Amazon (AMZN) has been in the news in the past week with an odd assortment of headlines. Last Friday there was a report that it is planning to sell ads on its site in competition with Google. Monday it acquired Twitch Interactive for $970 million. That's a video game streaming network that allows visitors to watch other people play games.
Then Tuesday, numbers released from ad network Chitika pointed to possibly weak sales of Amazon's new smartphone, unleashing a flood of jibes. "Amazon sold fewer Fire phones than Jack White sold albums," quipped MarketWatch.
Jokes aside, the disparate crop of headlines shows how Amazon's business interests are expanding at an alarming rate. Amazon is seemingly grabbing at one revenue opportunity after another raising questions about whether it has a cohesive strategy.
The Twitch purchase is largely seen as a smart move. The video game platform, which started in 2011, allows people to watch each other playing games through live video. It's a bet that video games will mature into a popular spectator sport. It's also a jab at Google (GOOG), which had considered a purchase of Twitch as well.
Before that, there was a report from the Wall Street Journal that Amazon was preparing an online advertising program that could replace Google ads that currently appear on Amazon websites. CNET reported in May that Amazon planned an advertising business, leveraging its customer information to better identify consumer interests.
Competing for smartphone sales was always going to be a challenge for Amazon. But analysis from Chitika, when combined with Comscore data in published reports suggested a mere 35,000 in sales for it's Fire Phone, which debuted July 25. Amazon CEO Jeff Bezos has said the company would "be patient," with market share for the new phone. Amazon did not respond prior to publication to request for comment about the report.
Amazon is in a difficult place. Financial performance has been below expectations and investors keep waiting for the company to report substantial profits on a predictable basis. With all the investment Bezos has directed into new products, like Amazon's Kindle tablets and Fire Phone, he needs to keep overall sales up to keep investors from applying even more pressure.
The two new initiatives could lead to more revenues: the massive purchasing and behavioral information Amazon has on its many millions of customers could help fuel better ad targeting, increasing the price it can charge for advertising. Providing live video of gamers uses the company's current streaming capabilities and could be monetized.
But while there is generally some connection to Amazon's activities, there is a difference between having a capacity and turning that into a separate business line. For example, a retail chain store would have distribution warehouses and trucks to ship goods to its locations. But turning that into a separate supply chain business to serve commercial customers would require significant investment in new processes and strategies.
The danger, as examinations of conglomerates have shown in the past, is that when one company's set of business activities becomes too divergent, it is difficult for executives to focus. Then the efficiency of the individual businesses can drop, pulling down profits.
Unlike some other company founders, Bezos didn't retain control and so is ultimately at the mercy of big investors, who may no longer share his confidence or his priorities. At $343 a share, the stock is down significantly from its 52-week high of $408 in late January.
Bezos is juggling more balls in the air and the trick for the next year will be making sure none of them drop.