Tag: Amazon

Luxembourg Amazon deal under EU scrutiny

luxembourg_villeEU watchdogs are investigating how Amazon avoided paying billions in tax using a dodgy deal with the Luxembourg government.

Leaked tax documents from accounting firm PwC in Luxembourg show how Amazon sidesteps the 30 percent tax rates so they can price rivals out of the market.

The Luxembourg documents, obtained in a review led by the International Consortium of Investigative Journalists, contain some of the first hard numbers and details on how Amazon pays virtually no tax for its non-US earnings.

The deal was hatched in secret in 2003 and was part of a cunning plan by Amazon after it was investigated by French tax authorities and the US Internal Revenue Service. In 2011, Amazon reported US tax authorities were demanding $1.5 billion in federal tax and penalties covering 2005 to 2011 in connection with the royalties payments. In 2012 the French government slapped a $252 million tax bill on Amazon. The company is appealing both matters in court.

So to fix this problem, Amazon hatched up a deal with teeny weeny countryLuxembourg. Almost all Amazon’s income outside the US ends up in a Luxembourg company, Amazon EU Sàrl, which was the beneficiary last year when Amazon notched up £4.3 billion ($7.9 billion) of sales in the UK and paid only £4.2 million in income tax.

A secret appendix to an annual report filed with the Luxembourg government shows the missing cash went in two related-party deals. Amazon EU paid €379 million in “service fee expense” and €519 million in royalties to Amazon Europe Holding Technologies.

So, in other words, Amazon Europe paid €105 million to Amazon Technologies in Nevada to license the rights to Amazon’s intellectual property – the patents and software for the websites, including that button that buys a book with one click.

Amazon Europe onsold the rights to use this intellectual property to Amazon EU for €519 million – five times what it had paid the US Company. ­Amazon Europe made an instant profit of €414 million, which would have been taxable, except that Amazon Europe is a limited partnership and does not pay tax in Luxembourg.

Amazon EU ended up paying 0.5 per cent tax. Amazon Europe’s money ended up tax-free in Gibraltar.

Luxembourg is not exactly being forthcoming about providing information about the deal either. In fact, the European Commission complained that Luxembourg has provided only limited information about the Amazon deal.

This is causing problems because there is nearly €1.2 billion of cash generated by Amazon which is missing. Some think the cash might have been “invested” in Amazon Data Services Ireland. However, either way it is proving very difficult to find.

Amazon might deliver by cab

London Cab, Wikimedia CommonsAfter contemplating the idea of drones dropping your groceries in your back garden, Amazon has apparently come up with a cunning plan to deliver goods using taxis.

That’s according to the Wall Street Journal, which claims that Amazon has already tested delivery of goods in both LA and San Francisco by using a mobile app called Flywheel.

The plan is to counter criticism from people that packages don’t arrive when expected. Last Christmas, it apparently had a problem with the US Post Office as well as courier companies FedEx and UPS.

While Amazon appears to have limited the trials to two US cities so far, we wonder how well it would work in congested cities like London or Oxford.

Sometimes you’d be faster walking to your destination rather than hailing a pricey black cab in Oxford Street or Victoria.

IBM claims first for intelligent cloud security

clouds3Big Blue claimed it is the first company to build an intelligent security profile that protects data, applications and people in the cloud.

The offerings it announced use what IBM described as advanced analytics to react to threats across enterprise, public, private and mobile clouds  – so called hybrid clouds.

IBM said that while the cloud is being rapidly adopted worldwide, attackers are more sophisticated and more able to hide their activities.  Indeed, IBM claims that three quarters of security breaches take days, weeks or months to be discovered.

Its managed security services platform is intended to protect IBM customers as well as customers of firms like Amazon Web Services and Salesforce.

It said that its intelligent threat protection monitors the cloud environment, analysing billions of security events and including correlation and external data feeds.

IBM estimates that nearly half of large enterprises will use hybrid clouds by the end of 2017 and claims that it is the largest hybrid cloud vendor.

Google cuts out the server middlemen

HP-MicroServerA report said that Taiwanese original design manufacturer (ODM) Quanta will supply search engine giant Google with its servers in 2015.

Google has long abandoned the habit of using “brand name” servers from the likes of Dell, HP or IBM/Lenovo.

