Apr 28, 2011

Bartholomeusz: an Amazonian effort

The common denominator in the Amazon and Google results was that the increase in revenues significantly outstripped the increase in earnings.

Stephen Bartholomeusz

Business Spectator commentator

The world’s leading internet retailer, Amazon, has announced a 38% increase in first quarter revenue and its shares fell. A few weeks ago another internet colossus, Google, announced first-quarter revenue growth of 29%. Its shares fell.

The common denominator for the two was that the increase in revenues significantly outstripped the increase in earnings — in fact Amazon’s first quarter earnings were actually down 33% while Google’s rose an otherwise very respectable 18%.

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One thought on “Bartholomeusz: an Amazonian effort

  1. ggm

    Having just had Amazon loose its east coast co-located services including dataloss, and having seen a couple of senior google people present on why they bought wind power, and how they load-shed their data centers to manage power budget.. you can see why these companies are seeing increased costs: its not the front-end labour or IPR, but their exposure to back-end raw cost of heat/light/power which is running out of control.

    These companies act like they are pure-information, man-in-the-middle, brokering the ad and content to you the user. But they are as bricks and mortar as the companies they replaced, because they have to be, to own the petabytes of data which drive that mediating role. Those bricks of disk and computer might be dropping in unit price, but the power cost isn’t and the roadmap for heat/power budget is only upward.

    There is also a cost on Amazon looming. Clinton spoke at a meeting in S.F. I attended recently and was asked on the floor how he felt about tax on internet now, 10 years after he helped avoid it. He said quite openly that he feels his own local community suffers from the cost shifting to online sales, and that a developed economy needs consumption taxes as part of the mix. He still believes relieving the internet of taxes *then* was justified, but if you ask about now, he is more willing to concede it has merit.

    If Amazon and Google have to start managing sales tax, their up front operational costs/consequences are going to balloon..


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