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Amazon bites Apple, by Meredith Greene
October 14, 2011 | 1:30 am
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By a TeleRead Contributor
With the success of the various Kindles and much of the eBook market firmly under its belt, Amazon seems to be gaining on Apple’s success, nearly coming up to a virtual eye-level with the tech giant just as the latter’s beloved founder unceremoniously left the planet. Quarterly reports and forecasts have always been the staple upon which the market analysts feed but in today’s market, pageviews and unique visitors catch the attention of the average consumer and industry blogger alike.
Amazon’s pageviews in the U.S. were up 26% in September and 19% in Q3 versus a year ago, while unique U.S. visitors grew 25% to 79 million. Amazon’s new project–the reasonably-priced tablet known as ‘Fire’–appears to have re-kindled consumer interest (no pun intended). According to BusinessInsider.com, “at one point screenshots of Amazon’s internal inventory system suggested that it was taking 50,000 Kindle Fire orders per day.” If true–and such orders continue–then the Fire could conceivably sell 4.5 million units by the end of 2011, especially in light of the upcoming holiday season… though one must point out that Amazon is not known for its willingness to give the general public exact sales figures. Fire appears to be making headway among the fellow readers and industry contacts; the excitement over such an affordable tablet has current Kindle owners in a tizzy.
“Forget the iPad,” one of my fellow writers emailed me in response to my query on the subject. “I want Fire. A 50% savings like that couldn’t come at a better time.”
Apple, on the other hand, recently disappointed fans and the world-wide market alike in not revealing the iPhone 5… a rather underwhelming start of the season for the Cupertino orchard sans Jobs. Add to this the reports hitting various web-based news outlets (back in September) indicating that Apple was reducing its production orders for the iPad 2; most tech bloggers shrugged this news off as “normal” but JP Morgan analysts disagreed, forecasting that the iPad 2 would fall short of its year-end sales projection by two million units. Couple this with MacGeneration’s news release today stating that Apple CEO Tim Cook has emailed company employees with the news that they’ll get some “extra time off” with pay for Thanksgiving, and a few more bites from the crisp contours of the apple logo seem to materialize.
All rumors and site data aside, the stock behavior of both companies is another facet to consider: Amazon stock is on a steady 52-week high, while Apple stock has been bobbing back and forth with an unusual amount of volatility, and this in spite of its record highs. Jobs stepping down and then leaving altogether may just have given Amazon the edge in the tablet race, not that they really needed any more of the market than they already boast. Comparing what eBook statistics I can find from Amazon to those of iBooks and iTunes, Amazon appears to be the clear victor, though these numbers stem from mere vague allusions from the company, itself, and not solid figures.
Third quarter earnings for both companies should iron out the rumors, projections and predictions into some more tangible facts. Considering the Q2 reports, it would be an enormous feat for Amazon to overtake its arch-rival; their second quarter earnings were nearly $10 Billion, but Apple’s were just shy of triple that figure.
However, barring Apple coming out with a truly innovative new gadget—emphasis on ‘new’–Amazon will likely sit on its holiday laurels, savoring its super-sized portion of eBook sales as unrest in the global tech market rides roughshod over corporate earnings reports.
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Comparing Apple and Amazon is a bit like comparing apples and oranges. Different companies with different goals.
But it’s interesting to see a negative spin on Apple’s launch of its new iPhone that ignores actual numbers and facts. And that iPad. Trying to derive failure out of some supply chain report from a non authoritative source? Kudos on that.
And apparently Apple is, once more, doomed because the stock market is in flux, like it has been for months, and Tim Cook is rewarding employees for a job well done after multiple major product releases.
@andy: Apple and Amazon may have *begun* as very different companies but in recent years they have ben moving in the same direction, going after digital content and services, and are headed for an all-out confrontation with each other, with Google, and to a lesser extent with Microsoft.
Now, their philosophies *are* different: Apple seeks to squeeze as much revenue from its customers by maximizing the take from each transaction (hence their relial on high margins and fees) while Amazon seeks to maximize the customer base with low-margin products and services so they can live off the repeat business. Apple lives off the short-term, hence their reliance on hype and “coolness” and constantly obsoleting their products; with Apple it is always about the next cool toy. Amazon plays the long game; they are always looking for incremental gains to build on, always looking for volume and scale. Apple sees customers as a resource they own and can restrict access to or charge to access, essentially another product; Amazon conversely sees *themselves* as the product; their skills and their efficiency is what they really sell.
