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Jurgis Newbie

Jurgis

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I'm somewhat Amazon fanboy, but we have finally disconnected Amazon Alexa/Echo. We've had it for 2+ years and we just don't use it at all. So I hope that Amazon got all the data about our secret conspiratorial conversations. It's not getting any more. (Actually it's still gonna get data from our 3 Fire tablets, but who's really counting).  8)

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Spekulatius Newbie

Spekulatius

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I'm somewhat Amazon fanboy, but we have finally disconnected Amazon Alexa/Echo. We've had it for 2+ years and we just don't use it at all. So I hope that Amazon got all the data about our secret conspiratorial conversations. It's not getting any more. (Actually it's still gonna get data from our 3 Fire tablets, but who's really counting).  8)

 

Well Alexa is a bit of a toy, but we do use it, for playing music (from Amazon music) as a timer in the kitchen. We got an Echo studio recently and the sound is pretty good as we synched it with a smaller Echo can. My son has one that he uses as an alarm clock in his room and occasionally we use it as an intercom and to control smart outlets. There are a bunch of use cases around that make it interesting but I agree it’s more like a toy than anything.

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Xerxes Newbie

Xerxes

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If Amazon has a 4 times sale multiple and is straddling between e-commerce and cloud computing, the stand alone cloud computing has a floor of $200 billion market cap, but that is very low.

 

I think e commerce revenue is around $300 billion with a 1.5 multiple that comes to $450 billion.

1.5 trillion minus $450 billion that leaves a trillion for cloud computing.

 

So somewhere between $200 billion and a trillion.

Say half a trillion.

 

 

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Liberty Newbie

Liberty

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If Amazon has a 4 times sale multiple and is straddling between e-commerce and cloud computing, the stand alone cloud computing has a floor of $200 billion market cap, but that is very low.

 

I think e commerce revenue is around $300 billion with a 1.5 multiple that comes to $450 billion.

1.5 trillion minus $450 billion that leaves a trillion for cloud computing.

 

So somewhere between $200 billion and a trillion.

Say half a trillion.

 

Why do you think retail is worth that? Increasingly, a large fraction of retail is 3P stuff with much better margin profile than the 1P stuff.

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Xerxes Newbie

Xerxes

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I agree

 

In fact it is also ignoring Prime membership fee which is very high margin as well as growing advertising revenues. All of which rolls up into e-commerce. Definitely very crude multiple and possibly low.

 

That is why I took the mid-point.

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OnTheShouldersOfGiants Newbie

OnTheShouldersOfGiants

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I appreciate the replies. I'm not so much interested in what multiple is implied by today's price. Rather I am more interested in knowing what sort of multiple you guys think the market would give a pure play enterprise IAAS and PAAS provider. Moreover, I am also interested in knowing what others believe this business will look like in 5-10 yrs time.

 

 

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Xerxes Newbie

Xerxes

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Apologies if this was already brought up; from Galloway new book about Amazon:

 

 

 

"MarketWatch: So do you see Amazon just getting even bigger?

 

Galloway: I believe that in 2025 the most valuable company in the world will be the recently spun-off AWS. Right now, there is no direct way to play the cloud. But when you think about a true cloud provider, you have to crawl over a software company, an e-commerce company, a search-engine company to get to the three premier cloud companies.

 

But if the biggest cloud company and most profitable cloud company in the world were a standalone stock, that would be the stock you gave at Bar Mitzvahs, at christenings, and every retirement fund would have it. They wouldn’t even look at the multiple. They would be totally immune to altitude sickness around the valuation. I think Jeff Bezos is smarter than the rest of us, he is going to feel the wolves at the door of antitrust and prophylactically spin off AWS. And that will be the most valuable company in the world by 2025.

 

I also think that in two to three years, Amazon will be the fastest growing health-care company. If you look at what they are doing, they are lining up their tanks, their aircraft, their artillery, on the border of what is the largest industry in the world, arguably, which is health care.

 

There is incredible customer satisfaction. That all adds up to the mother of disruption opportunities in the history of our economy. And Amazon sees that.

 

[in order to maintain its massive valuation, Galloway said Amazon needs to keep growing and it needs to disrupt another major industry.]

 

They have built really this three-dimensional avatar of your health. They know what food you order, they know what products you buy, they know what your body mass index is, they know your income, they know whether you are in a monogamous relationship, they know your Zip code, your education, all the signals that go in an actuarial table, but an avatar of a lifestyle.

 

[in his prediction, Amazon would create a “Prime Health” option, Galloway explained in more depth in the book. As an example, say a consumer uses Alexa to look for a dermatologist to help deal with a skin rash. The doctors are not Amazon employees, and instead they give a cut of their revenue to Amazon. The doctor would have access to medical records, and consult the patient via a video chat, which has now become more common place and acceptable because of the pandemic. A prescription could be distributed quickly via the Amazon-owned PillPack pharmacy, and if a blood test is required, a kit could be included in the prescription.]

 

It’s very clear to me that Amazon is literally getting all their artillery, planes and tanks lined up at the border of this enormous industry and you are just about to see war break out.

