Jeff Bezos was the driving force behind Amazon’s Fire Phone flop

It’s no secret that Amazon’s first smartphone has been a commercial and critical flop. But a new article in Fast Company details just how involved CEO Jeff Bezos was in the planning and execution of the Fire Phone debacle. The phone was his baby.

At one point during the Fire Phone development process, Jeff Bezos reportedly “spent a month” working from Amazon’s R&D offices in California, functioning as the phone’s “product manager,” according to Fast Company, citing employees who have since left [company]Amazon[/company].

In fact, Bezos was reportedly the driving force behind the Fire Phone’s Dynamic Perspective, a bold gimmick that simulates a 3D interface on a smartphone screen with the help of four front-facing cameras and some nifty facial recognition technology.

Although the feature, which cost “surreal amounts of money” to develop, ended up making it onto the Fire Phone, the four cameras kill battery life, and ultimately Dynamic Perspective probably isn’t the “Fire Phone’s version of Siri,” as Bezos had hoped. As the tech press pointed out when the Fire Phone launched, there just isn’t much you can do with it besides gaming.

In Bezos’ defense, Dynamic Perspective was in fact the one feature that no other handset could match. It just isn’t a good feature.

Apparently, during the development process, a stripped-down, basic phone prototype was produced. This phone was supposed to be extremely cheap — perhaps even included free with a Prime subscription. Bezos spiked it in favor of the phone that eventually launched, which was initially priced the same as the Apple iPhone — surprising people coming from a company that (almost) always prices its products aggressively. After two price cuts, the Fire Phone now costs $200 without a contract.

Amazon’s R&D department, called Lab126, is in Sunnyvale and Cupertino, California — over 800 miles away from Amazon’s corporate headquarters in Seattle, but in a better location for poaching hardware talent from companies like Apple. Although it’s where all of Amazon’s hardware is designed, from the first Kindle to other experiments like Dash and Echo, it increasingly appears to be disconnected from Amazon’s older e-commerce and AWS departments. Fast Company reported yesterday that Lab126 is undergoing a big reorganization, with two executives who worked closely on the Fire Phone leaving the company.

Both stories are worth a read.

After rough year for Amazon stock, will AWS feel the pain?

People who watch Amazon Web Services tend to be cloud oriented and don’t necessarily pay a ton of attention to the Amazon Inc. mothership. Maybe they should broaden their focus a bit.

In 2014, that mothership had a rough year  — Amazon’s stock price fell 18 percent over a period during which the Nasdaq overall was up 14 percent. That put [company]Amazon[/company] founder and CEO Jeff Bezos on the receiving end of a $7.4 billion paper loss for that period. (His 18 percent ownership is still worth just north of $26 billion.)

The company’s third quarter was particularly worrisome. For the period ending September 30, 2014, Amazon posted a $544 million loss on revenue of $20 billion, provoking much consternation on Wall Street, which appeared to be losing patience with Bezos’ growth-at-all-costs strategy. At that time, I wondered whether, given all that angst,  the company would keep investing in AWS to the degree it had previously. I’ve reached out to Amazon for comment and will update this post as needed.

Some people see AWS as a profit generator for Amazon Inc. Despite the steady drumbeat of price cuts, it’s been clear for some time that AWS isn’t the loss leader most experts once deemed it to be. But as of 2014, AWS was no longer the sole arbiter of public cloud IaaS pricing. Google and Microsoft sliced the prices of public cloud services on their own, sometimes beating AWS to the punch — which means that even as AWS adds scale and features, it is in a much more competitive market than it was for the first seven years of its existence.

AMZN Chart

AMZN data by YCharts

More big fish in the pond

Over the past year or so, big competitors have come online with many comparable services for the first time. And two of those competitors — [company]Microsoft[/company] and [company]Google[/company] — seem prepared to spend what it takes to keep scaling up, cutting prices and adding higher-level services.

The thinking seems to be that AWS (and Amazon itself) sacrifices profits for market share growth, and then, when the growth spurt stops, it can start reaping the rewards.

That strategy worked well for Amazon’s retail operations a decade ago.  But at that time, there weren’t e-commerce competitors capable of competing at Amazon scale. That’s changed. Now there’s Chinese retail giant Alibaba, Target.com and Walmart.com. While Bezos’s net worth got a haircut in 2014, Alibaba Group co-founder Jack Ma added another $25.1 billion  to his stockpile, thanks to his company’s September IPO.

