Get Used to Amazon Being Profitable

Get Used to Amazon Being ProfitableYou may need to change the way you think about Amazon. It’s no longer just an e-commerce giant. It’s the world’s largest retailer. Period. And at the same time, it runs the world’s most successful cloud computing business.

Last week, Amazon posted its third quarter earnings report, and for the second quarter in a row, the Seattle company—known for shunning profits in favor of growth—is profitable. Both its Amazon Web Services cloud business and its North American retail sales were strong performers for the company.

But AWS was the real winner. The cloud business’s operating income in the third quarter ($521 million), was almost as much as Amazon’s whole North America e-commerce business ($528 million). Amazon says its operating margins were 3 percent and 25 percent for its North America e-commerce business and AWS, respectively. All of which just means: Its cloud business is still killing it. And it adds, in a big way, to Amazon’s new profitability.

Much more.

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AWS Powers Amazon to Profit and Stock Hits New High (Pub Lunch)
Amazon’s third quarter sales and profits came in at the high end of their guidance from three months ago, and investors promptly lifted shares by close to 10 percent in after-hours trading to what would be a new all-time high for the stock. Net sales increased to $25.4 billion and were 23 percent higher than a year ago, and operating income was $406 million—compared to an operating loss of $544 million in the third quarter of 2014—and net income of $79 million. Amazon pleasantly surprised investors last quarter with operating income of $464 million. The key to their performance again is AWS, which accounted for all of the profit and then some, generating operating income of $521 million (on sales of $2.085 billion).

Cloud Boom Boosts Google, Amazon with $100 Billion Stock Surge (Bloomberg)
Amazon, Google and Microsoft all topped profit estimates last quarter, highlighting the widening gulf between companies that deliver computing via server-laden warehouses and a generation of latecomers to the cloud boom. Together, the three companies added almost $100 billion in market cap, sharing a reliance on technology that comes from powerful machines lashed together in bunkers the size of football fields. These data centers are capable of providing a broad range of services at a low cost. Contrast that with technology firms, such as IBM, Hewlett-Packard, EMC and Oracle, which are suffering from slowing growth or declines as cloud operators shun traditional hardware, software and services.

Amazon Improves the Integrity of the Customer Review System (Chris McMullen)
It’s now fairly well-known that customers who are friends or family members of authors generally can’t leave reviews no matter how hard they try, and Amazon is very good at discerning probable relationships. Occasionally, Amazon is a little too good, blocking or removing a review of a stranger who proceeded to interact in the author’s social circles. A casualty of war.

How German Publishers Deal with Amazon (PW)
At the opening press conference at this year’s Frankfurt Book Fair, Heinrich Riethmuller, the chairman of the German Publishers and Booksellers Association, told reporters about the German book industry’s battle to prevent Amazon from “monopolizing” the book business. In a sign of how that fight is going, Riethmuller said that the Tolino, an e-reader backed by a consortium of German booksellers and publishers, was outselling the Kindle in Germany. According to figures compiled by GFK Entertainment, the Tolino e-reader now holds a 45-percent market share in Germany, while the Kindle has a 39-percent share.

SpotlightHow to Build an Author Platform Through Email Lists (PW)
Author platforms: we’re still talking about them because they’re such a crucial part of introducing new books and new authors to a wider readership. And, for indie authors, having a robust author platform can mean the difference between giving up your day job or staying put for a while. Unfortunately, many authors seem to think that their author platform is located somewhere on social media sites, although those certainly play a part. But savvy authors realize that having direct access to their readers—and a larger universe of people interested in the types of things they write about—is the most valuable asset of all for anyone hoping to write and publish books for a living.

How to Get Self-Published Books into Stores and Libraries (PW)
While many indie authors have mastered online sales, even strong-selling writers tend to see distribution to libraries and bricks-and-mortar stores as difficult to impossible. However, they should consider giving it another go. Industry experts and indie authors who have tried to get wider distribution have recently found surprising success—both in expanded availability and greater awareness of their work.

Reinventing the Library (New York Times)
Libraries are resilient. Intent on surviving in an age where the intellectual act has lost almost all prestige, libraries have become largely social centers. Most libraries today are used less to borrow books than to seek protection from harsh weather and to find jobs online, and it is admirable that librarians have lent themselves to these very necessary services that don’t traditionally belong to their job description. A new definition of the role of librarians could be drafted by diversifying their mandate, but such restructuring must also ensure that the librarians’ primary purpose is not forgotten: to guide readers to their books.

Inkshares Announces New Publishing Tier, Funding Goal (DBW)
Crowd-funded publisher Inkshares announced significant changes to its platform in an effort to publish more books and grow the company at a faster rate. Changes consist of a new funding goal structure and a refined credit system.


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