Entrepreneur Watch

Jeff Bezos vs. Steve Ballmer vs. Bill Gates

There's an interesting contrast in style in a Forbes article this week: Steve Ballmer looks to the past, insisting there is still life in the PC. Jeff Bezos continually looks to new opportunities, such as the Kindle Fire and cloud computing. Maybe we should start referring to Microsoft.toast.

The interesting thing is that Ballmer isn't that different from Gates in his latter days at Microsoft. In the late 1990s I asked him if the internet might start displacing the PC model, and he tried his usual tactic of sarcastic argument through belittlement. "Oh, sure, I mean, the internet can do everything!" He went on to say, "Do you think the demand for software is going to go away? I mean ,if that's true, then Microsoft is in trouble!"

There's still demand for software, just not Microsoft's software. The problem is that Microsoft always looked to the past. Gates always emphasized compatibility. It's how he took over the PC software market. Every IBM-style PC was compatible with the others and backwards compatible with previous generations (to an extent.) It kept everyone locked in to DOS, then Windows. Nobody else could gain a foothold, except Apple, which gained only a toehold when measured by volume sales.

Microsoft never evolved beyond that strategy. The need now is for software that can run mobile phones, tablet computers and other new devices. Gates -- and now Ballmer -- made the same mistake. They want to cram Windows into the small portable devices and maintain some level of compatibility. But they should have learned from IBM. You can take a small computer operating system and make it bigger, more powerful as the machines themselves get more powerful, but you can't trim a piece of bloated software down to make it fit in a smaller device with weaker processors.

That strategy hasn't worked for a decade. They should get over it. If you've got a good OS, software companies will develop for it. Relying on your locked-in installed base shows a lack of faith in your own ability to design new software.

Meanwhile, back in the Republic of Chad...

Another Forbes article shows Bill Gates is tackling his post-Microsoft role as the bringer of medicine to poor countries. He's forward-thinking here, creating new models to get pharma companies to develop vaccines, and making sure the drugs get to the right people. He always planned on being a philanthropist after Microsoft, and seems to be doing it well. 

Heading into space: Jeff Bezos's secretive Blue Origin, Elon Musk's SpaceX picnic

Jeff Bezos really wants to get into space. He has put up a new website about Blue Origin, which is working on a vehicle to take people into sub-orbital space. The site has a short video of a successful test launch of the Vertical Takeoff and Vertical Landing vehicle, but does not mention that one of its prototypes crashed in another test launch in September. But he also notes on the site, "Accomplishing this mission will take time, and we're working on it methodically." Believe me, he has the patience -- and money -- to pursue this for a long time.

He's also hoping Blue Origin can get some of the NASA funding set aside for private space vehicle companies. Elon Musk's Space Exploration Techologies company (http://www.spacex.com/) is also hoping for some of that money.

By the way, Bezos is looking for some rocket scientists to work on the project.

Unlike Bezos, who is very secretive about the company (no interviews, please!) Musk invited Texas locals to a picnic at his McGregor, TX development facility on Nov. 19. 

Musk lists his job openings here. 

Jeff Bezos: No Steve Jobs, but more instructive for entrepreneurs

A review from Canada of my book, "One Click: Jeff Bezos and the Rise of Amazon.com."

"Amid the flood of tributes to the late Apple co-founder Steve Jobs, it might seem like an unfortunate time to come out with a book about Jeff Bezos and his online retailing giant, Amazon.com. But in some ways, Bezos’s achievements are just as impressive, and perhaps more instructive for would-be entrepreneurs."

Why Jeff Bezos will become a powerhouse in the future of computing

People keep wondering if Jeff Bezos will be the new Steve Jobs.

He will not. Nobody has Jobs's flair for creating new products that we didn't even know we wanted until he offered them. Nobody designs hardware like Jobs, and we will all suffer for his loss. Even those of us who don't buy many Apple products have benefitted by all the knockoffs created by others, including the iPad-like Kindle Fire.

But Bezos is not about hardware. He's not even primarily about online retailing any more. He's primarily about cloud computing.

