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Technical Article => Business =>  Amazon

Amazon is a good company but doesn't have the best business model

  36 Kr      2013-07-02 11:34:45      2,268    0

Public opinion about a company is usually based on its performance. If it performs well, people will praise it, otherwise people will blame it.

In 1999, Apple was still a broken apple(Steve Jobs's talent and effort was paid off yet). Public opinion about Apple was the closed model caused Apple's failure. They built hardware themselves, developed software themselves and delivered service themselves, this is certainly not sustainable. But Steve Jobs let everyone see this new model. In order to control the end-user experience, they not only built software and hardware, they even did sales themselves. After 10 years, Apple succeeded, now public opinion about Apple is it's a great company and its success is attributed to the closed model. In just 10 years, public opinion has turned around.

Microsoft and Apple have very different models. From cost perspective, Microsoft model is better than Apple, while Apple model provides better user experience.

Microsoft's success is based on social work distribution. They first borrowed IBM PC standard directly, then they unified hardware standard, so all the hardware vendors can produce hardware mutually compatible independently,these hardware includes hard disk, CPU, motherboard, memory and even the power supply.Meanwhile they tried to make various companies develop software for the unified software platform--Windows. Then they continued to cooperate with numerous system integrators and distributors to form a complex ecosystems. But this system is so complex, messy and competitive that many users feel uncomfortable.

Apple's model is to control everything from bottom to up. You shouldn't have seen people bought a hard drive for their Mac computer or changed an Intel's CPU. This benefit of this is obvious, it provides consistent user experience to consumers. But the drawback is cost.

The basis of the modern economy is work distribution. Because of Steve Jobs's innovative products and strong management, Apple maintains the existing system and make it successful. This model may be the best model from user experience perspective, but it is certainly not the lowest-cost model. When the product is good enough, consumers are willing to pay a higher price. Once this high-value recognition disappears, Apple's model would quickly collapse.

Amazon has a similar model as Apple. It provides high quality products , fast delivery channel as well as excellent customer service. But the same problem is the high cost of this model. Although Amazon still has a huge advantage over a physical store, it will lose its advantage once there is a competitor. The competitor is definitely not eBay. it's a bad strategy that eBay turns to PowerSeller model to compete with Amazon instead of sticking to the C2C model.

In short, the company is a special case, specific management, specific innovation or specific bad strategy will affect the company's performance. While the model is relatively fixed. Models must not be used to predict the performance of the company, they do not even have a reference value. The uniqueness of the company is much more important than the model they adopt.

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