Amazon.com (AMZN) has installed more than 15,000 robots across 10 U.S. warehouses, a move that promises to cut operating costs by one-fifth and get packages out the door more quickly in the run-up to Christmas.
The orange 320-pound robots, which scoot around the floor on wheels, show how Amazon has adopted technology developed by Kiva Systems, a robotics company it bought for $775 million in 2012. Amazon showcased to reporters on Sunday ahead of Cyber Monday, the biggest online shopping day of the year.
The robots are designed to help the leading U.S. online retailer speed the time it takes to deliver items to customers and better compete with brick-and-mortar stores, where the bulk of Americans still do their shopping.
The robots also may help Amazon avoid the mishaps of last year's holiday season, when a surge of packages overwhelmed shipping and logistics company UPS (UPS) and delayed the arrival of Christmas presents around the globe. Amazon offered shipping refunds and $20 gift cards to compensate customers.
Amazon deployed the robots this summer, ahead of the key holiday quarter, when the company typically books about one-third of its annual revenue. The updated warehouses are in five states -- California, Texas, Florida, New Jersey and Washington.
The move comes at a cost. Amazon estimated in June 2013 that it would spend about $46 million to install Kiva robots at its warehouse in Ruskin, Florida, including $26.1 million for the equipment, according to company filings to local government.
The Kiva robots have allowed Amazon to hold about 50 percent more items and shorten the time it takes to offer same-day delivery in several areas, said Dave Clark, senior vice president of worldwide operations and customer services.
At Amazon's warehouse in Tracy, California, workers stack goods in shelves carried by more than 1,500 Kiva robots, which use markings on the floor to navigate and form a "big block of inventory," Clark said.
Squeezing the racks of items closely together eliminates the need for workers to navigate aisles to collect items ordered by consumers. Now, a worker calls for specific items and the robot steers itself to their particular work station. Each robot can carry as much as 720 pounds.
In some cases, the robots have allowed Amazon to get packages out the door in as little as 13 minutes from the pick stations, compared to about an hour and a half on average in older centers.
"It's certainly proving out that it's justified itself," Clark said of the Kiva acquisition. "We're happy with the economics of it."
Authored by Deepa Seetharaman via dailyfinance.com.
The Web—that thin veneer of human-readable design on top of the machine babble that constitutes the Internet—is dying. And the way it’s dying has farther-reaching implications than almost anything else in technology today.
Think about your mobile phone. All those little chiclets on your screen are apps, not websites, and they work in ways that are fundamentally different from the way the Web does.
Mountains of data tell us that, in aggregate, we are spending time in apps that we once spent surfing the Web. We’re in love with apps, and they’ve taken over. On phones, 86% of our time is spent in apps, and just 14% is spent on the Web, according to mobile-analytics company Flurry.
This might seem like a trivial change. In the old days, we printed out directions from the website MapQuest that were often wrong or confusing. Today we call up Waze on our phones and are routed around traffic in real time. For those who remember the old way, this is a miracle.
Everything about apps feels like a win for users—they are faster and easier to use than what came before. But underneath all that convenience is something sinister: the end of the very openness that allowed Internet companies to grow into some of the most powerful or important companies of the 21st century.
Take that most essential of activities for e-commerce: accepting credit cards. When Amazon.com made its debut on the Web, it had to pay a few percentage points in transaction fees. But Apple takes 30% of every transaction conducted within an app sold through its app store, and “very few businesses in the world can withstand that haircut,” says Chris Dixon, a venture capitalist at Andreessen Horowitz.
App stores, which are shackled to particular operating systems and devices, are walled gardens where Apple, Google , Microsoft and Amazon get to set the rules. For a while, that meant Apple banned Bitcoin, an alternative currency that many technologists believe is the most revolutionary development on the Internet since the hyperlink. Apple regularly bans apps that offend its politics, taste, or compete with its own software and services.
But the problem with apps runs much deeper than the ways they can be controlled by centralized gatekeepers. The Web was invented by academics whose goal was sharing information. Tim Berners-Lee was just trying to make it easy for scientists to publish data they were putting together during construction of CERN, the world’s biggest particle accelerator.
No one involved knew they were giving birth to the biggest creator and destroyer of wealth anyone had ever seen. So, unlike with app stores, there was no drive to control the early Web. Standards bodies arose—like the United Nations, but for programming languages. Companies that would have liked to wipe each other off the map were forced, by the very nature of the Web, to come together and agree on revisions to the common language for Web pages.
The result: Anyone could put up a Web page or launch a new service, and anyone could access it. Google was born in a garage. Facebook was born in Mark Zuckerberg ’s dorm room.
But app stores don’t work like that. The lists of most-downloaded apps now drive consumer adoption of those apps. Search on app stores is broken.
The Web is built of links, but apps don’t have a functional equivalent. Facebook and Google are trying to fix this by creating a standard called “deep linking,” but there are fundamental technical barriers to making apps behave like websites.
The Web was intended to expose information. It was so devoted to sharing above all else that it didn’t include any way to pay for things—something some of its early architects regret to this day, since it forced the Web to survive on advertising.
The Web wasn’t perfect, but it created a commons where people could exchange information and goods. It forced companies to build technology that was explicitly designed to be compatible with competitors’ technology. Microsoft’s Web browser had to faithfully render Apple’s website. If it didn’t, consumers would use another one, such as Firefox or Google’s Chrome, which has since taken over.
