If market automagically maximizes benefits to customers, there would be no need for regulations. Ever heard of monopolies and antitrust?
Companies are supposed to maximize benefits to shareholders, not customers. Even that is not guaranteed as we have the agency problem.
The need for a market regulator is hyped up by socialists and the communist. The regulators end up hurting free markets more often.
No company exists without its customers. Shareholders share the profit of the company, but consumers consume the product/services.
SAP and Oracle used to be the one-stop shop for enterprise software. Now the market is shelf fragmented. Big companies canât move as quickly as small companies.
Fragmented to oligopoly to fragmented to oligopoly to ⌠normal course of events. Now is in fragmented phase. We need to figure out who are likely to be the few oligopoly.
Iâm not sure I see it reversing. Open source and API interfaces are too big of trend. Itâs way too easy to get software to communicate now. Companies arenât going to give up freedom to lock in everything with one vendor.
Are people saying being the default option and best integration with the rest of the stack is worthless? Unless you have a very deep technical bench, companies usually just opt for the easiest options. If something is available on AWS and itâs being marketed heavily, people will just settle for that. Thatâs the power of the default option.
A timely article detailing what Amazon is doing with these cloud startups.
Elastic, a software start-up in Amsterdam, was rapidly building its business and had grown to 100 employees. Then Amazon came along.
In October 2015, Amazonâs cloud computing arm announced it was copying Elasticâs free software tool, which people use to search and analyze data, and would sell it as a paid service. Amazon went ahead even though Elasticâs product, called Elasticsearch, was already available on Amazon.
Within a year, Amazon was generating more money from what Elastic had built than the start-up, by making it easy for people to use the tool with its other offerings. So Elastic added premium features last year and limited what companies like Amazon could do with them. Amazon duplicated many of those features anyway and provided them free.
Seamless integration with the rest of AWS, thatâs the modern version of the Microsoft playbook in the browser war of the 90s. Back then Netscape was a free download and still people didnât bother because IE was pre-installed.
Moral: never underestimate the power of the defaults.
Amazon has used its cloud computing arm â called Amazon Web Services, or A.W.S. for short â to copy and integrate software that other tech companies pioneered. It has given an edge to its own services by making them more convenient to use, burying rival offerings and bundling discounts to make its products less expensive. The moves drive customers toward Amazon while those responsible for the software may not see a cent.
If that was true, Slack would have never got off the ground. The same for Coupa, Okta, Salesforce, workday, service now, and a ton of other companies.
Whatâs different now is it used to require very expensive customization to integrate those with an ERP. It was also expensive to maintain those connections every time there was an update. In an API world, the connections are now automatic or so simple a non-technical person can quickly do it. Updates on either side are irrelevant and the API remains unchanged. Itâs completely changed how software is developed and how software programs interact.
Software may have changed but human nature hasnât. Again, from the NYT article:
Customers can add new A.W.S. services with a single click and use the same system to manage them. The new service is added to the same bill and requires no extra permission from a finance or compliance department.
In contrast, using a non-Amazon service on A.W.S. is more complicated.
Today when a customer logs onto A.W.S., they see a home page called the management console. At the center is a list of about 150 services. All are A.W.S.âs own products.
When someone types âMongoDB,â the search results do not fetch information for MongoDBâs service on A.W.S.; it instead suggests an offering from Amazon that is âcompatible with MongoDB.â
How did OKTA got wide acceptance? By being 10x better than Amazonâs default. Thatâs a high bar to clear and you have to continue to clear that bar.
Even after a customer has selected a non-Amazon option, the company sometimes continues pushing its own product. When someone creates a new database, they are presented an ad for Amazonâs own technology called Aurora. If they pick something else, Amazon still highlights its option as ârecommended.â
Trump should hasten FCC to sue AMZN for abuse of monopolistic power.
Amazonâs dashboards arenât that good. We buy Cloud Health from VMware to track spend. No one is adding services without setting off flags. Everything that runs in AWS is tagged. We know exactly how much production, dev, and QA environments cost. We know exactly how much each department spends.
Cloud health even recommends how many reserved instances (RI) should be bought based on usage to minimize the AWS bill. RIs are much cheaper for usage especially if buying 3-year.
I think if anything people will go away from AWS. Itâs the same problem as selling in amazon. Your main vendor might decide to be your competitor. Azure is growing faster than AWS now. If google had any idea how to run an actual business, they would huge threat.
Amazon is not a monopoly by any stretch of the word. Anything you do not like does not become a monopoly.
And yet Amazonâs share of US online retail goes up every year.
The whole point of the NYT article and mine as well is that, by exploiting its huge market power amazon does NOT have to be the best option. Simply being the default on the market leading (by far) platform has tremendous value in and of itself.
Your points about Amazonâs offering not being the best are no doubt correct. But that actually goes to prove my point. Amazon simply doesnât have to be the best in those offerings. Part of the value comes from the quality of the software, but there are many other vectors.
Amazon might as well have two different brands. One for default and starters, and the other for more demanding customers with specific needs. Much like Honda also has Lexus, and Toyota also has Acura.
Siri: Market cap of AMZN has fallen behind GOOG.
GOOG: $932B
AMZN: $884B
Do you want me to inform @manch?
Me: Nah, not going to be the messenger of bad news. He should know.
Another 52 week high for AAPL.