Amazon Quarterly Results Bring Price Drop, Analyst Deep Thoughts

The NY Times has the standard story on the results, announced yesterday, and the consequent stock price slippage and analyst beard-stroking.

But we should all have expected this. Amazon has been telling everyone -- loudly, with both their actual announcements and their actions -- that they do not intend to reach a position of market power and then increase margins, which is what all of the analysts and outsiders still expect. Instead, Amazon is following a Wal-Mart strategy: relentlessly push for lower costs and lower prices all the time, in all ways.

Amazon is not trying to dominate markets so that they can they reap larger profits; they're trying to dominate markets so that they can then continue on to enter new markets and dominate those as well. They are not Apple; they will never throw off vast quantities of cash. And expecting them to do so will only lead to misery, heartbreak, and bad investment decisions.