Differences in corporate culture aside, both are targeting digital media as a growth area; both rely on walled-garden platforms, both seek to add value and lock-in via remote “cloud” services and resources, both try to control the customer relationship and are extremely secretive about what the do and how they do it. (Lost in all the hype over the Fire is that Amazon introduced an entirely new generation of eink readers and vague word on them only leaked out–if it was actually a leak–the day before.)
With Fire, Amazon is in fact challenging Apple; they are challenging the mantra that 7in is too small, that cheap equals crap, that only Apple can make a good consumer media consumption device. And it is the latter that Apple needs to worry about: if content producers find viable alternatives to the iOS garden, they will finally have an answer to Apple’s take-it-or-leave-it fees, they’ll have leverage.
As I said, Apple is about fat, juicy margins; Amazon is about being lean and mean and prospering off paper thin margins. Polar opposites. The clash is inevitable. Amazon must fail or Apple’s entire business model is at risk.
Its going to be fun to watch.
Ah, the ol’ take-my-word-out-of-context-and-ignore-the-rest ploy. Gotta love the slap-dash emotionally-charged commenter. Hyphens for you. I will say, however, that you sound as if you are still in mourning for Jobs and a trifle bitter.
Felix Torres on the other hand, stellar job at pointing out both facts and looking at the limitations of both companies through the goggles of the consumer. This is just the type of informed feedback I was looking for.
They really aren’t the same kind of companies. Apple only does one thing, expensive tech gadgets. Amazon sells a bazillion different things, has a bunch of subsidiaries, has the best Cloud Services for business (my company saves at least $10,000/month by using Amazon instead of a physical data center), they are a publisher with several imprints, and then, as a small part, competes with Apple in one area. Amazon’s diversity is its strength, they don’t need just one silo or one customer base to be successful. If the Fire fails, which doesn’t look to be the case, Amazon has dozens of other ventures to take up the slack.
Apple is the realm of the Neiman Marcus type of shopper. Expensive, designer labeling, etc. They go for the status symbol. Amazon is more like Target, good quality for an affordable price for regular people. Affordability is especially important in today’s down economy.
Amazon also has the #1 customer service in the world. No other company lets you return an ebook for any reason within 7 days. They have also replaced defective Kindles outside of the warranty period in some cases.
Yeah .. Apple doesn’t sell music … or software … or computers, or anything like that .. just gadgets…. yeah .
A laughably inept and incompetent article desperately trying to mix ridiculous extrapolation with utter nonsense to promote Amazon and dis Apple. It couldn’t have been more obviously written by an Amazon marketing team.
If “Apple, on the other hand, recently disappointed fans and the world-wide market alike in not revealing the iPhone 5″ then why are pre-sales 65% up on those for the iPhone4 ?
If extrapolating Amazon’s ‘rumoured’ sales in the first few days to annual sales is the new method of comparison can you please extrapolate the iPhone4 pre-orders across to annual sales ? Or would that be too logical for you ?
If iPad2 manufacturing orders are slightly down on last year could it possibly be due to the crippling recession and the imminent arrival in 2012 of the iPad3 ? No those would be far too obvious explanations to fit the transparent agenda of the article.
The writer also seems to lack all understanding of the tablet market if he thinks that the Fire and the iPad are in any way comparable products. The iPad is the top of the range tablet, and the Fire is a grossly underpowered tablet, basically souped up eReader. They appeal to completely different users and the market will be expanded as all new markets do.
“Amazon seems to be gaining on Apple’s success, nearly coming up to a virtual eye-level with the tech giant just as the latter’s beloved founder unceremoniously left the planet.”
This really does stretch the imaginations ability to define ‘success’. Are you really inviting a look at Quarterly Reports and Forecasts ??
Amazon’s 2nd quarter results in 2011 showed an 8% fall in profits with Profits of 191 million. Apple’s profits for that period were 7.3 BILLION.
Are you really serious when you say that Amazon is ‘coming up to a virtual eye-level with the tech giant’ ? Ok we get it that you are excited about Amazon, and you want them to succeed. But some sense of perspective and reality might be worth considering when you write your next weighty tome.
