On Tuesday, Amazon.com reported third-quarter earnings that fell far short of Wall Street’s expectations. Its earnings were down 73% from the quarter a year earlier. However, sales grew 44%, in line with Wall Street’s ambitious expectations. This follows last quarter’s 51% growth in sales, the company’s largest year-over-year growth in a decade.
What happened to Amazon?
Actually, Amazon looks at the world in a different way. Amazon does not view itself as a retail company, but rather as an incubator for disruptive businesses.Amazon missed its earnings on Tuesday because it has chosen to invest in its disruptive-growth engine while the company’s core business is healthy, profitable, and continues to grow.
Amazon missed its earnings because the company has been investing more heavily in the infrastructure to support not just a single disruptive business, but a number of disruptive-growth opportunities.
Below is a snapshot of Amazon’s portfolio of disruptive businesses:
• Amazon Retail — disrupting traditional retailers
• Amazon Kindle — disrupting the paper book format and paper book retailers
• CreateSpace — a self-publishing solution that disrupts traditional publishing houses
• Kindle Fire Tablet — a new market disruption enabled by business model innovation
• Amazon MP3 and streaming audio and video — disrupting traditional content distribution companies
• Amazon Web Services — disrupting the companies that sell on-site servers and native software applications
Amazon’s founder, Jeff Bezos, said, “One of the biggest problems with big companies doing clean-sheet innovation is that even if you see it, you have to be a really long-term thinker, because for a long time it will be a tiny slice of the company … The key thing is to be willing to wait 5, 7, 10 years. And most companies aren’t willing to wait 10 years.”
To read the full article, click ” Investors Punish Amazon for Investing in Disruptive Growth” in HBR