The news, reported in Digitimes, confirms a recent survey saying that the ODMs, which often build machines that are then subsequently branded, are taking market share from the brand names.

It’s not just Google that is following this path.  Amazon, Facebook and Microsoft also buy their servers direct.  Quanta has benefited more from these changes in buying patterns because it has been quicker to realise the money involved than rivals such as Taiwanese company Inventec.

Until comparatively recently, Quanta’s entire business was building notebook machines, subsequently branded by others.  But the bottom has somewhat fallen out of the notebook business with the rise of tablets and smartphones.

Amazon burnt by Fire

FireOnTheAmazonPosterAmazon has admitted that it has lost a pile of dosh on its Fire smartphone.

Chief Financial Officer Tom Szkutak confessed to investors that the company took a $170 million charge related to the write-down of costs associated with its smartphone.

The smartphone was supposed to be one branch of Amazon’s expanding family tree of devices, which has grown from a single e-reader to tablets, a media-streaming box and the smartphone.

The company last week  reported a third-quarter loss that significantly widened over a year ago and missed Wall Street expectations, while warning that its fourth-quarter revenue would also disappoint. The Fire Phone charge was a large component of the $437 million lost in the period.

But the Fire Phone, its first foray into the smartphone business, was supposed to do to Amazon what its tablet had done.  Make piles of dosh by forcing people to buy its content.  The phone itself was not bad either with some technology which should have helped it elbow its way into the market. It could display 3D images and graphics and scan certain products and media for additional information and purchasing options.

Where Amazon went wrong was that it did not subsidise the phone in the same way that it had done for its Fire Tablet. Even with an exclusive partnership with wireless carrier AT&T in the US. The phone has failed to make a dent in the market, and after two months, went from $200 to 99 cents with a two-year contract. In the UK it’s free on various contracts from the O2 network.

The exclusive deal with AT&T in the US did not help either. Most high-profile smartphones opt to go with multiple carriers, but Amazon tied itself to AT&T in exchange for more prominent promotional positioning in the carrier’s shops.  However that did not explain why it also tanked in the UK.

Amazon is an illusion claims mystic Ballmer

SteveBallmerMouthAgapeIt seems that since he has left Microsoft, the shy and retiring former Vole Steve “there is a kind of hush” Ballmer has been taking some time out to consider the nature of reality.

Now when Buddha hit the same level in his meditations, he concluded that death and suffering was all an illusion, but Ballmer contemplated his navel, he concluded that the online retailer Amazon is not real.

Sharing his spiritual realisations on the Charlie Rose Show, Ballmer said that he didn’t  know what to say about Amazon before explaining why he’s wary of the company.

He said that the company made no money and in his world, you’re not a real business until you make some money.

“I have a hard time with businesses that don’t make money at some point.”

Amazon came up short of analyst expectations and on Thursday posted a $437 million loss for the third quarter, or a loss of 95 cents a share. That followed a net loss of $126 million during the second quarter. Its stock has fallen eight percent today as a result.

Ballmer said it’s OK for a company not to make money for a few years, but he’s perplexed with Amazon, which had yet to post a profit in two decades.

“If you are worth $150 billion, eventually somebody thinks you’re going to make $15 billion pre tax,” Ballmer said. “They make about zero, and there’s a big gap between zero and 15.”

Ballmer said that every business is expected to have is the capability to make money, and it requires  discipline and a certain kind of mindset.

“As a businessman, if you ask me what I’m proud of, I’m proud of the fact that I made $250 billion under my watch as CEO.”

So St Steve still has a problem working out that materiality is also an illusion.

Algorithms gouge online buyers

smartphone-shoppingA study by a team of researchers at the Northeastern University have discovered that online shops target people based on their profiles and charge some more than others for the same products.

The team said that people regularly receive personalised content, such as specific offers from Amazon.  That, the study shows, can be to a person’s advantage but e-commerce sites manipulate search results and customise prices without anyone knowing.

The researchers looked at 16 popular e-commerce sites, including 10 general shops and six hotel and car rental sites,to measure price discrimination and price steering.

“We have found numerous instances of price steering and discrimination on a variety of top e-commerce site,” they said in a report.

Some sites altered prices by hundreds of dollars and travel sites showed inconsistencies in a higher percentage of cases.

