Appropriately deriving its name from the longest river in the world, Amazon.com is truly the company that popularized online shopping by having the most voluminous product supply online. It is also one of the first companies to sell products deep into the long tail by housing them all in numerous warehouses and distributing products from many partner companies.

Amazon founder, Jeff Bezos, began the company with the understanding that it wouldn’t be profitable for 5 years or so. Unlike many of the dot-coms that went bust in the late nineties, Amazon grew slowly and eventually had its first quarterly profit at the end of 2002. Amazon’s business model precludes it from making a profit unless it sells incredibly high volumes of products. It is a low margin business that is only successful because it is a hugely popular center for e-commerce.

Of the $1 billion it did in revenue in the fourth quarter of 2002, it made a profit of $5 million, or 1¢ per share. Such low numbers increased in the next few years with a peak of $10.7 billion in revenue at fiscal year end of 2006. Profit numbers hit their peak in 2004 at $588 million, but have dropped more recently due to heavy spending on research and development.

Since 2004 Amazon has begun rapidly expanding its web services arsenal. Bezos has taken much criticism for spending shareholders money on other projects which, like Amazon at its birth, are losing money. Such products as Amazon EC2 (Elastic Compute Cloud) and Amazon S3 (Simple Storage System), however, are heavily coveted by web companies seeking to improve their storage and virtual server issues. Like Amazon’s traditional model which touts the importance of high volume over high initial margins, the company hopes to slowly increase its presence with web companies and consumers and eventually increase the margins of its newer services.