What Will Amazon.com Do Next?

| About: Amazon.com, Inc. (AMZN)
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In the wake of its Kindle Fire roll-out Amazon.com (NASDAQ:AMZN) is in a uniquely powerful position. Who else has a PE of 98? Who else can justify it?

While everyone is still singing hosannas to Steve Jobs, it should be remembered that CEO Jeff Bezos has already been Time's Person of the Year and could well cop the honor again for 2011. (Got a better candidate?) Amazon is now worth more than twice its value at the hot of the dot-com boom, and over the last five years has even done better for shareholders than Jobs, by a lot.

Bezos said after his press conference this week that he sees the Fire not as a tech product, but as an “end to end service.” This should make you wonder what it might want with HP's (NYSE:HPQ) webOS business. I would think taking out Level 3 (NASDAQ:LVLT) would give it better a better shot at leveling the Internet cost playing field with Google (NASDAQ:GOOG).

While there has been some speculation over Netflix (NFLX), doesn't it seem more likely that Amazon is going to now face the same problem Netflix did – namely a reluctance by media companies to sell to it, based on its market power?

The company's increased power in the content space also means it gets a deeper burn when it has problems with content – the kind of problems that might just attract the attention of government regulators.

Speaking of which ...

Reporters are already lining up objections to the Kindle, based on Amazon's power. Chief among these is a concern for privacy since the Silk browser will be tracking users by name and caching their personal property. The New York Times is also objecting to this unrivaled control over consumer behavior and when the chattering classes get going like this, can government be far behind?

Despite having all these possible legal and lobbying problems, Amazon still has less than one-half the value of IBM (NYSE:IBM) and Microsoft (NASDAQ:MSFT) and less than one-third that of Apple (NASDAQ:AAPL). The company is going to have to play defense for a while at a time when its stock price demands some offense.

For now having just a vision is no solution. Everything depends on execution. All eyes will be focused on Amazon's whisper numbers for the fourth quarter. Failure to blow those out of the water will send the stock plummeting to Earth faster than Netflix ever did.

But if Jeff Bezos can navigate all this and fulfill the dreams of the people buying AMZN stock, historians will not say Steve Jobs was the greatest CEO of his era.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.