Gadgets
Amazon Sales Growth Slows as Online Shopping Surge Eases
Spending growth by Prime members, Amazon’s most valuable customers, has eased as well, the company said. Shares fell 7 percent in after-hours trade.
More than a year into the COVID-19 pandemic, Amazon’s financial luster is fading slightly. When brick-and-mortar stores closed, Amazon posted record profits, drew more than 200 million Prime loyalty subscribers, and recruited over 500,000 workers to keep up with surging demand.
Now, the company is facing the tough task of climbing higher still. While revenue surged 44 percent in the first quarter of this year, that figure dropped to 27 percent for the period ended June 30. Sales may only rise as much as 16 percent in the third quarter, Amazon said.
Brian Olsavsky, Amazon’s chief financial officer, attributed this to a difficult comparison to last year, when consumers stayed more indoors and relied on e-commerce for their everyday needs. In the United States and Europe, customers are now out and about.
They are “doing other things besides shopping,” he said.
Revenue was $113 billion (roughly Rs. 8,39,770 crores) for the second quarter, shy of analysts’ average estimate of $115 billion (roughly Rs. 8,54,630 crores), according to IBES data from Refinitiv. Profit rose 48 percent to $7.8 billion (roughly Rs. 57,970 crores), the second-largest Amazon ever announced.
Amazon expects this lower growth to continue for the next few quarters, Olsavsky told reporters.
The outlook comes just after Jassy on July 5 inherited Amazon’s top job, which has never been bigger or more complex. Last quarter Amazon announced a deal to buy the film studio MGM for $8.5 billion (roughly Rs. 63,170 crores), expanding in Hollywood at the same time as it is running a grocery chain, building a healthcare business and facing scrutiny from regulators worldwide.
Olsavsky said the company hopes COVID-19 will subside and that the economy will continue to bounce back. While peers Alphabet and Facebook said they will require vaccines for workers returning to offices, Amazon has made no such announcement.
The company in the pandemic has grappled with staff protests over safety precautions and a high-profile, failed unionisation bid in a facility in Bessemer, Alabama.
Brian Yarbrough, an analyst with Edward Jones, said it was “not feasible” for Amazon to maintain its breakneck pace.
“It’s still phenomenal growth when you think of the sheer size of the business,” he said. “Obviously the pandemic helped them, but they’re not going to be able to grow that rapidly on top of those numbers.”
Labour shortage
The world’s biggest online retailer had moved its annual marketing blitz, Prime Day, to June, hoping to peddle goods before shoppers headed out on vacation. This only helped so much: Sales since May 15 have been up just in the mid-teens excluding Prime Day, Olsavsky told analysts.
Amazon Web Services has fared better. The cloud computing division that Jassy long ran grew revenue 37 percent to $14.8 billion (roughly Rs. 1,09,970 crores), ahead of estimates of more than $14.1 billion (roughly Rs. 1,04,740 crores). Though AWS has lowered prices, it has signed new multi-year agreements with large customers, Olsavsky said.
Enormous challenges have come with Amazon’s size.
Costs continue to rise, aside from the $200 million (roughly Rs. 1,490 crores) in extra stock Amazon plans to pay Jassy over the next 10 years. The company has offered an average $17 (roughly Rs. 1,260) in hourly wages plus signing bonuses to attract 75,000 workers during a labour shortage.
Olsavsky said he expects wage pressure to stay for the near future, as industry reopenings, government payments, and back-to-school impact individuals’ willingness to work.
“It’s a very competitive labor market out there, and certainly the biggest contributor to inflationary pressures that we’re seeing in the business,” he said.
The No.2 US employer this winter became a rallying point for organised labour, which wanted to form Amazon’s first US union and inspire similar efforts across the country. Amazon is awaiting a decision on whether a US National Labor Relations Board regional director will overturn its landslide victory in the Bessemer, Alabama union election and call for a rerun.
Following the April vote count, Bezos said he aimed to make Amazon a better place to work. It is unclear how he will govern from the sidelines in the role of executive chair of Amazon’s board.
Olsavsky said Jassy has “hit the ground running,” though Bezos would continue to weigh in on decisions where there was no turning back.
“We’ve had a good handoff,” Olsavsky said. But Bezos “will not be leaving. He’s obviously continuing to be very involved.”
“At Xbox, we believe that with better tools, creators can make even more extraordinary games,” Haiyan Zhang, GM, Xbox Gaming AI, said in a blog post. “This partnership will bring together: Inworld’s expertise in working with generative AI models for character development, Microsoft’s cutting-edge cloud-based AI solutions including Azure OpenAI Service, Microsoft Research’s technical insights into the future of play, and Team Xbox’s strengths in revolutionizing accessible and responsible creator tools for all developers.”
