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Amazon: Money trail helps reveal its digital strategy
August 5, 2009 | 9:42 am
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By Ted Treanor, publishing consultant
Ted Treanor, our latest contributor, is notable for founding NetGalley and other important sites. Ted’s bio appears at the end. He is now a publishing consultant with The Consulting Garage. Welcome, Ted! – D.R.
So what’s Amazon’s digital strategy? Let’s follow the money trail.
In 2005 Amazon bought BookSurge and Mobipocket in one month. That clearly showed a commitment to both digital and traditional book publishing.
Significantly, Amazon saw the potential of print on demand. And it wanted an infrastructure to support its activities not just in books but also in other industries, too.
Here is an awesome link to a visualization of Amazon’s entire history of investments in buying companies across all industries—a detailed view of overwhelming visualization above.
I’ve extracted a steadily growing summary list of 16 of Amazon’s direct investments in the book industry. Seeing the tally in one place causes one to take even more notice of Amazon’s sizable investments. Here are a few examples:
- Shelfari (acquired August 25, 2008), a book-based social network site.
- Audible.com (April 2008). Amazon bought this online audio-book provider for US$300 million and assumption of liabilities.
- Justbooks (subsidiary of AbeBooks, acquired Dec 2008).
- Lexcycle, Inc. (acquired April 27, 2009) This is the company behind Stanza, an electronic book reading application for the iPhone and iPod.
- Booktour (seed capital investment in April, 2009)
You can bet that there will be more acquisitions to come.
There are many other Amazon investments in customer-enabling technologies. The goal is to improve the customer experience for any product or service through the ever reaching and growing Amazon.com. Amazon is in not just B2C, but B2B relationships, such as hosting and in the cloud computing services. The company is building a comprehensive online shopping platform for entire verticals and horizontals. Amazon makes money selling directly to the consumer, or helping merchants sell to their customers, and more recently by supporting supply chain relationships. No small vision here.
I have no Amazon stock or contracts. As far as being in competition, it’s becoming more difficult by the year to identify industry roles that Amazon is not playing, but that’s a topic for another post.
Whether you see Amazon as a friend or a threat, or both, will depend on your market position. It will also depend if you and your company have a strong vision and an ongoing commitment of investment in the future. Where do you weigh in?
Ted Treanor, a digital publishing leader, an ecommerce and Internet pioneer, has been involved with the e-book industry since the early 1990s and founded Net Galley and other noteworthy sites. He has consulted with and formed strategic partnerships with many of the largest companies in the world. Ted specializes in strategic initiatives, business development, producing new revenue streams and technology assessments. You can reach him at tedNOSPAMgocommerce.com.
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Comments:
Ted, how do we know this investment strategy actually represents Amazon’s commitment to these areas, as opposed to its desire to submerge and subsume them in favor of its existing (or planned future) markets? I wouldn’t say that all of these acquisitions have exactly been doing gangbusters under Amazon’s wing.
Steve, fair question and points well taken. There are 16 plus book-related investments, so far. Their rational is bound to be complex and varied. We’ve all noticed that they are fairly private about their strategy. They certainly have the resources to acquire and stifle a competitor. In observation, an acquisition may lose their separate identity and become Borg, or they may continue to operate as a separate company, wholly owned by Amazon.
I see two major historic strategies for acquisitions; technology and customers. Most investments, unless they are at a very early stage in the life of the company, have both technology and customers. Amazon buys technology that enables business transactions and customer relationships. They also buy customer platforms that accelerate their market penetration. Good examples of platforms are Audible and Mobipocket. Both companies also have customer enabling technologies that facilitate ecommerce transactions, not to mention major strategic contracts with key channel partners.
Amazon is a large player that thinks big and moves toward scalable businesses that supports its long-term strategies. They are thinking years into the future, a future that will continue to impact the industry.
I didn’t notice abebooks.com on that incredible chart. (Perhaps my eye-brain team failed me, again.) It has also been gobbled up by Amazon.
Amazon wants. I can’t think why, but there’s no doubt about it. Amazon wants and then wants more.
cheers,
bill
Bill, even though the chart looks impressive, the font and image quality was so hard on my eyes that I didn’t even try to read it in detail. It was easier (on my eyes) to Google Amazon’s acquisitions and investments and even found memory to come to the aid of the article, since you are right that there is a missing piece or two.