2. The Background: The Dot
Com Bubble
• Amazon founded in a time when companies’ stock
prices shot up simply by adding “.com” or “e-” to their
name.
• Philosophy of
the day: “Get big
or get lost”: company
ledgers took huge losses
in pricey advertising.
http://www.housingmarketnews.net/images/bubble-history/dot-com-bubble.jpg
• Most companies crashed during the burst; Amazon
didn’t.
3. Foundation of Amazon
• Bezos created
Amazon’s business
plan on a cross-
country trip.
• Like other dot-com
companies, Amazon
fully expected to
operate at a loss for
the first few years.
http://web.mit.edu/wi/logos/amazon.jpg
4. How did Amazon survive the
Bubble Burst?
• No agreed-upon one reason for survival, but several
factors may have helped:
o 1999 patent of “1-click shopping”
Previously, online shopping done in “shopping cart” model,
where items were abandoned in carts.
1 Click shopping eliminated “abandoning” and buyer confusion
Patent lawsuit temporarily forced Barnes-And-Noble, who
was using a similar system, out of business at Christmas
holiday rush
o Customer Service: “The competition is watching us, and
we’re watching the customers.”
One of the first to encrypt credit card numbers
Built distribution centers with money most companies used to
advertise
Amazon had a reputation left standing after bubble burst
crashed advertising capital.
5. Moving On: The New
Innovations
Making Startups Easier than Ever
• Elastic Compute Cloud:
o Sells otherwise expensive
server power
o Very economic: Amazon
normally only uses 10% of
potential server power (other
90% reserved for spikes)
• Fulfillment:
o Sells unused warehouse space
so startup capital is saved from
buying private warehouses
o Automates everything: As soon
as buyer orders are sent,
http://www.thepicky.com/images/2009/04/cloud-computing.gif warehouse automatically ships
6. New Innovations cont.
Task Distribution Management
• Amazon Mechanical
Turk:
o Some tasks are just
better done by humans
instead of computers
(image recognition, etc.)
o People post these tasks
on AMT and other people
complete these tasks,
sometimes for money. The Original Mechanical Turk: A chess
o Rewards really not that playing “machine” secretly operated by a
large: ~10 cents hidden person inside.
It’s how Amazon’s Mechanical
Turk produces human-like results;
because work is done by unseen humans
(the users)!
http://images.salon.com/tech/feature/2006/07/24/turks/story.jpg
7. The Fight to lead the Web 2.0
• Web 2.0 is about platforming: providing the basic
layer for website-building.
• Google has been leading this, but:
• ECC, AMT, Fulfillment have attracted big
customers: Microsoft, Linden Labs, etc.
• So the Big Question is:
Will Amazon be the New
Microsoft?
8. Works Cited
• Bezos, Jeff (1964-). Hutchinson Unabridged Encyclopedia. Helicon
Publishing. 2005. eLibrary. ProQuest LLC. ITHACA HIGH SCHOOL.
28 Sep 2009. http://elibrary.bigchalk.com
• Chris Woodyard and Lorrie Grant. “E-Tailers Dash to Wild, Wild
Web.” USA Today Jan. 13, 1999: 1B-2B. SIRS Researcher. Web. 28
September, 2009.
• Henry Petroski. “Shopping by Design.” American Scientist Vol. 93, No.
6 Nov./Dec. 2005: 491-495. SIRS Researcher. Web. 28 September,
2009.
• “Jeff Bezos’ Risky Bet” (Cover Story, Nov. 13, 2006). Business Week.
20 Nov 2006. 22. eLibrary. ProQuest LLC. ITHACA HIGH SCHOOL.
28 Sep 2009. http://elibrary.bigchalk.com.
