2012 100 - Networld Media Group

It’s instructive to remember that Jeff Bezos founded
Amazon in the mid-1990s, at a time when most re-
tailers and corporations treated the Web as little more
than a space for billboard messages. More than any
other company or institution, Amazon made the Web
a venue for commerce. Amazon’s pioneering security
innovations are responsible for chipping away at customers’
initial reluctance to enter their credit-card
numbers and other sensitive information online. David
Hornik of VentureBlog notes that, “while many
firms use Web platforms successfully, very few make
real money from Web commerce alone. … Amazon
stands out for demonstrating what can be done, and
— just as important — for showing how difficult and
rare real Web-commerce success is. Amazon is so
big, so embedded in our daily habits, that it’s folly to
think it could serve as a useful model for any emerging
firm.”
Amazon now accounts for more than 40 percent of
online commerce transacted in the US, yet Tom Foremski
of Silicon Valley Watcher reckons that Bezos’
most impressive feat may be summed up in Amazon’s
JEFF BEZOS
miniscule operating profit margin — just 2.47 percent
for its most recent quarter. (Compare that to Google’s
33 percent Apple’s 31 percent, and Microsoft’s 39
percent.) Bezos has consistently
rebuffed institutional investors’
pleas to maximize quarterly returns
for the sake of shares value, choosing to focus
instead on long-term profitability and stability, sacrificing
high margins for market share. “Amazon’s slim
margins are a key component of Mr Bezos’ business
strategy in keeping competition away,” says Foremski.
“Amazon forces a competitor to fight in the gutter
over margins that are rounding errors for others.” No
longer content with being a mere retail outlet, Bezos
is turning Amazon into an entertainment hub, taking
bigger risks on ventures such as the Kindle, inking big
Hollywood content deals, providing in-the-cloud access
to music and video, and hosting Web service data
for other firms and institutions. His newly rekindled
spirit of adventure, along with the untimely passing of
Steve Jobs, may yet give Bezos his long-awaited turn
as the wizened savant, showing the world the way to
the future.
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