September 27, 2011

Why is Amazon better than Apple and Google?

If I ask you to name an innovative company, you are probably going to say Apple or Google. But according to Forbes, the 2nd most innovative company is Amazon. The most innovative company is Salesforce while Apple is at number 5 and Google is at number 7. Innovation is here defined as how much investors have bid up the stock price of a company above the value of its existing business based on expectations of future innovative results. The companies in the list must have $10 billion in market capitalization, spend at least 1 percent of their asset base on R&D and have seven years of public data.

So the people at Amazon are obviously doing more than selling books. This is why Amazon is more innovative:
  • Amazon has a web service which is the leader in cloud computing
  • The streaming service Prime Instant Videos is a Netflix competitor
  • The Amazon MP3 and cloud music offerings have the ability to take market share from iTunes
  • An Appstore for Android
  • The upcoming Amazon table is a mini-iPad with a cheaper price than the original iPad
One can argue from this list that being second is not always a bad thing.