by Tom Taulli | December 2, 2013 10:44 am
Last night, Amazon (AMZN) CEO Jeff Bezos showed once gain why he is a business genius. On a segment of 60 Minutes, Bezos unveiled a revolutionary concept of using drones to deliver packages — calling it Amazon Prime Air. While the news didn’t send AMZN stock any higher in this morning’s trading, the buzz around the Amazon drones has been loud.
Sure, the drones for Amazon Prime Air probably won’t hit the market any time soon … but it still provides more evidence that there will be no shortage of things to get investors excited about AMZN stock.
So what are the details on Amazon Prime Air?
Well, drones have already been a hot technology, as consumer products like the Parrot AR Drone are already sold on the Amazon website, while other commercial models are being developed.
But Amazon Prime Air will use the drones as a delivery too. Jeff Bezos calls the Amazon drone “the octocopter” because it has eight propellers. Plus, he provided a cool video of it making a delivery to the doorstep of a customer.
For the most part, the goal is to allow for a new-fangled Amazon Air Prime to have same-day delivery. Plus, it was a savvy public relations move to use a visual — something that seems sure to drive not just buzz, but eventually some demand for AMZN stock.
The irony is that Jeff Bezos tried to temper expectations during the segment. He mentioned it will take four to five years until the Amazon Prime Air drone program will become a reality. Keep in mind that AMZN will need to get approval from the FAA. Besides, it wouldn’t be cool if a drone crashed into a home or landed on a pet … an it would certainly be a downer for AMZN stock.
Something else: The folks at UPS (UPS) and FedEx (FDX) should be concerned that Amazon Air Prime will be a disruption. See, a key driver for AMZN stock is to take out the middleman. AMZN has already been experimenting with its Fresh grocery delivery service, which involves refrigerated trucks. No doubt, the Amazon drone system would be a threat as well.
All in all, Jeff Bezos yet again has pulled off a nice move — and he did so on the ever of Cyber Monday 2013. He captured tons of headlines by using hot button terms like drones and Amazon Prime Air to get shoppers to the Amazon site and investors at least thinking about AMZN stock.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.
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