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June 8 (Xinhua)-- analysts at Bernstein Research publicly wrote to Amazon's CEO and board of directors on Wednesday, saying that Amazon is pursuing "too many ideas" and needs to focus on the best opportunities.

Mark Shmulik, an analyst at Bernstein, said in an open letter to Andy Jassy, Amazon's chief executive, and the board that Amazon had become too fragmented and missed opportunities in its core business as it sought to upend everything from healthcare to grocery stores to internet satellite services.

With AWS, Amazon still dominates e-commerce and cloud computing. However, analysts say the company has also invested heavily in many other areas, but has seen no results.

"We fully support Amazon's efforts to identify and seize the next AWS scale opportunity," he wrote in an open letter, rating Amazon's stock as "outperforming the market." But what we've seen recently is that the company pursues too many ideas, and the bad ideas take away resources, capital and, most importantly, the focus on truly disruptive innovation that only Amazon can do. "

Amazon's stock performance, compared with its "closest technology giants (Apple, Microsoft and Google)," also disappointed investors, Mr. Schmulick said. Amazon shares have risen 50% so far this year, but have underperformed other tech giants by about 52% in the past five years.

Mr Schmallick urged Amazon to return to its "first day" mentality, referring to a phrase advocated by Jeff Bezos, Amazon's founder and executive chairman. Bezos has said that the mentality of the first day will help Amazon avoid decline and encourage it to continue to innovate as quickly as startups, no matter how big the company becomes.

"the mindset of the second day of starting a business is stagnant and then irrelevant," Bezos said in his annual shareholder letter in 2017. this is followed by painful decline, followed by death. That's why you always have to keep a first-day mindset. "

Amazon should divest healthcare and the newly created low-Earth orbit satellite program, Project Kuiper (Project Kuiper), or seek external financing or spending cuts, Mr. Schmulick wrote. He points out that Amazon has been moving into healthcare for years, abandoning the telemedicine service Care, health and fitness bracelet Halo and a healthcare joint venture called Haven.

According to Schmurick, "the Kuiper project seems more extreme as an investment area," and Amazon has pledged $10 billion to expand the program. Google's failure to succeed in Project Loon, Fibre and Fi projects, he wrote, shows that "no matter how cool the technology is, capital-intensive, low-margin utilities are not worth the effort."

Amazon should even follow the example of Google's parent company, Alphabet, by integrating Project Kuiper, Healthcare and possibly Alexa, a smart voice assistant, into "other bets," Mr. Schmulick said. Doing so will demonstrate a "healthier and more profitable core business" without affecting the company's efforts to "build the next AWS".

Mr Schmallick is also sceptical about Amazon's expansion in still competitive international markets such as Brazil, Singapore and India. He called it "spending one unjust sum of money after another", although these markets may have strategic value.

When considering physical businesses such as whole Foods (Whole Foods), fresh supermarket Fresh and cashier-free convenience store Go, Amazon needs to "investigate in advance," Mr. Schmulick wrote. The company bought whole Foods for $13.7 billion in 2017 and continued to launch groceries on its website as well as other experimental stores. Recently, the company suspended further expansion of its Fresh and Go stores because Mr. Jassi wanted to cut costs.

Instead of tinkering with its Fresh and Go store businesses, Amazon should "buy a proven concept, such as a potential, spun-off KR / ACI store," he said, referring to the stores Kroger and Albertson are selling as part of their integration plan.

Mr. Schmurick said Amazon should focus on its core strengths and continue to push into other areas that have gained appeal, encouraging its advertising and media division to continue to expand, as well as expanding its Buy with Prime service, which allows sites other than Amazon to take advantage of its Prime distribution advantage.

Mr Schmurick added that the current aimless, net-casting strategy puzzled shareholders and needed to be corrected to curb persistent underperformance. He pointed out that Amazon's position in the artificial intelligence competition is still uncertain.

"the investor question we received today is,'is AWS at the bottom of artificial intelligence?','is retail really a profitable business?'or even'do we want Jassi to participate in the earnings call?'" Schmurick wrote. "all this points to a fundamental problem: Amazon does not have its own narrative."

An Amazon spokesman did not comment on this article, but pointed to Mr. Jassi's letter to shareholders in April, which referred to some of the issues covered in the Bernstein report. Mr Jassi said in the letter that Amazon had spent months analyzing the business and determining "whether we believe every plan has long-term potential" to boost revenue and operating profits.

Speaking of international expansion, Jassi said: "these new markets need a certain amount of fixed investment to start and expand, but we like their current trajectory."

Jassi said in the letter that Amazon needs a "broader physical store footprint" to serve more people in the grocery market. For the Kuiper project, this is "a very big potential opportunity for Amazon" and was initially capital-intensive, similar to AWS.

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