With Amazon remaining vague as to the total Kindle Fires sold, which is a marked departure from Apple's
What I like about Amazon
I have been a faithful Amazon customer for as long as I can remember. I purchased my first Kindle last year and have moved to purchasing the majority of my books in an e-book format. Even when I buy books in print format, I choose Amazon over Barnes & Noble
While the availability of movies and television shows pales in comparison to the library at Netflix
What I want to see changed
As an investor, I don't think that I am alone in wanting the P/E of Amazon to come down from its lofty perch. Using the average earnings per share over the past three years, its P/E is still around 90. With gross margins hovering around 22% for the last three years, and net margins down to just over 1.3%, there isn't a lot of room to grow without expanding revenue streams. One revenue stream to pursue would be to continue to expand its video offering outside of Prime members.
But as much as I like my Amazon Prime account, with its free videos and quick shipping, I've been less than pleased with Amazon's streaming presence on other devices. For example, with my Netflix account I could stream videos using either Microsoft's
There are other methods of streaming Prime videos to a television, including the purchase of numerous compatible devices that work with the service. Short of spending money on redundant electronics, I am forced to continue watching Prime videos on my Kindle Fire or computer. If Amazon took Netflix's approach and added support for the Xbox, PS3, and Nintendo's Wii, they would expand their reach to over 100 million U.S. gaming-console owners. If they were to capture just 1% of these owners as new customers, they would add an additional $79 million in revenue from Prime memberships alone, providing them with some money to add more content.
Is video domination next?
Amazon has become a retail leader since its humble beginnings as a book seller over 15 years ago. It could now be considered a one-stop shop for nearly any item that you want to purchase. With the addition of its video service, especially the expansion beyond Prime members, it could become even more of an entertainment hub for customers. It is for this reason that Amazon has been included in our new free report, "3 Stocks That Will Help You Retire Rich," along with two other great stocks. Click here to get your free copy before it's too late.
Fool contributor Robert Eberhard holds no position in any company mentioned. Follow him on Twitter. The Motley Fool owns shares of Microsoft and Amazon.com. Motley Fool newsletter services have recommended buying shares of Amazon.com, Netflix, and Microsoft. Motley Fool newsletter services have recommended creating a bull call spread position in Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.