Steven Levy at Wired has the best article in the world about Jeff Bezos right now. Anyone who is interested in Bezos and the future of Amazon must read this article. Levy gets behind the facts and analyst speculations and into the heart of the Bezos story.

He points out that Bezos has caught on to the cloud computing paradigm as the future for all computing. Bezos has established the lead position in providing cloud computing services for consumers, and is now doing everything he can to pull further ahead and strengthen that lead.

While Jobs was all about creating the greatest hardware in the world, Bezos's hardware designs, including the Kindle Fire, are merely the delivery devices that will give us access to Amazon's real products: computing, media and other services delivered through the internet. The devices don't even have to be that powerful. The heavy computing is done in the cloud, on Amazon's computers, and delivered to us via that device in our hands, which will largely just need to play back what we've gathered from the Internet.

In many ways, this is a grander vision than even that of Steve Jobs. The future of computing is not so much in the hardware any more -- although it sure was nice to have those great hardware designs that Jobs came up with. The future of computing IS the internet, and Bezos is the one figuring out how bring the internet to our homes as a virtual supercomputer that seems to sit in the palm of our hands.

It's no longer about computers. It's about computing. A decade from now we may not even think of Amazon as an online retailer. Amazon will be the company that revolutionizes the use of the internet as the computing platform of choice. Perhaps more than any other company, Amazon now has the potential to become the world's leading computing company.

What bank executives could learn from Jeff Bezos

I'm still amazed at the short-term, unimaginative strategies dreamed up by most executives these days.

Here's one scenario: Banks see a revenue delcline coming because Congress cuts the amount of fees they can charge when they use ATM cards. Damn, we can't charge merchants when customers use their ATM instead of cash? No problem, we'll charge the customers to get their cash back from us instead.

The result? Customers get pissed off, activists announce a national Bank Transfer Day, encouraging people to move to credit unions. A PR disaster, banks have to back off the plan. But now the idea is out there. Why use banks, whose only concern about customers is how much money they can collect from them through any means their botton-line focused minds can dream up?

Here's another scenario: Amazon.com CEO Jeff Bezos wakes up in early 2000 to find that stock prices for unprofitable dot-com companies have been devastated by a tech stock crash. What to do? Raising prices would be the knee-jerk reactino from most executives. No, Bezos decides to keep prices low, cutting costs instead and turning Amazon into a hugely profitable company. 

Then, in 2011, Bezos decides to invest in new Kindle products and in distribution centers to better serve customers. Profits drop dramatically for the quarter, the stock drops 13 percent in one day. Bezos shrugs. He'll get it back in the long run.

Nobody announces Amazon Transfer Day.

Most companies -- and financial institutions, who seem to see customers only as wallets -- are happy to punish their customers in order to try and raise revenues and profits. Even Netflix decided to raise prices without any increase in service, even though potential competitors, including Amazon, are looming on the horizon.

The smart companies deicde -- gasp! -- that customers come first. Serve your customers well, and they'll reward you in the long run.

Is that idea really so hard to comprehend?

Not to me. I switched from Citibank to a credit union months ago.  I held off for years because I needed access to ATMs that wouldn't charge me a fee to get my money. Citibank has a deal with an ATM network prominent in 7-Eleven stores. Guess what? So does my credit union (Redwood Credit Union.) Think I'll ever go back? Let's see, that would be a no.

To the rest of you, stop being banking sheep, a group to which I belonged for years. Look into a credit union. Your bank is simply betting that inertia will keep you there and they'll use that to milk you for everything they can. 

But I see no reason to stop using Amazon.

Jeff Bezos, Everyman entrepreneur, space cadet

My article in the British pulication City A.M.

 

 

Can Amazon's Jeff Bezos Fill the Void Left By Steve Jobs?

Here's my interview with Wall Street Journal's "Speakeasy."

 

 

Review of my book

From Management Today in the UK.

"... a good story told well. If you want to understand the Bezos phenomenon, this is an easy and efficient way to do it - just like shopping on Amazon."