Today, as apps take over, the Web’s architects are abandoning it. Google’s newest experiment in email nirvana, called Inbox, is available for both Android and Apple’s iOS, but on the Web it doesn’t work in any browser except Chrome. The process of creating new Web standards has slowed to a crawl. Meanwhile, companies with app stores are devoted to making those stores better than—and entirely incompatible with—app stores built by competitors.
“In a lot of tech processes, as things decline a little bit, the way the world reacts is that it tends to accelerate that decline,” says Mr. Dixon. “If you go to any Internet startup or large company, they have large teams focused on creating very high quality native apps, and they tend to de-prioritize the mobile Web by comparison.”
Many industry watchers think this is just fine. Ben Thompson, an independent tech and mobile analyst, told me he sees the dominance of apps as the “natural state” for software.
Ruefully, I have to agree. The history of computing is companies trying to use their market power to shut out rivals, even when it’s bad for innovation and the consumer.
That doesn’t mean the Web will disappear. Facebook and Google still rely on it to furnish a stream of content that can be accessed from within their apps. But even the Web of documents and news items could go away. Facebook has announced plans to host publishers’ work within Facebook itself, leaving the Web nothing but a curiosity, a relic haunted by hobbyists.
I think the Web was a historical accident, an anomalous instance of a powerful new technology going almost directly from a publicly funded research lab to the public. It caught existing juggernauts like Microsoft flat-footed, and it led to the kind of disruption today’s most powerful tech companies would prefer to avoid.
It isn’t that today’s kings of the app world want to quash innovation, per se. It is that in the transition to a world in which services are delivered through apps, rather than the Web, we are graduating to a system that makes innovation, serendipity and experimentation that much harder for those who build things that rely on the Internet. And today, that is pretty much everyone.
—Follow Christopher Mims on Twitter @Mims; write to him at firstname.lastname@example.org.
France, meet “Yeux Fous.” This month, Netflix (NFLX), the world’s largest subscription streaming video service, will offer the original series Orange Is the New Black and other programming to six European nations, including Germany and France. It aims to reduce its reliance on the U.S. market and establish global dominance before Time Warner’s (TWX) HBO Go and Amazon.com’s (AMZN)Prime Instant Video do.
The big question is whether Netflix can navigate rules that shield homegrown media companies and local culture. Shows that play well in one country may not in another, so Netflix will have to localize at least some content, a costly undertaking. “Europe is an attractive market for a subscription service,” says Richard Broughton, an analyst at researcher IHS. “People are willing to pay for TV subscriptions and are more willing to pay for media in general. [But] it is quite difficult for new entrants to compete.”
Netflix entered Canada in 2010 and has since taken its streaming service to countries in Latin America and Scandinavia, the U.K., and the Netherlands. Now it’s adding France, Germany, Austria, Switzerland, Belgium, and Luxembourg. The European countries that Netflix is in had more than 100 million broadband accounts at the end of 2013, vs. 91 million in the U.S., according to the International Telecommunication Union, a United Nations agency.
HBO and sister channel Cinemax have 127 million worldwide customers. The cable channel is expanding internationally with HBO Go, the mobile and streaming product that already competes with Netflix in Sweden, Finland, Denmark, and Norway. Amazon operates in the U.K. and Germany, where it offers Instant Video to subscribers of its Prime delivery service.
Almost three-quarters of Netflix’s 50 million customers are in the U.S. Analysts question whether Netflix can hit its target of 60 million to 90 million domestic subscribers. “Few paid services have been that successful getting past 30 to 40 percent penetration,” says Ross Gerber, co-founder and chief executive officer of Gerber Kawasaki Wealth & Investment Management, which invests in media companies. Europe has wide broadband penetration, a strong middle class, and efficient billing systems, and Netflix’s forays there have gone well so far. IHS projects the company will have more than 3 million subscribers in the U.K. by yearend. The company has high penetration rates—25 percent to 30 percent—in the Scandinavian countries, where the potential subscriber base is smaller. By next year, Europe will account for 20 percent of Netflix’s subscribers, IHS says.
Netflix has said it aims to generate as much as 80 percent of sales outside the U.S. In the past year, international revenue jumped 85 percent. “We really see this as an enormous moment in history,” CEO Reed Hastings said on a recent earnings call.
To protect movie theater owners and DVD sales, France requires streaming services to wait three years after a film’s release before offering it to customers. Video service is not a separate expense for many German consumers, but part of what they pay to rent their homes, so they’re not as willing to pay for additional video services. That, analysts say, has inhibited the growth in Germany of streaming services offered by European companies such as Vivendi (VIV:FP) and Sky Deutschland (SKYD:GR).
Netflix won’t enter either market with many new titles, as the distribution rights of many movies are held by local media companies such as Orange and Canal+ in France and Sky Deutschland and Amazon in Germany. Instead, Netflix will rely on U.S., Canadian, and some English TV series and its own original programming. It holds the rights to almost all its original shows, including Orange Is the New Black,Hemlock Grove, and Bojack Horseman. House of Cards is an exception, because Canal+ and Sky Deutschland distribute the series.
“You’re going to see and have seen more focus on original programming and high-quality scripted drama,” says Darren Throop, CEO of Entertainment One (ETO:LN), a Canadian producer and distributor that sells shows to Netflix.
French government policy requires media companies operating in the country to invest in local production and TV channels to maintain a library of films and TV that’s at least 50 percent European and 40 percent French. Netflix has said it will sidestep those regulations by basing its European operations in the Netherlands. Even so, 20 percent of its titles in France will be French. The company is also developing a French original series called Marseille, a political drama set in the French port city.
Authored by Lucas Shaw via bloombergh.com.