Does the fact that they aren't turning a profit concern people that much? Didn't the Xbox division take years before profitting? I'm not a business guy so I'm genuinely asking this out of curiosity.
The Xbox wasn't in a market with zero brand loyalty, low barrier to entry, etc. It's an apples to aircraft carriers comparison, IMO. Groupon could be very profitable in the future, but so could the other 1000 companies in the space. It's a race to the bottom with little retaining their business.
Good points, but as a business, I would consider GroupOn before those other 1000 companies because of their reach.
They have reach now, but others are gaining ground. I see LivingSocial as the biggest potential competitor right now, since they're an Amazon subsidiary -- that gives them a lot of leverage that Groupon doesn't have, e.g. giving away $20 Amazon gift cards for $10.
For one thing, when you buy an Xbox, and Microsoft has revenue for years. Customer retention is fairly easy. It's easy (and fun) to unsubscribe from Groupon.
The fact that they aren't turning a profit and have an indefensible business model is concerning to me. There's no reason why a Groupon customer shouldn't use LivingSocial or one of the dozen other competitors.