Thursday, November 10, 2011

Apple Vs Amazon

Apple's iPad has been able to outperform its competitors of lower price, and offer a better value-per-dollar compared to other tablets of equal or greater price. For all intensive purposes, Apple has enjoyed a comfortable stranglehold on the tablet market, with the freedom to charge whatsoever it pleased - until now. On Wednesday, September 28, Amazon released its next generation of Kindles. The Amazon Kindle was the original e-reader, offering many thousands of books and other reading materials on a lightweight, easy-to-read handheld tablet. Amazon is still offering this basic Kindle, and now offers a Kindle that has 3G wireless capability, allowing its users to download new materials, at no additional charge. These rudimentary reading devices have never offered a true threat to Apple's iPad in the past though. It is only the introduction of Amazon's newest Kindle, the Fire, that is making Apple feel the heat of competition.

Amazon is releasing their newest product as the direct competitor to the iPad, and they are wielding the sword of cost-savings. The Amazon Fire is capable of providing its owner with all of the reading, viewing, and listening content available through Subscribers are even able to access media on a unlimited basis for an annual fee of about $80. Although the Fire does not offer the computing capabilities of the iPad, it challenges entertainment portion of the iPad directly. Now that there are two strong companies in the market for tablets, and vying eagerly for any customers in this relatively new market, each must take a strong stance in its corner of the ring, and establish a rock-solid foundation and strategy which will be able to both compete directly with the other, and differentiate itself enough as to justify the difference in cost.

Previous to its new threat, Apple's stance has been clear. It offers arguably the best product, at usually the highest price. Despite quite nearly forfeiting a limb for each Apple product, most Mac-heads will swear by their products. They are intuitive, easy-to-use, and reliable. On top of their outstanding performance, Apple's service is almost second-to-none. Yet with the introduction of a new, formidable competitor, we the consumers and investors will watch how this battle of the tablets unfolds. Amazon has clearly taken the stance of offering a direct replacement for the entertainment function of the iPad at 30% the price. However, Amazon's approach is not to offer a superior or equivalent product to the iPad. Amazon plans to offer a medium to extend its superior service to its existing customer base of tens of millions of online members. In essence, Amazon has brought its legendary service backed by years of experience in the online industry to the tablet market. It is not fighting fire with Fire. It is attempting to light the Apple orchard ablaze. The Fire will not ship to buyers until mid-November, so until that time we can only speculate how Apple will respond to this challenger, if at all.

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