Why Amazon can't win a tablet price war against Google
Google and Amazon are about to go to war for the future of non-iPad tablets. Here's why Amazon needs a new strategy.
Computerworld - When you order something from Amazon, it comes in a box.
Let's say you browse the Amazon.com website looking for a book, a wristwatch or a muffin pan. When you find the object of desire, you click an "Add to Cart" button. Amazon already has your credit card and address, so it's easy for you to buy and for them to sell. The cardboard box your item arrives in is the physical manifestation of Amazon's fulfillment of your order.
Boxes are important to Amazon's business. But they're not in the box business. They don't make money on boxes. Amazon is happy to lose a little money on boxes because it enables them to profit from what's inside the box.
To Amazon, a tablet is just another kind of box.
Electronic products like music, movies, e-books and digital publications are part of Amazon's business. An e-book is an item for sale, just like a paperback. And Amazon wants to control the order-fulfillment experience just like it does with cardboard boxes. So it makes tablets.
You can divide the tablet universe into three categories: 1. Companies that are in tablet hardware and online content and services businesses; 2. Companies that are in the online content and services business only; and 3. Companies that are in the tablet hardware business only.
The first category has two players: Apple and Sony. In both cases, Apple and Sony have business models that depend on making revenue and profits from the sale of tablet hardware, as well as from digital content and online services.
The second category are those companies involved in selling digital content and online services, but which use tablets as boxes. They're happy to make no money on tablets -- or even lose money -- as long as they can give their digital offerings an advantage over competitors. This category includes Amazon, Google and Barnes & Noble.
The third category includes companies that sell tablets for profit, rather than as containers for digital content and online services. This category includes Samsung, Asus, Research In Motion, Acer, Motorola, Toshiba, Archos and many others.
All three categories will continue to exist side-by-side indefinitely, but there will be winners and losers within each category.
Why Apple will dominate the first category forever
In any standards-based, network-effects-based, application platform-based or aftermarket-based business, the rich tend to get richer. The more customers and partners any company has, the more attractive that company is to additional customers and partners.
The tablet market is all four. Apple is by far the richest, and is therefore in the enviable position to keep dominating.
- Samsung to offer 3 new tablets starting Feb. 13
- Tablets remain tops in American gift-buying plans
- 'Phablets' are eating into the tablet market, IDC says
- Apple springs Retina iPad Mini on customers
- The puzzling Lumia 2520 tablet: Will it disappear when Microsoft buys Nokia?
- Dell launches four new tablets -- all on Intel chips
- Few use tablets to replace laptops
- New Kindle Fire HDX's tech support button could push IT to yell 'Mayday!'
- Kindle Fire HDX tablets show big push for business users
- Microsoft kicks off iPad buyback deal in latest effort to juice Surface sales
- Best iPhone, iPad Business Apps for 2014
- 14 Tech Conventions You Should Attend in 2014
- 10 Desktop Apps to Power Your Windows PC
- How to Add New Job Skills Without Going Back to School
- Slideshow: 7 security mistakes people make with their mobile device
- iOS vs. Android: Which is more secure?
- 11 sure signs you've been hacked
- OpenStack Hype vs. Reality: CIO Quick Pulse Open-source architecture can enable IT departments to build infrastructure-as-a-service (IaaS) clouds running on standard hardware.
- The Critical Role of Support in Your Enterprise Mobility Management Strategy Most business leaders underestimate the importance of tech support when they choose an EMM solution. Here's what to put on your checklist.
- Separating Work and Personal at the Platform Level: How BlackBerry Balance Works BlackBerry® Balance™ separates work from personal on the same mobile device, right at a platform level. Find out how it can work for...
- Protection for Every Enterprise: How BlackBerry Security Works Get an IT-level review of BlackBerry® Security, addressing data leakage protection, certified encryption, containerization and much more.
- Live Webcast On-demand webinar: "Mobility Mayhem: Balancing BYOD with Enterprise Security" Check out this on-demand webinar to hear Sophos senior security expert John Shier deep dive into how BYOD impacts your enterprise security strategy...
- Live Webcast Unmasking the Differences between Consumer and Enterprise File Sync & Share The consumerization of IT combined with the rapid pace of the modern mobile workplace is forcing enterprise IT teams to evaluate file sync...
- Live Webcast Workforce Mobilization for Improved Productivity A mobility research director from Aberdeen discusses reasons for extending legacy applications to mobile devices, and an integration strategist from Attachmate shows how...
- Getting Ready for BlackBerry Enterprise Service 10.2 Find out how BlackBerry® Enterprise Service 10 helps organizations address the full spectrum of EMM challenges, while balancing the needs of both the...
- Containerization Options: How to Choose the Best DLP Solution for Your Organization This webcast outlines a framework for making the right choice when it comes to containerization approaches, along with the pros and cons of... All Mobile/Wireless White Papers | Webcasts
As emerging technologies evolve they often find an initial niche in highly specialized scenarios, or in specific industry verticals, before expanding to wider areas of applicability. Within these initial niches, the early adopters can be anything from digital enthusiasts to fashionistas, or they can be folks simply using the technology because it serves a specific need extremely well. (free registration required) more