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Comment by spaceman_2020 | Hacker News Reader

spaceman_2020·

What's the objective of running these loss making businesses? If it's to funnel users to Amazon's e-commerce store, that doesn't seem like a great decision since the e-commerce store doesn't make money either. And I can't see enterprise cloud decisions being swayed much by Amazon's consumer business.

Spending money on a loss making product so that you can funnel people to another loss making business seems...counterintuitive?

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Amazon (the marketplace) invests it's revenue aggressively, although this serves as a loss on paper there is still a benefit to generating that revenue in the first place as it serves as investment dollars for other parts of the business

Sometimes it's to capture the market: kill all competitors with a price they can't match and then jack up the price once you've achieved monopoly. Kind of a gross practice that is only possible when you've got a huge budget and no need to self fund.

It is the original playbook for many startup and it all started from Amazon?

I think Kindle might be the ideal situation for this kind of strategy, as I imagine ebooks have healthy margins, the store lock-in isn’t total or even that inconvenient but it’s enough to funnel sales their way most of the time, and I imagine the continuing development costs are minimal compared to a more full featured tablet or a program like Alexa. Unfortunately most things aren’t an easy commodity to work with like chunks of the written word.

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