They said Expedia and hotels,com “steered a subset of users towards more expensive hotels”.

The team said that price differences were significant in some of the cases. Amazon and Ebay were excluded from the study and so too were firms like Apple.

Although the researchers said they contacted the sites they surveyed, they did not say how or if the companies replied.

Amazon invests in German datacentres

amazonsMany people might think that Amazon is where you buy your books, your Hue lights and your CDs but behind the scenes it is  becoming a major player in the datacentre business.

And now, according to the Financial Times, Amazon will build several datacentres in Frankfurt in a bid to allay customers’ fears that their data is housed in places where security and privacy are not as high a priority as in Germany.

The FT reports that the EU has much stricter data protection laws than other territories.  And, of the EU countries, Germany has the best privacy control.

A senior VP of Amazon Web Services told the FT that many of its German customers would prefer to have their data held locally. Although a figure hasn’t been placed on the German infrastructure investment, it’s believed that such a project will require a multimillion dollar investment.

US providers like Google, Rackspace and others compete with Amazon but are based in the USA.  Amazon is believed to generate revenues from its cloud business amounting to over $5 billion during 2014.

Google plays Amazon red herring

red herringAs Google continues to be investigated by the European Union, chairman Eric Schmidt has decided to deflect criticism by saying that Amazon is its biggest search rival.

In a speech in Berlin, Schmidt – who has repeatedly denied that Google is a monopolistic player – he also took time to diss rivals Bing and Yahoo, saying they don’t matter at all.

According to the BBC, Schmidt said that people didn’t see Amazon as a search engine but most people go there when they want to buy something, rather than Google.

How Schmidt thinks this kind of argument will have any weight with the European Union is hard to fathom.

He said: “Amazon is answering users’ questions and searches, just as we are.”

Google isn’t the be and end of it all, added Schmidt. In a note of paranoia he suggested that somewhere will be new technology that will topple it from its premier position.

Tablet market is all shook up

ipad3Apple and Samsung are going to have to fight hard to keep their place as leaders of the tablet pack.

Because, according to market intelligence firm ABI Research, other vendors including Asus, Lenovo and Amazon are fighting hard for third place and creeping up on the leaders.

These emerging vendors are set to experience a compound annual growth rate (CAGR) of 22.8 percent between 2014 and 2019.  Lenovo, for example will ship 21 million tablets by 2019.

Samsung saw a 35 percent decline in growth between Q1 2014 and the second quarter, while Apple saw a 19 percent decline.

In the first quarter, Apple and Samsung had a hefty 72 percent of the marketplace but their combined market share dropped to 66 percent and that’s the way things are headed.

In fact, ABI Research thinks that advanced and mature markets are experiencing a stall in growth, partly because tablets don’t need replacing every few years like notebook PCs.

Amazon can’t read Germany

german strikeUS online bookseller Amazon is continuing its war against the German unions despite multiple strikes shutting down its business.

American companies generally do not understand trade unions, which they see as a communistic method by which workers get things like decent wages and conditions which prevent the shareholders and management becoming as wealthy as they should. In the US, trade unions are identified as being in the pockets of organised crime.

In the EU, where things are a little more balanced, unions have a little more respect and power.  But not, in Amazon with appears to be going through the sort of battles that Margaret Thatcher had with the coal miners in the 1980s.

Workers at German warehouses of online retailer Amazon.com took strike action again on Monday as labour union Verdi pressed its demands in a long-running dispute over pay and conditions.

Verdi said in a statement it had called out workers to strike at distribution centers in Bad Hersfeld, Leipzig, Graben and Rheinberg. Verdi had in June staged walkouts at three of those sites.

Amazon hires 9,000 warehouse staff at nine distribution centers in Germany, its second-biggest market behind the United States, plus 14,000 seasonal workers.

Verdi wants Amazon to raise pay for workers at its distribution centres in accordance with collective bargaining agreements across the mail order and retail industry in Germany and has organised several stoppages over the past year.

Amazon insists that its warehouse staff are logistics workers and says they receive above-average pay by the standards of that industry.

Amazon introduces more tablets

Fire HD6 from AmazonInternet giant Amazon announced the Fire HD6 tablet, at a price of £79 for the base model. It also introduced the Fire HDX8.9 at £329, and two Kindles.

