09-09-2012, 03:42 PM
It is interesting that if you want to compete with Amazon in the hardware business, you have to compete with them as a content provider, because that's where the profits are. There might still be a "luxury market" for tablets that you buy outside of the Amazon model, which will still run Amazon content, but Amazon will have a firm grasp on the "mass market" of tablet hardware.
This isn't really Amazon trying to kill hardware manufacturers so much as it's Amazon wanting to make sure that tablets are relatively cheap and readily available. They want tablets to be like televisions: everyone has one, if not more than one. They need them to become commonplace so that their digital content sales takes off.
It's a great plan, from their perspective, and they're far enough ahead in digital sales (as an overall concept and business model) that it would take a real coalition to uproot them.
Apple's plan, I think, is a flimsier version of this. Amazon ultimately doesn't care who you buy your hardware from and in fact they'd probably have higher profits if you bought your tablet from someone else. They just want to sell you content and they don't care what you play it on. Apple wants to sell you (and lock you into) an entire company's product line. Apple hardware running only Apple software which runs only on Apple hardware. If you don't buy their devices then they have nothing to sell you. If you don't buy Amazon's devices, they're perfectly happy about that and will sell content to whatever it is you buy.
This sort of thinking is probably why Amazon's P/E continues to be off the charts. Amazon is positioning themselves to be a giant in markets that are in their infancy now.
This isn't really Amazon trying to kill hardware manufacturers so much as it's Amazon wanting to make sure that tablets are relatively cheap and readily available. They want tablets to be like televisions: everyone has one, if not more than one. They need them to become commonplace so that their digital content sales takes off.
It's a great plan, from their perspective, and they're far enough ahead in digital sales (as an overall concept and business model) that it would take a real coalition to uproot them.
Apple's plan, I think, is a flimsier version of this. Amazon ultimately doesn't care who you buy your hardware from and in fact they'd probably have higher profits if you bought your tablet from someone else. They just want to sell you content and they don't care what you play it on. Apple wants to sell you (and lock you into) an entire company's product line. Apple hardware running only Apple software which runs only on Apple hardware. If you don't buy their devices then they have nothing to sell you. If you don't buy Amazon's devices, they're perfectly happy about that and will sell content to whatever it is you buy.
This sort of thinking is probably why Amazon's P/E continues to be off the charts. Amazon is positioning themselves to be a giant in markets that are in their infancy now.