Jeff Bezos purple prose reveals Amazon Prime's passed 100m customers

Amazon has announced the yield from its money mine for the full year 2017: on full-year sales of US$178 billion, it generated an operating income of $4 billion and net income of $3 billion.

The Bezos Bunch pulled most of its retail business in the Christmas period, since as we reported in February, Q4 2017 netted $1.9 billion, nearly two-thirds of its net income.

AWS is still only a small part of the cash machine, with full year sales of $17.5 billion, but that's leaped from under $8 billion in the 2015 financial year. It's accelerating, though: CEO Jeff Bezos said it's hit a $20bn annual revenue run-rate.

The cloud service's growth has slowed over that time, as is normal from a low base: from 70 per cent for 2015, to 55 per cent in 2016 and 43 per cent in 2016. At that rate, it'll be a paltry $20 billion or so next year.

Amazon's proxy statement includes its first CEO-to-worker full-year pay ratio disclosure: Jeff Bezos takes home a relatively modest $1.68 million a year, 59 times his staff average of $28,446 ($36,500 in Australia, ₤20,000 or €23,000).

In other words, Silicon Valley image aside, Amazon is overwhelmingly a retail company, paying far, far below tech-sector incomes.

It should be remembered that Amazon has a genuinely worldwide workforce among its 560,000 staff, many of which won't command Silicon Valley pay packets – not to mention an unknown number of part-time staff, mostly in its logistical operations.

The company has also published Bezos' annual Letter to Shareholders, which comes close to self-help gobbledegook as it spans the philosophy of workplace standards as exemplified by taking yoga to learn how to execute the perfect handstand, soaring over Amazon customers' “divine discontent”, and nodding towards “customer empowerment” before settling into breathless praise of every single line of business).

Tucked underneath that and a restatement of Bezos' long-standing commitment to the power of the six-page memo as a management construct, we learn for the first time in its thirteen-year history that Amazon Prime has 100 million customers.

Alexa, we learn, is getting better at listening to its owners from further away, with a claimed far-field speech recognition improvement of 15 per cent. Outside developers have contributed more than 30,000 skills to the geegaw, and 1,200 smart-home vendors now let Alexa control more than 4,000 individual devices. There's no word on total Alexa units sold, however, but Bezos says it's “among the best-selling items across all of Amazon”.

Echo, Echo Dot, Fire TV Stick and Alexa went out the door in their “tens of millions”, Bezos wrote, and while we don't know how many customers have signed for Prime Video, the CEO promised a heavy production workload of new content.

“In 2017, Prime Video Direct secured subscription video rights for more than 3,000 feature films and committed over $18 million in royalties to independent filmmakers and other rights holders”, the shareholder letter says (the average of $6,000 per rights-deal suggests Amazon expects a high attrition rate between deal-signed and show-screened).

If share analysts want to divine anything concrete from Amazon's future plans, they'll need to engage a medium or two. Here's what Jeff has to say under the heading “Path Ahead”:

“This year marks the 20th anniversary of our first shareholder letter, and our core values and approach remain unchanged. We continue to aspire to be Earth’s most customer-centric company, and we recognise this to be no small or easy challenge. We know there is much we can do better, and we find tremendous energy in the many challenges and opportunities that lie ahead.”

The annual report, shareholder letter, and proxy statement are here. ®