 

MarketWatch: What else do you see happening on the antitrust front?

 

Galloway: So COVID-19 will absolutely be the catalyst for the breakup of Big Tech, but it’s indirect.

 

I think there is going to be antitrust, I think it will be slower than most people think, systemic more deliberate, and writing laws is hard. They will not cancel the antitrust lawsuit against Google, [the Biden administration] they will pick it up and modify it.

 

[Galloway believes] Apple won’t be broken up but will face additional regulation around their app store.

 

[in the book, Galloway also predicts that Apple might consider buying Peloton Interactive Inc. PTON, +1.39%, the exercise bike maker, which has a similar fanatical fan base as Apple, if the stock hits a floor from its current levels. Such a deal would give Apple an “additional, if cumbersome, wearable product” which could be branded as an iPeloton, for an additional service offering, one that would also pair well with the Apple Watch.]

 

MarketWatch: Where else do you see huge disruption happening?

 

Galloway: [Just as] we are dispersing that $4 trillion away from the traditional channels [in health care], doctors’ offices, hospitals, etc. to the home … we are also going to disperse hundreds of billions of dollars in education.

 

Traditionally, that has flowed through the university that uses artificial scarcity and is employed by administrators, tenured professors…to increase their compensation so that we can limit enrollments in our best universities. While we are all rather fond of that in the short term, in the long term it means your kids aren’t getting in.

 

[Galloway said data he compiled from UCLA, as an example, showed that years ago, approximately 50% of applicants got in, while recently, it’s about 12%. Then he gave an example of how remote learning is changing education, from his own classes.]

 

Last night, I had 280 kids for my grand strategy class on Zoom ZM, +1.02%. They paid $7,000 each, that’s $1.96 million for 12 nights of Zoom. That’s not only not sustainable but it’s a huge opportunity. I used to teach 160 kids because the largest classroom at Stern was 160. They asked me if I would go to 280 and I said sure. But they haven’t passed along those savings to the student. At some point the market will force them to.

 

That dispersion of education away from universities and to remote learning should dramatically lower the cost and dramatically increase the supply, which is a huge opportunity in education."

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OnTheShouldersOfGiants Newbie

OnTheShouldersOfGiants

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Thanks Xerxes, I hadn't seen that

 

Galloway articulated what I've been thinking about AWS. That if it was spun out and traded on its own as a pure play IAAS, PAAS cloud provider it might be surprising the valuation it would receive. Personally I suspect we're at the very early stages of public cloud which seems to have consolidated to 3 legitimate players (4 if you include Alibaba). I think there may be a very long runway for growth in a business that has very large barriers to entry and is fundamentally important to almost every business on the planet.

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Liberty Newbie

Liberty

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https://press.aboutamazon.com/news-releases/news-release-details/amazon-becomes-worlds-largest-corporate-purchaser-renewable

 

"Amazon Becomes World’s Largest Corporate Purchaser of Renewable Energy" ("The addition of 26 new utility-scale wind & solar projects in Australia, France, Germany, Italy, South Africa, Sweden, the UK, and U.S. bring total number of projects to 127")

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Liberty Newbie

Liberty

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https://www.cnbc.com/2020/12/14/amazons-self-driving-company-zoox-unveils-autonomous-robotaxi.html

 

Amazon’s autonomous vehicle company, Zoox, is taking the wraps off of its first self-driving robotaxi.

 

Zoox on Monday debuted an electric, fully driverless vehicle that’s built for ride hailing. It’s a “carriage-style” car, which means that passengers face each other and there’s no space for a driver or passenger seat, since there’s no steering wheel. It has space for up to four passengers.

 

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dwy000 Newbie

dwy000

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Amazon seems to be following the Costco playbook: sell product at breakeven (or a loss) and make your money from the annual membership.  With 150 million Prime members at an average of $100/year that's $15bn of 100% margin revenue.  The whole US and Int'l segments generated operating income of $9.5bn (which includes products, memberships, video, advertising, etc - everything but AWS).  Phenomenal growth for sure but I would have thought hitting $100bn+ of non-AWS revenues would have positive margin at this point (ex-Prime membership).

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RadMan24 Newbie

RadMan24

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https://www.ft.com/content/fdef43d2-8988-4694-8357-f7abe02f1c80

 

the kicker:

 

"

The news that Jeff Bezos would step aside as Amazon’s chief executive was a surprise, but there were signs it may have been on his mind for some time.

 

“He was very admiring of the Microsoft succession process,” said Jeffrey Sonnenfeld, professor of leadership at the Yale School of Management, recalling a conversation he had with the Amazon founder way back in 2007.

 

He said he had tried and failed to get Mr Bezos to discuss his own succession plans in a live event. “I think he didn’t want to tip his hand, or suggest there was any kind of internal horse race.”

 

But more than a decade later, Mr Bezos is indeed following the Microsoft model. In the third quarter, he will switch — as Bill Gates did — from day-to-day running to a position of broader strategic leadership."

 

adesigar wins.

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