The cheap and cheerful Fire HD6 comes in two configurations, an 8GB and a 16GB version – the latter costs £99.

The device comes in a range of five colours, uses a 1.5GHz quad core processor, a six inch HD display, and front and rear cameras.

It also includes unlimited cloud storage for photos taken with all of its Fire devices. It gives access to Android apps and is compatible with most of the digital content on the interweb.

The device weighs 290 grams and has a claimed battery life of eight hours.  Full charge via a micro USB port – supplied in the box – takes six hours.

It also has a Slimport USB 2.0 microB connector that lets you plug it into HDTV or VGA monitors or to PCs and Macs.

The Fire HD6 has a limited guarantee of a year.

The Kindle comes with touch now and costs £59, while the Kindle Voyage costs from £169.

Amazon sells smartphone for 99 cents

fire-phoneAll those who paid over the odds for an Amazon smartphone will probably be gathering together their pitchforks and torches for a lynching.

When Amazon released its Fire smartphone, analysts wondered what it was playing at. Amazon’s Fire tablets had done rather well because they were subsidised, but the bookseller had put out a smartphone which was not only unsubsidised but also rather expensive.

As a product the phone was not that bad. It had a dynamic perspective screen that gives it a 3D look. It also has a new feature, Firefly, that lets users capture in physical objects, text and tag content from TV or radio, with the press of a button.

You could find better on the market for the sort of price that Amazon wanted for it. It appears that after a few weeks, no one wanted to buy one.

Now six weeks after hitting the market, Amazon is slashing the price of its Fire Phone to just 99 cents with a two-year contract.

For 99 cents, the Fire Phone will come with unlimited cloud storage for photos as well as a free year of Amazon Prime. The Fire Phone comes with 32GB of storage, so the new, lower cost is a pretty good deal.

The Fire Phone is only available on AT&T in the United States; the 99 cent offer is available both on Amazon.com and AT&T’s website as well as in AT&T stores.

A price drop this soon is not an encouraging sign that the Fire Phone is doing well and it is not clear if there will be any form of subsidy when the Fire hits the UK later.

 

Amazon Fire Phone fails to rage

quo_vadis_poster-nero-plays-while-rome-burns-w450Amazon’s Fire Phone was launched in July to a great fanfare over its 3D-effect maps and multiple front-facing cameras.

But apparently it has been greeted with a collective yawn by actual users and there are signs that Amazon priced itself out of the market.

The Fire Phone cost $200 for a 32GB version on an AT&T contract – the same price range as the iPhone 5S or Samsung GS5.

According to a release from Chitika, looking at activity on its ad network in the 20 days after the Fire Phone’s release, the Fire Phone accounted for 0.015 per cent of activity.

This sounds a low number, but it is possible to work out how many phones that might represent. Using data from ComScore for the three months to the end of June 2014 there were 173m smartphones in use in the US.

That figure is rising by between a million or two a month so two months later, by mid-August, when the Chitika data was collected, there would be about 177 million smartphones in use in the US. .015% of 177 million means 26,550 Fire phones in use.

Of course, you have to assume that Amazon’s Fire Phone will show up on Chitika’s network as often as any other phone, but even allowing for errors, does seem that the Fire sold only 35,000 Fire Phones during those 20 days.

Amazon said that it was in the phone game for the long play and it intends to be patient. That might work in the long term, but we would have thought Amazon would go for a cheaper more popular product, as it did successfully with its tablets.

Amazon getting into advertising business

amazonOnline bookseller Amazon is getting into the internet advertising business.

The Wall Street Journal has been telling the world+dog that the in-house platform aims to replace ads supplied by Google on Amazon’s own website.

However the plan is to later expand the program to challenge Google and Microsoft advertising business in the future.

Amazon’s system is similar to Google’s AdWords, and is planned to make it easier for marketers to reach the company’s users.

The retailer is also building a tool that would help advertising agencies buy in bulk for thousands of advertisers.

Analysts have been wondering how long it would take Amazon to try to stick its foot in the door of the advertising industry. After all, if you know what a person reads you can target a lot of advertising their way.

Amazon is sitting on a huge consumer data but has so far been reluctant to use it for advertising.

The company already has an advertising service it employs chiefly on its own website but it is extremely low key in comparison to the potential.