Technics: Business: Amazon won't see a half of its predicted yearly profits, tho sales up 34%

According to MarketWatch's Ben Cheney writes-up the modern business economics of Amazon, the miracle bookdealer by internet. "Amazon profit drops by half; sales rise 34%--Shares rise late on bullish forecast" (Feb1,2k7)

SAN FRANCISCO -- Amazon.com Inc. late Thursday reported its profit dropped by half, even while sales rose 34%, as the company lost the benefit of a large tax gain it had a year ago and saw its operating margin narrow.

Still, Amazon also issued a forecast for its next quarter and all of 2007 that were slightly ahead of expectations, sending its shares up nearly 5% in late trading.

Click up the article for the full details and a stock market report on the company.

Technotes, by Owlie Scowlie

That's the biz ec (microeconomics, but Amazon doesn't seem to qualify for the qualifer "micro-") of it. How does Amazon do it? A very large part of the answer to that question comes from Read/Write Web email newsletter [readwriteweb "at" gmail "dot" com ].

First, Amazon continues to innovate to live up to its Web 2.0 potential. Read/Write (Jan26,2k7) points out two Amazon services I had not met before:

Amazon S3

Amazon S3 is all about distributed storage. S3 saves you from the hassles and big costs of buying and maintaining storage hardware for your site's needs. YouOS is one example that secures its data on scalable Amazon S3 servers. You can see if a web site is using S3 or not by keeping track of your status bar while a page loads; S3 powered sites will frequently fetch data from http://aws.amazon.com address. R/WW's MyBlogLog for example uses S3.

Even though the advantages are so obvious and the company that offers it is the well trusted Amazon, my personal experience tells me that S3 usage is not very large either yet.

Amazon EC2

Similarly to S3, EC2 (Electronic Cloud 2) is Amazon's distributed computing power system. Considering the fact that it's still a beta service and its implementation is not that easy, the low usage is understandable. But when it gets ready, Amazon EC2 will become a compelling service that ends all the hassles of maintaining clusters and scalable services.

Second, now there's Amapedia (Read/Write, Jan26,2k7):

Amazon Quietly Launches Amapedia, a Wikipedia For Products

Amazon has just released a new Wikipedia clone, called Amapedia. It's described as "a community for sharing information about the products you like the most." So far Amapedia has had no promotion from Amazon, but it was discovered today by Rogers Cadenhead. Anyone with an Amazon.Com account can edit the site. Regarding the name, Amapedia appears to be a combo of the words Amazon and Wikipedia: ama[zon][wiki]pedia.

Note that this is a different wiki product than what Alex Iskold was referring to in yesterday's post, on Amazon's use of tags, ajax, blogs and wikis. In that post we were discussing the ProductWiki feature, but it states on Amapedia's homepage that "Amapedia is the next generation of Amazon.com’s ProductWiki feature; all of your previous ProductWiki contributions were preserved and now live here."

The site looks pretty raw currently and has little info in it - it is after all brand new. But a wikipedia for products makes perfect sense for Amazon. Who better to spotlight products and gather product information from the community, than Amazon? Another way to look at this: Amapedia could become the next generation of user reviews. User reviews on websites today are relatively rigid and old fashioned, so Amazon may be thinking that Amapedia will be a new platform for user reviews - it may help remove redundancy in reviews, while offering more completeness.

We'd like to see a bit more structure in the Amapedia pages, so that it is less chaotic when people edit it. For example add sections to pages. But the fact that tags are there already is fantastic - Amazon is calling this "collaborative structured tagging". Check it out and let us know what you think.

Third and foremost, the review-notice on Amapedia (Read/Write, Jan25) hints at the key to Amazon's steady-on bbut slow success" "a community for sharing information about the products you like the most." Amazon's features of reviews by the experts, but most of all by readers of the books involved, multiple reciews of a single book often are the backbone of why readers searching for a book they haven't read, go to fellow-consumers and derive an over-all impression from the aggregate of the fellow readers and fellow consumers, especially. The stats that point to other books that purchasers of your given title have also purchased in addition to the one that interests you, apparently also has a large influence on new buys. This info is detailed in Read/Write (Jan24,2k7) by "The New Face of Amazon - Tags, Ajax, Plogs & Wikis." The stats are the result of what are called "reccomendation engines."