Amazon: The five biggest stories of 2012

The e-commerce giant spent the year stepping on its competitors' toes -- as usual.

8.9-inch Kindle Fire HD Amazon

Amazon spent another year invading everyone's territory and pushing the limits of its business strategy.

The e-commerce company continued to dabble in book publishing and Web site hosting and tried its hand at video-gaming development. Anything slightly related to its business -- Amazon jumped on it.

That's not surprising given Amazon's history with identifying and mimicking both services and products to strengthen its bottom line. Here are the five biggest Amazon stories of 2012:

1. Go big on hardware or go home

Amazon beefed up its hardware selection this year, releasing three new devices to add to its previous line of e-book readers and its tablet. The new devices, the Kindle Paperwhite, the Kindle Fire HD, and the updated Kindle Fire, are part of the company's strategy to make money off content. Amazon actually loses money on the sale of the devices, but that doesn't matter to the retail giant. It wants people to buy into its ecosystem of apps , books , movies , and music. The Kindle Fire HD, which comes in both 7- and 8.9-inch models with modest prices, also happens to compete with Apple's iPad for tablet dollars .

2. A push for original content

The company backed the creation of more original content this year, invading the space of various forms of media. In addition to helping authors self-publish their writing and produce movies, the company bought a book publishing company and opened up its own social gaming studio to develop and publish titles. The studio, Amazon Game Studios, launched in August with a desktop game and quickly followed suit with a mobile game .

Amazon does it because it can. If its already-loyal customers -- and there are many of them -- buy into its all-in-one digital spread, Amazon can control how and what they consume.

3. More sales tax drama

Ah, the ongoing sales tax battle. This dates back years -- and continued to be an issue for Amazon in 2012. As part of Amazon's quest for faster, cheaper shipping, the company started building fulfillment centers in additional states, forcing sellers to start collecting sales tax in several states this year, including California , Texas , and Pennsylvania. These centers store and ship the goods that independent retailers sell to consumers -- the more fulfillment centers, the faster Amazon can ship. Customers in more states, like Massachusetts and New Jersey , will start paying taxes in 2013.

The ability to ship quickly to customers is clearly important to Amazon. The company also shelled out $775 million to buy a company that runs logistics for fulfillment systems.

4. Continually shaking up traditional book selling

This goes to the core of Amazon's "Earth's Biggest Bookstore" motto from the 1990s. Amazon certainly disrupted the book selling industry when it first came on the scene. And it continued to enter skirmishes with book publishers and competing book brokers in 2012. Tensions between Amazon and Barnes & Nobles, the world's biggest brick-and-mortar bookseller, have always been high. But this year the companies used tablets to fight their battles . Amazon also found itself at odds with Apple. The iPad maker accused Amazon of being the "driving force" behind federal prosecution that ended in several publishers settling with the government. Prosecutors accused the publishers of colluding with Apple to fix the price of e-books in an alleged affront to Amazon.

In an attempt to soothe its disgruntled competitors, Amazon's publishing arm signed a deal that allowed competitors to sell Amazon's titles.

5. Battles with Netflix

Amazon bulked up its video streaming offerings throughout the year, signing deals with studios and TV service Epix in order to get enough films to compete with Netflix. On top of bundling its video streaming service with its premium shipping account, Amazon also began offering its $7.99-per-month streaming plan this year, directly challenging Netflix's $7.99 plan.

All of this has left some bad blood between the companies, with Netflix CEO Redd Hastings publicly dumping on Amazon .

Adding fuel to that fire, the year ended on a downbeat for both companies. On Christmas Eve, Netflix's video streaming service suffered a widespread, hours-long outage across the Americas. The culprit was Amazon Web Services, which Netflix uses for video streaming.

 

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