Hacker News Reader

Comment by irrational | Hacker News Reader

I don't think they are doing it to be nice to consumers. I think they are doing it to cost less than competitors.

FWIW I was informed by an AWS employee that their internal philosophy is to keep pricing at cost+ levels, which is a strategic play - it forces the operations to remain lean and discourages many competitors from trying to wedge themselves into the cost-price gap.

Fat profit margins attract competition, this is what happened when Oracle/Unix combo were chewed up by Microsoft Windows/SQL from the bottom, and then Linux/MySQL started chewing up Microsoft from their bottom. It's the dog-eats-dog world.

"Your margin is my opportunity."

- Jeff Bezos

Isn't that the same in practice?

You get customers by being nice to them. Being nice to customers means competitive pricing, high quality support, good documentation, easy integration, etc. It's all driving towards the same goal.

Naming good documentation and high quality support in conjunction with AWS is a bit weird to me. Though parent was talking about using their scale to improve prices. They might just reduce their margins at the moment.

It's not necessarily the same in outcome. Undercutting competitors can be a temporary thing. As soon as the competitors are eliminated you jack the prices up. Doing it to be nice to customers can potentially last even after competitors go belly up. Then again, Google's motto used to be "do no evil" (basically be nice to customers). That obviously went the way of the dodo bird.

>>As soon as the competitors are eliminated you jack the prices up

And then you provide a competitor or startup another opportunity.

Eventually. But Amazon has the headspace to drop prices for as long as they need to kill the new competition. Only someone like Google or MS will be able to keep up as long as they can automate a lot and use money from ads or software licenses to prop up their cloud business.

I didn't mean to imply that they did it to be kind, I think it's clear they made this change to be more competitive in the market place.

It's still great to see.

Are you implying that they are trying to make money?

I'm implying that they are trying to undercut competition to drive them out of business so they can then raise prices across the board.

I think everyone is already aware of the fact that AWS is a company.

Reply on news.ycombinator.com