionary thermostat company for which Google paid $3.2bn in 2013. He would not be leading the project if the company’s top brass had lost all faith in Glass’s potential.

Glassholes might not be on the verge of reappearing on your local high street any time soon, but the wearable tech market is reality, not virtual reality. Google Glass will be back.