It was a mere two years ago that Fortune named Jeff Bezos, Amazon’s chief executive, its Businessperson of the Year. Bezos and his company were on a roll: dominant in U.S. e-commerce, providers of impressive e-readers and tablet computers, and creators of a new billion-dollar web-services business that became a go-to resource for technology startups. Despite persistently thin margins and intermittent losses, Amazon and its stock price soared; Bezos was the envy of all.

Now, for the first time in years, Amazon’s AMZN momentum is in doubt. Its enemies are emboldened, its products are uneven, and its competitors loom larger than ever. Even the company’s once-bulletproof stock price has been crushed, off 25% from its peak. It’s all enough to make a lover of schadenfreude wonder: Is the relentless flow of Amazon’s success slowing to a trickle?

Last year, journalist Brad Stone’s comprehensive book The Everything Store painted an unflattering portrait of an unpleasant company that treated employees and partners shabbily. As if on cue, Amazon this spring got into a spat with Hachette, one of the country’s largest book publishers (including the imprint that published Stone’s book), over e-book pricing. A routine commercial dispute turned into a public-relations black eye for Amazon, which delayed shipments and otherwise retaliated against Hachette. The battle continues.


Amazon kept racking up problems elsewhere. In June the company announced its long-awaited Fire phone only to watch the product become so unloved that it dropped the price from $200 to $1. (It recently recorded a $170 million loss on the phone and revealed it still had $83 million worth in unsold inventory.) In July it revealed slowing revenue growth rates for its Amazon Web Services unit at a time when a resurgent Microsoft MSFT has shown strength in its Azure business, an AWS rival that markets to the software giant’s vast corporate customer base. In October, Amazon revealed it had lost $437 million in the third quarter, its biggest loss in years.

Amazon’s sales continue to grow, but its investments in new products and services are growing faster. It spent more than $100 million on original Amazon Studios productions in a single quarter this year. It is preparing to build a logistics warehouse in the new free-trade zone in Shanghai—just two hours’ drive from Hangzhou, where Alibaba is headquartered. Meanwhile, Amazon’s competition is rejuvenated. Wal-Mart WMT is doubling down on e-commerce. Google is going toe-to-toe with Amazon on multiple fronts, including home delivery of products.

MIXED BAG The swings between Amazon's profits and losses are a roller coaster for shareholders.MIXED BAG The swings between Amazon’s profits and losses are a roller coaster for shareholders.Graphic Source: Amazon Earnings Reports


Investors aren’t pleased. Amazon’s stock hovers around $300, down $100 from its all-time high one year ago. It’s the first time in six years that the stock has languished. If the situation persists, employees will suffer most. “Compensation is completely based on stock appreciation,” notes John Rossman, a former Amazon executive and the author of the book The Amazon Way. “If Amazon gets perceived as a flat or negative stock, they’ll have a difficult time retaining and recruiting engineering talent.” Indeed, the weighted average value of the 17.5 million restricted stock units its employees hold is $276, per Amazon’s securities filings. That means that on average, employees are sitting on next to no increase in the value of their incentive grants.

In 2012, Fortune called Bezos “the ultimate disrupter.” If he doesn’t become a decent moneymaker soon, Bezos himself could end up being the one who’s disrupted.


shotsfiredv2AMAZON HAS DEMONSTRATED A TASTE FOR ENTERING NEW MARKETS WITH UNUSUAL FEROCITY. HERE ARE FIVE:

mediav2Amazon vs. Publishers
As it fights book publishers over e-book pricing, Amazon is taking on film studios and cable companies by spending hundreds of millions of dollars on Amazon Studios and Twitch, a video platform and community for gamers.
WILDCARD: Netflix

cloudv2Amazon vs. Microsoft
Amazon Web Services is the undisputed king of the cloud-computing world, multiples larger in size and revenue than the nearest competitor, Microsoft Azure. (Google and IBM are also in the mix.) But there is a price war afoot, placing pressure on all.
WILDCARD: Rackspace

advertisingv2Amazon vs. Google
Amazon is thought to be developing its own software for placing advertisements online. The platform would make use of its knowledge of millions of Internet shoppers and go head-to-head with Google’s primary source of revenue.
WILDCARD: Facebook

ecommercev2Amazon vs. Alibaba
China’s Alibaba, which this year made the world’s biggest initial public offering, does not strongly compete with Amazon today. That is quickly changing as each company builds operations in the other’s primary market.
WILDCARD: JD.com

electronicsv2Amazon vs. Apple + Google
Fire phone, Fire tablet, Fire TV, and Fire TV Stick: Amazon has been trying to kindle conflict in a lucrative consumer-electronics ecosystem dominated by Apple, Google, and to a lesser extent Microsoft. Its success has been mixed, but that could change.
WILDCARD: Samsung
Andrew Nusca

READ ALSO: “Amazon Exec: We Priced the Fire Phone Wrong”

This story is from the December 1, 2014 issue of Fortune. Editor’s note: Amazon and Hachette resolved their dispute on Nov. 13, 2014.