Reading about Amazon.com's (NASDAQ:AMZN) Prime Air shows how skeptical most of the media was regarding the initiative. Countless arguments were put forward why Prime Air wouldn't work, including:
- The drones are too expensive thus making them uneconomical;
- The drones are inefficient, since helicopter flight is inefficient and each drone would carry just a single package;
- The drones would hit birds;
- The drones would get attacked by pets;
- The drones would get attacked by or injure curious children;
- The drones would get tangled up in wires, trees and other obstacles;
- People would shoot down the drones for their payload;
- The drones would be mostly useless in urban settings for lack of a place to drop the merchandise;
- The drones would be mostly useless outside of urban settings due to the low range and low population density - meaning few people would be within their range;
- Such light drones can be brought down by random wind gusts;
- Even 99.9% reliability would still make malfunctions and accidents turn drones into an uneconomical preposition, since the cost of a drone over 1000 or even 10000 deliveries would be prohibitive;
- The FAA is not likely to change rules enough to allow for millions of drones in the sky;
- Drones malfunctioning or being involved in accidents would then rain on people and property, leading to a large liability;
- And countless other reasons.
This is all logical; it is true that Amazon.com's outlandish idea, which isn't exactly original as 6 months ago Domino's Pizza had a video depicting the exact same thing, faces tremendous hurdles.
But all of this is besides the point. Because the drones actually worked. Look how I said "worked", not "work" or "will work". The reason is simple. The drones were not designed to put merchandise in your porch. They were, instead, designed to put Amazon.com in the media.
And for that, they worked. Amazon.com was in every front page with Prime Air. In 2-3-4 years people will have forgotten about the stunt and there will be no drones beyond sporadic demos. But today, in 2013, they worked for their intended purpose. And all of it must have cost Amazon.com little more than a $20000 or $30000 for the drone prototypes and the short movie demo.
Amazon.com faces a struggle to remain in people's minds. It must either spend significantly in advertising or run the risk of stagnation. With Amazon.com's already challenged low-profit financials, Amazon.com would rather avoid making such expenses, so it has to resort to creative ways to get free publicity. The drones were one such way.
Impending smartphones, impending gaming consoles, upcoming set-top boxes and tens of other realistic products might well be other ways used by Amazon.com to achieve the same goals, though those are likely to be developed by Amazon.com for real.
Either way, the drones worked. There won't be an army of drones delivering stuff, but for what they were really conceived, the drones already delivered.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: I have option positions which stand to gain from the bursting of the AMZN bubble.