The company has been able to grow its subscriber base internationally, which is a part of the appeal to selling content to Netflix as it gets instantaneous international distribution, which helps content companies to monetize their entertainment rights. This is why The Walt Disney Company (NYSE:DIS) is jumping on board with Netflix and is cutting ties to its ownership stake in Hulu. After all, it makes sense for Walt Disney to sell content to the broadest distribution possible, and Netflix seems like it can effectively handle itself in this pursuit. Global web-based television will most likely happen on Netflix’s network.
Buy Amazon because of retail and cloud
Amazon.com, Inc. (NASDAQ:AMZN) is caught in a bit of a tough position with this recent Intel entry. Assuming Intel wins and is able to fight off the anti-competitive practices of the cable industry, Intel Corporation (NASDAQ:INTC) has more firepower than Amazon, Netflix, and Hulu combined. What Intel lacks is any substantial market presence, which is something Amazon Instant Video also lacks, as well. Amazon Instant Video doesn’t provide a rich of a content collection as Netflix. Amazon Instant Video also has a smaller subscriber base, making it more difficult to compete with Netflix based on scale.
I see much more upside in Amazon because of online retail and cloud virtualization. The company also plans to partner with Google Inc (NASDAQ:GOOG) in order to launch an Amazon application store in over 200 countries. The company’s growth is hinged on global online retail, increasing demand for servers, and digital content for mobile phones. The company’s growth is really strong in both cloud and retail, which is the primary reason why investors should buy the stock even though it’s unclear as to whether or not it can make a profit from Amazon Instant Video.
Also, I’m skeptical of Amazon Kindle, and believe that it will not be financially successful .The application ecosystem surrounding Kindle isn’t nearly as strong as Microsoft Corporation (NASDAQ:MSFT)’s, Google Inc (NASDAQ:GOOG)’s, and Apple Inc. (NASDAQ:AAPL)’s.
Amazon, in its most recent quarterly earnings announcement, reported 47.3% year-over-year growth in its cloud segment, which was also paired with 16% year-over-year growth in its international retail segment.
Assuming the European economy recovers and international internet adoption improves to 5 billion people, the company’s international growth efforts will be monumentally successful. In anticipation of this, analysts anticipate the company to grow earnings by 37.15% on average over the next five years.
Conclusion
Intel Corporation (NASDAQ:INTC) is doing what it needs to do, which is to pursue product ideas outside of semiconductors. The company’s efforts may fail, but at least the company is willing to invest into business activities in order to sustain both earnings and revenue growth.
I believe that there is a more compelling investment thesis in Amazon and Netflix. Netflix is well on track to growing its subscriber base internationally, giving Netflix even greater economies of scale. Amazon, on the other hand, continues to unfold its retail empire internationally while ripping apart its competitors in cloud virtualization.
Alexander Cho has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Intel, and Netflix. The Motley Fool owns shares of Amazon.com, Intel, and Netflix. Alexander is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article Intel Television Could Become a Reality originally appeared on Fool.com and is written by Alexander Cho.
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