The best tech article I’ve read in week’s is Fast Company’s behind-the-scenes report on the development of Amazon’s Fire Phone — which was thoroughly rejected by consumers and caused an embarrassing $170,000,000 write down for the retailing giant. So what went so wrong?
The short version might be: Jeff Bezos thought he was Steve Jobs.
Bezos drove the team hard on one particular feature: Dynamic Perspective, the 3-D effects engine that is perhaps most representative of what went wrong with the Fire Phone. Dynamic Perspective presented the team with a challenge: Create a 3-D display that requires no glasses and is visible from multiple angles. The key would be facial recognition, which would allow the phone’s cameras to track a user’s gaze and adjust the 3-D effect accordingly. After a first set of leaders assigned to the project failed to deliver, their replacements went on a hiring spree. One team even set up a room that they essentially turned into a costume store, filling it with wigs, sunglasses, fake moustaches, and earrings that they donned for the cameras in order to improve facial recognition. “I want this feature,” Bezos said, telling the team he didn’t care how long it took or how much it cost. Eventually, a solution was discovered: Four cameras had to be mounted at the corners of the phone, each capable of identifying facial features, whether in total darkness or obscured by sunglasses. But adding that to the phone created a serious battery drain.
And team members simply could not imagine truly useful applications for Dynamic Perspective.
On the Fire Phone, Bezos forgot all about his laser-like focus on the customer’s needs, to pursue a feature his own design team didn’t know what to do with. Has Bezos reached that point of success where nobody can tell him No anymore? As a happy Amazon customer, I certainly hope not, although Amazon could fiddle around with more failures like the Fire Phone for years before it negatively impacted its retail operations. But here’s the bit which should have investors worried:
Bezos has said that his job is to encourage more “bold bets” and to embrace failure inside the company in pursuit of the big successes that “compensate for dozens and dozens of things that [don’t] work.” That drive and willingness to experiment has made Amazon a formidable competitor; Google chairman Eric Schmidt, for one, has said he considers Amazon to be the search giant’s most dangerous rival. For Apple, too, its ambitions with e-commerce, iCloud, and now, even devices, all run headlong into Amazon’s initiatives. But will all of Bezos’s risk-taking ultimately pay off? “They make no money!” former Microsoft CEO Steve Ballmer exclaimed in a recent TV interview. “In my world, [that’s] not a real business. I get it if you don’t make money for two or three years, but Amazon is, what, 21 years old?”
You get the feeling the profits just aren’t a part of Amazon’s business model?
UPDATE: An unfair thought just occurred to me. If you want to expand an existing business into profitable new fields, Ballmer is not the person you call on to help. But if you want to squeeze extra billions out of existing products and services, there might not be anyone better than Ballmer. Maybe Bezos should make him an offer he can’t refuse…