You are currently browsing the category archive for the ‘Amazon’ category.
The first two sectors for 2013 are beginning to overlap in a lot of ways – but for this purpose when we talk cloud we are focusing on providers and the data center while mobile is more equipment and service providers. In general, we continue to be positive on technology spending as a whole. There are not a ton of pie-expanding investments out there – tech spending is all about ROI now and the faster the better. Technology investments are enabling more efficient and nimble companies and helping profitability (and even morale in many cases). There are more themes and more specific niches to consider – but here are the major groups.
1) Cloud
a. Premise: I want what I want, where I want, on any device I want…
b. Delivery: leaders in the cloud services space are AMZN and GOOG. Names to watch: MSFT, RAX, CTXS, and HPQ (last hope). Specifically – CTXS, RAX, and NTAP get attention as acquisition candidates by Cisco
c. Data Center: the “cloud” is a generic term, but in general the idea of housing all of your data at remote data center and delivering it on a global basis instantaneously puts heavy demands on computing resources. The ability to cost effectively scale the data center and deliver speed is critical. Top names: EMC (has VMW and will spin out Data Analytics), CSCO, IBM
d. There are some consultant type plays that would include CTSH, IBM, SAP and ORCL
e. Salesforce.com (CRM) falls into the “cloud” and I love what they are doing, but the valuation, like Amazon, is difficult to digest. CRM represents the SaaS (software as a service) space which saw several M&A deals this summer. The recent darling IPOs are Workday (WDAY) for HR Solutions and ServiceNow (NOW) for cloud infrastructure management
2) Mobility
a. Premise: Freedom; flexibility, and the same premise as cloud only I want it NOW
b. Delivery: telecom networks are traditionally high div paying and we still think VZ and T are fair plays on sell offs – but nothing to be exicted about
c. Infrastructure: as the world seeks to build out 4G networks the lead players are CSCO, ERIC, …
d. Equipment: there are only 3 names to watch: AAPL, GOOG, Samsung. Hail Mary plays in RIMM and NOK
e. Components: QCOM, ARMH, BRCM
f. Mobile Ad Spend – the only pure play is Millenial Media (MM) – but the big guys to watch are Google, FB, and Amazon – Apple is trailing.
3) Data Analytics
a. Premise: the world is generating data on a exponential scale – but what does it all mean?
b. The only way to describe this space is to say there are lots of people working the solve the problem of extracting information from data – across nearly any end market – healthcare, utilities, retail, tech…etc. There are hundreds of small, private companies working on solutions –most are getting gobbled up by the bigger players: IBM, ORCL, SAP. This space is likely to see several smaller IPOs this year and many more acquisitions.
Niche to Riche?
1) 3D Printing – initial market for industrial prototypes becoming saturated – key to the story is first, low cost home/office printing. Second, improved material possibilities leads to new “mass customization” market: only two real public plays are SSYS, DDD – expect HPQ to try something (they currently license SSYS); Autodesk (ADSK) for software – they will be a part of this.
a. Unknown what Trimble may do – they bought the 3D CAD software from Google (SketchUp) – they likely want to integrate with construction GPS aided equipment but something to keep an eye on. We like Trimble as a productivity enhancement play for construction, agriculture and fleets
2) Social Networking – yes, overhyped and underdelivered in many cases… a lot of this has to do with the misconceptions of what these firms actually DO vs the optionality you are buying. Moving forward, LNKD and FB are interesting, they have the ability to monetize their users and to expand the optionality of their platforms. LinkedIn has an actual market, job placement, and is expanding its offerings. FB is facing lots of problems, the biggest being mobile. The good news is they were able to generate $3-4b in revs without trying – currently they are rolling out new services, revenue models like mobile ads and ad exchange networks at the fastest pace to date. YELP not working. Hail Mary in ZNGA on gambling legislation
3) Housing meets Data – Zillow (Z) and Trulia (TRLA)
Favorite large cap names:
GOOG, IBM, QCOM, ORCL, AMZN, EBAY, EMC, CRM
Turnarounds: MSFT (data center), INTC (servers), YHOO
SMID Names: high valuation – prone to blow ups but like the technology
FIO, FTNT, SPLK, WDAY
On the Power of Ecommerce
Update April 2012: Simple yet powerful statement from Jim Chanos during a Bloomberg interview: “The Internet is the most efficient distribution network ever devised. Anybody in the business of selling you a physical product that is digitized is seeing their margin collapse overtime.”
July 2011: The continued penetration of ecommerce and its scale and focus on the consumers means that anyone selling any non-exclusive physical product utilizing a pricing scheme based on limited local inventory will see their margins shrink over time and force a model change…just like those who faced the initial wave of online content – music and newspapers. Companies not focusing on the customer “experience” and instead just the product or the store operating margin will lose. This is going to move beyond office supplies, books and electronics, all of which have ecommerce as greater than 20% of sales, a tipping point. The inventory of the world at your finger tips presents a huge challenge for traditional retail. In addition, while the first three rules of retail are location, location, location, one could argue that it is even more important than before due to the added convenience and satisfaction levels of e-commerce. Shopping is an experience, and part of that is not going “out of your way” to reach a certain store in a non-premium or stand alone location. We expect the continued positive traction of higher end malls and full service (food, shopping and entertainment) shopping centers to force retails to pay up to be part of those experiences for shoppers. This pattern of location issues has always been impactful for retail – think Circuit City vs Best Buy…sure the selling model was a little different, but mostly the stores were shinier and in new, more trafficked locations…so what location is better than in your living room, or office, on the palm of your hand?
Some observations to continue on…
The sense of brand has never been more leveragable or more important. Your identity as a business and even as a person is now searchable and on display – you have to cultivate it and use it to your advantage.
From a retail perspective the concept of the “lifetime value” of a customer has taken on a new meaning… and will evolve even more. There are real time conversations and interactions occurring. A feedback loop that never existed before. Brands are not perfect, and are not expected to be, but they are expected to be more transparent, thoughtful, and reactive now. Increased amounts of data and analytics can influence these relationships for the better.
Realize there are no more lines. People have the tools to sift through enormous amounts of information, and the speed to locate the best sources. Being the best at what you do is vital, the next step is to be part of the network, you don’t have to BE the network, but you need to be on it. Your product or service is potentially global the second you launch it.
Commerce will become social – in part because it already is in the off line sense, but more so because the network effect of data. Both social activity and commerce (including media consumption) deliver valuable streams of data in isolation – but those backbones or vertical markets now mesh – presenting a cross data stream to be queried, driving ever more targeted results and correlations. Companies are very excited about this potential, and the potential to interact directly with their customers. These actions stand to enhance my shopping experience and relationship with the brand.
Winners: Amazon, eBay (PayPal), Lulu Lemon, Chipotle,
Losers: Best Buy, Radio Shack, Office Depot, Staples
The Change Investor 