The aforementioned AI design copilot is a toolset that will help game designers turn prompts into scripts and dialogue trees. In contrast, the character runtime will enable dynamically generated plot beats and quests. We’ve already seen heavy AI integration in games by way of procedural generation — a more recent example being the 1000+ planets in Starfield. Not to mention, enemy AI has been around for way longer.
Inworld made headlines in August when it launched a modded story mode for Grand Theft Auto V, Sentient Streets, in which players had to investigate the rise of a bizarre AI-worshipping cult — a segment loaded with characters that spoke in AI-generated dialogue, on the fly. The mod was later taken down by publisher Take-Two, leaving a permanent strike on the creator Bloc’s YouTube channel. As per The Verge, Inworld’s AI technology can also be used for narration in top-down RPGs to warn players about any events awaiting off-screen and respond to questions like we’ve seen in the past year with AI chatbots like ChatGPT and Bing Chat. Microsoft has also been heavily banking on artificial intelligence, having made a $10 billion (about Rs. 83,254 crore) investment in OpenAI. The company has also integrated AI tools into its popular suite of services and also added an AI copilot to Windows.
Despite being a Microsoft-affiliated AI toolset, it would be interesting to see whether titles using them will be allowed to thrive on other platforms. In July, Valve claimed that it would be cracking down on games that included AI-generated assets if the developer didn’t own the copyright to the piece of art. For the uninitiated, when you insert a prompt to create something in AI, the software simply repurposes existing assets found online and mushes them together — basically stealing from other artists and writers without appropriate commercial licenses. Infringing them would lead to the game not being distributed on Steam, forcing the developers to seek proper licenses for the asset by reaching out to the AI companies involved. It’s unclear how Microsoft’s partnership will play out — as long as AI content is being used as a catalyst to innovate and create something new, it should be fine.
In a post on X shared by BSNL’s Andhra Pradesh (@bsnl_ap_circle) unit, the company confirmed that BSNL users can upgrade their older 2G or 3G SIMs to a 4G SIM for free. Not only will the upgrade be free, but a promotional image shared with the post suggests that users who opt for the upgrade will also receive 4GB of free data that will be valid for three months. It is speculated that BSNL is aiming to boost its upcoming 4G services with this offer. The announcement was first spotted by Telecom Talk.
To access the free data offer and the free upgrade, BSNL users are requested to get in touch with executives at BSNL’s Customer Service Centre, franchisee or retailer stores, or contact one of their Direct Selling Agents (DSA). The promo image also adds in a finer print that the offer is available with certain terms and conditions, but hasn’t detailed any, so far.
Reliance’s Jio recently launched the 4G-supported Bharat B1 feature phone in India. The handset is priced at Rs. 1,299 in India. Alongside 4G connectivity, the phone comes with JioCinema and JioSaavn applications pre-installed.
The Jio Bharat B1 is equipped with the JioPay application, which is said to allow users to make UPI payments. Aiming to increase accessibility, the phone supports 23 languages overall, including multiple regional languages.
Realme, via Weibo, announced the arrival of the Realme GT 5 Pro in China. The display of the handset is confirmed to offer 3000 nits peak brightness. It has also been teased to offer heat dissipation with a surface area of around 10,000mm2. It is confirmed to ship with Qualcomm’s new Snapdragon 8 Gen 3 SoC. The post doesn’t specify the exact launch date of the smartphone, however, given the release of the teasers, the launch could be just around the corner.
The Realme GT 5 Pro has been in the news a lot lately. It is expected to feature a 6.78-inch (1,264×2,780 pixels) AMOLED display and is tipped to come in 8GB, 12GB, and 16GB RAM options along with 128GB, 256GB, 512GB, and 1TB inbuilt storage options.
For optics, the Realme GT 5 Pro is said to have a triple rear camera unit comprising two 50-megapixel sensors and an 8-megapixel shooter at the rear. The camera setup might include a Sony LYTIA LYT808 sensor, an OmniVision OV08D10 secondary sensor, and a Sony IMX890 telephoto sensor. For selfies, there could be a 32-megapixel sensor at the front. It is said to carry a 5,400mAh battery with support for 100W wired charging and 50W wireless charging.
The Realme GT 5 Pro is expected to come with upgrades over Realme GT 5. The latter was launched in China in August with a price tag of CNY 2,999 for the base model with 12GB of RAM and 256GB of storage.
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