Just as those retail competitors got with the program, tech competitors have gotten the cloud memo. Microsoft now fields Azure, Google has Google Cloud Platform, [company]IBM[/company] has SoftLayer.

No one doubts Bezos’ financial acumen, and he isn’t standing still. In early December, the company sold $6 billion in a debt offering, a move that met mixed reviews by various bond rating agencies. Moody’s pretty much immediately downgraded its outlook on Amazon to negative; Standard & Poor’s, on the other hand, reaffirmed its positive AA rating on the debt.

In November, AWS SVP Andy Jassy was asked whether Amazon’s cloud could compete with cash-rich rivals and he expressed confidence that the company can continue to “fund this business to its potential” and reiterated that with its head-start it still offers far more services than anyone else.

Still, it helps to remember that even companies that dominate markets can’t hold the top slot forever. The public cloud marketplace has been validated, so competitors flooded in. The niche players won’t all be able to play at mass scale IaaS, but it’s clear that Microsoft and Google are here to stay. AWS isn’t alone anymore.

Note: This story was updated at 10:13 a.m. to include Andy Jassy’s comments from November for context.

Amazon’s Jeff Bezos talks succession plan (sorta)

The week in cloud

Last week, Amazon CEO Jeff Bezos talked a bit on stage about what Amazon would be without him. At a Business Insider event, Bezos was asked the zillion-dollar succession question. After the slow-mo Microsoft CEO search we endured last year, that topic resonates.

And the answer was: Yes, [company]Amazon[/company] does have a CEO successor lined up should something happen to Bezos, as it does with all senior managers, presumably including the Amazon Web Services brain trust of Andy Jassy and Werner Vogels.

So who is that successor? Bezos put down the hammer: “It’s a secret.”

Also interesting is Bezos’ take on how Seattle-based Amazon differs from stereotypical Silicon Valley tech companies. There are no free gourmet-lunches and no suburban Montessori-school-like headquarters. Amazon’s culture revolves around its urban HQ and a definitive butt-in-chair work ethic.

And, in Bezos’ opinion, taking a job with the company that offers the best free massages may not be the optimal career choice for a young engineer. More here from Gigaom’s Jeff Roberts on the event..

The full segment is here.

Container-on-container violence

If you were on a tech media news blackout last week, you missed the dustup touched off when CoreOS launched its own Rocket container, in a move seen as a direct shot at Docker.

CoreOS’s contention is that while Docker adds orchestration and other trimmings to its container it’s sort of neglecting the container itself and that its process model is “fundamentally flawed.”

Docker cried foul. If a company wants to just use just the Docker container, it can do so although Docker’s “batteries included but removeable” slogan isn’t helping its cause.

It makes total sense for CoreOS to glom onto what it sees as a great thing to get a piece of the action, which is how many people see what’s transpiring. “Every time some piece of technology gains traction you see all these prospectors staking claims,” said one long time observer who thinks CoreOS hasn’t done itself any favors the way it went about this, blasting out a blog post on the eve of Dockercon.

This gold rush happened with Rails, it happened with Node.js, it happened with Linux, and now it’s happening with Docker, he said.

But it also looks like there’s fear that the Docker “platform” will encroach on stuff offered by third parties, which Docker CTO and Founder Solomon Hykes addressed in comments to this blog post by CloudCredo CEO Colin Humphreys. Hykes wrote:

“The fact that Docker is building a platform does not at all mean that ‘docker’, the command-line tool, will become bloated and monolithic. Quite the contrary! The major theme of Docker is in fact the exact opposite: to make it more modular, and make it easier to use one part without the other. In fact, the very features mentioned by the CoreOS blog post (machine management, clustering) will not, in fact, be incorporated into the Docker binary.”

Below check out a couple of relevant Structure Show podcasts. First, last week’s show with CoreOS CEO Alex Polvi in which he says there’s nothing wrong with Docker going the platform route, but people need just plain containers. Then one from July in which Hykes discusses (presciently) how tricky Docker governance was going to be going forward.

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CoreOS CEO Alex Polvi

CoreOS CEO Alex Polvi

 

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Docker Founder and CTO Solomon Hykes at DockerCon 2014

Docker Founder and CTO Solomon Hykes at DockerCon 2014

 

 

 

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