If any of you would like a review copy to post in a blog or on Amazon.com, send me a message at [email protected] with "One Click" in the subject line and I'll send you one. Doesn't have to be a glowing review, just an honest one.

 

Amazon's Kindle Fire: Trojan Horse and ... Microsoft Killer!

The Kindle Fire is out, and it's going to be the hottest Trojan Horse we've seen since .. the original Kindle. Jeff Bezos has started building computer hardware with one primary purpose in mind: to make Amazon a software company. An unusual approach, but one that will ultimately succeed.

Sure the Kindle Fire will be the only significant competitor to Apple's iPad, but it is also showing that Microsoft is still stuck in the 20th Century. (Have you noticed that Microsoft really doesn't generate much buzz these days?) Microsoft just hasn't figured out the Internet software business.

Bezos started selling hardware (books, then other physical consumer products) because the market for selling software through the Internet wasn't there yet. Now he's favoring electronic books, music, video and cloud computing services because that's where his real future lies. It costs nothing to distribute software, as long as there's a device out there to receive it. Much cheaper than UPS.

The market is different now. The 21st Century calls for great devices that get their software--this time in the form of content and services--through the Internet. So he's borrowing strategies from both Microsoft and Apple to make sure the hardware and software infrastructure is there.

Apple-like Strategies

Steve Jobs loves making hardware hardware AND software, and likes to integrate them into great products. His hardware products are great showcases that create whole new categories of consumer electronics. He also gets the advantage of using the devices to sell his own software--music, books, video, etc. Jobs likes the high-margin strategy of building premium products and pushing old versions down the price ladder as he introduces new top-end products. 

Bezos likes building harware and software primarily because he wants to sell software. Similar to Jobs's strategy, he puts out exclusive devices that run his software so that he can sell more of that software. So he makes sure that his products, while not as great as Apple's, are still impressive enough to compete with Apple while other hardware makers fail. And part of their appeal is the very fact that he has a lot of software to sell, making the hardware more appealing.

Microsoft-like Strategies

But Bezos is also copying pieces of Microsoft's strategy: start at the low end of the hardware market in order to sell his software, and build up. Microsoft ensured that Windows would be the operating system for the masses by licensing Windows to all PC makers, creating price competition and ensuring low PC prices and high Windows volume. 

Bezos is aiming at the mass market with cheaper hardware that appeals to more that just the early adopters. The Kindle Fire doesn't have all the features of the iPad and is smaller, but is half the price. By creating his own hardware, he also gets Apple's advantage of selling devices that favor his own software. He'll sell you electronic books, movies, TV programs, and will throw in cloud computing services for free, just to make them more appealing. It's great that you can read a book on one device, then pick up where you left off on another device. That's because your books--and memory of what page you're on--is stored in the cloud, on Amazon's servers. The Kindle Fire will allow you to do the same thing with movies and TV shows.

But he wisely doesn't try to compete in the OS market for new devices. Increasingly, that's a war between Google and Apple (in this case, Google takes on Microsoft's old role.) Why should he? He gets the Android OS for free.

Microsoft just can't seem to compete with Apple, Amazon and Google in the Internet software business. It can't make inroads into the mobile phone and tablet markets. Sorry, Ballmer.

So look for Bezos to move deeper into the content and software services business. There have already been rumors that he would like to buy Hulu as well as Netflix's streaming movie service. He could have trouble keeping the rights to that content, but he's a tough-ass competitor, and if he (like Jobs) has the hardware to play it, the content producers will have to give in.

At least, once those content companies finally get the fact that the rules have changed in the 21st century.

We might also see Amazon making its own cell phones and other devices that will bring in service revenues. Technology is becoming a service business, and Amazon is becoming a technology retailer. It's got a great future there.

Thet's just hope that Jobs can remain active enough at Apple to ensure that Apple still has a great future as well.

 

Who Is Jeff Bezos?

A tax dodger? ... A ruthless competitor? ... An incredible CEO? ... A tough SOB? --- An extraordinary entrepreneur?

All of the above?

"One Click: Jeff Bezos and the Rise of Amazon.com"

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