Amazon CFO on Prime and Kindle ecosystems growth, barriers to AWS

Amazon's chief financial officer responds to rumors about a possible set-top box while boasting about the growth of digital product sales.
Written by Rachel King, Contributor on

There have been a number of rumors swirling what big new products Amazon might be working on right now, ranging from a Kindle-branded smartphone to a set-top box for Prime streaming video.

See also: Amazon's Q1 solid, 'other' AWS sales surge

Regardless if those reports are based on solid ground or not, what we can be sure about is that both the Kindle and Prime brands are doing very well right now, to say the least.

During Thursday's conference call with analysts, Amazon chief financial officer Tom Szkutak pointed that Q1 2013 was the first quarter ever when the top 10 best-selling items worldwide were either digital and Kindle-related (or both). He cited that the Kindle Paperwhite e-reader took first place overall.

"We’re very pleased with our Kindle and digital businesses," boasted Szkutak. "We’re super excited in terms of the ecosystem. You're certainly seeing that in our results."

As for the Prime ecosystem in particular, Szkutak was asked about how often subscribers opted to pay to stream digital TV shows and movies on top of free content included in the annual fee.

Szkutak described that Prime customers are doing a lot of "cross-shopping" in general, explaining that it's not surprising to see a customer who has traditionally only made purchases across a few categories in pre-Prime days to expand their shopping habits.

"It's the same thing on digital content. They might start with free content and then purchase paid content," Szkutak continued. "It’s a nice effect that we're seeing, which is why we like Prime so much."

However, as for what Szkutak had to say (or not say) about a standalone set-top box, some eager beavers might be disappointed -- at least for now.

"We have a long standing practice of not talking about what we might or might not do there," Szkutak retorted.

A few other notes of interest from the call:

  • Amazon Web Services: There was little talk about product development around one of Amazon’s core departments and its number one priority for the enterprise. Szkutak stuck more to praising the team for "developing services that are great for many different customer types," adding that they are focused on customers from "operational" and "security" standpoints.
  • Amazon Fresh: Another growing segment that Amazon leadership is keeping mum about. Szkutak said there was “nothing to announce” despite remarking that the company is “very pleased with what we’ve seen in the Seattle area.” “It’s been a test and we continue to monitor that test,” Szkutak said. “Certainly something that customers love, the experience. The challenge has been making sure we get the economics right.”
  • Geographical expansion: Analysts seem to be particular keen on learning how much Amazon (notably the AWS department) plans to expand in Brazil. Much like the set-top box and smartphone topics, Szkutak stayed coy, commenting that "there’s not a lot I can say specifically about Brazil." But he did note diplomatically that followers should expect to see the Washington state-based operation expand into additional markets over time.
Editorial standards