“Couple this with MacGeneration’s news release today stating that Apple CEO Tim Cook has emailed company employees with the news that they’ll get some “extra time off” with pay for Thanksgiving, and a few more bites from the crisp contours of the apple logo seem to materialize.”
I have no idea what this is supposed to mean.
One is loath to comment on such articles since they seem to be wholly speculative, not to mention risking the ire of foaming fanboys. So here is a source for a rather opposite view for would be investors.
http://www.gurufocus.com/news/145911/price-to-sales-and-operating-margins-aapl-and-amzn
Huh. After 20+ years of using/liking Apple things ( not that you would know or care ) since before before they were “status symbols”, I think I’m entitled to a small amount of emotional attachment to one of my preferred computing tools. At least enough to hope for a more balanced comparison than this was.
Liking the tools you use for work or play is not a crime (heck, I even like Visual Studio and .NET even if they come from “evil” Microsoft – they pay the bills for my Apple toys.) Buying things from Amazon? That’s just another luxury for the privileged. That’s where the difference is to me. Apple makes things I use. I can always buy things from some place other than Amazon.
Oops… Apologies for wandering OT.
@Howard- I have to say that I think you are mistaken in thinking that the iPad and the Fire will not be competing with each other.
I was thinking how nice an iPad would be, but once I saw the Fire I was like I want that instead! The iPad is a great item, but I just want it for surfing the web, reading and media stuff. I see no reason that the lower end Fire could not do that just as well. So I think that the price conscious consumer is going to look at the Fire and think that it would be a good option to go with instead of the iPad.
Felix,
I have to confess I read any comment you write anywhere that I find them and I wish you would do a blog so it’d be easier to get your always well-informed, balanced analyses on things.
I’ll add one thing though, re the non-leak of e-Ink devices coming. It’s not that this didn’t leak but that the world was or is not nearly as interested in b&w as in dazzling color (and I’m sometimes one of the latter too).
I keep a page of the stronger Amazon tablet rumors to see, after it all ends (with the 10″ coming) how accurate (or not) the various articles citing strong sources have been.
That’s at http://kindleworld.blogspot.com/p/list-of-stronger-amazon-tablet-rumors.html
I mentioned in an opening paragraph that one rumor was about a smaller e-Ink Kindle as well — and this was David Carnoy of CNet back in May, and he repeated this strong prediction in two other articles I saw later but which I didn’t blog. He was just reminding people and I noted (to myself) that he was still on it. No one in the Comments area ever said anything to the e-Ink parts. It’s considered ‘passe’ by many.
In the live-blogging of the Nook Touch announcements May 24, Carnoy inserted into his time-logged remarks: “7:50 a.m. PT (David Carnoy): Everyone should be aware that Amazon will [likely] do this same device within the next few months. Just an FYI. There will be a smaller Kindle this fall IMHO (with a touch screen).”
The “[likely]” was added a bit later. He’s a fairly conservative writer and wouldn’t just pop off with no reason, so I felt he was told about work being done and then softened it.
Nick Bilton of the NYT, July 14 described the challenges facing Amazon’s Touchco company in making a touchscreen that would retain the darkness and crispness that Kindle 3 users prize — and I’ve found the Nook Touch text-to-background too grayish although high res. Same complaint is made of the iriver and Kobo, and many Nook Classic owners openly wished the NookTouch fonts were as dark as the first Nook’s.
On July 16, Bilton said he talked with someone who “works with Amazon” but wasn’t authorized by the company to speak publicly, who mentioned a few issues “during the last half year that included both the tablet(s) and the touchscreen Kindle. He wrote, “…engineers have had trouble integrating the technology into the Kindle e-readers because it can reduce the intensity and crispness of the screen.”
I did feel Siegler was fed wrong info on e-Ink touchscreen e-readers when he said they weren’t due until next year. I think he was given information that would cause people to underestimate what would be announced all around. He said ‘single core’ processor for the tablet and an older Android build than 2.x …
When on the day before the NY event, AppleInsider’s Concord securities analyst, Ming-Chi Kuo, who gets his info from companies producing and shipping products and of course anyone eager to talk off the record, gave very detailed information on the two e-Ink e-readers that would be announced the next day and that the Fire would not be $250-$300 but $199, no blogger but me would repeat it, but I’d been watching it and I did report what was being said, though I said I had NO idea if the analyst had a great rep or not, but I knew that AppleInsider has a very decent one.
Between Carnoy, Bilton’s report on Touchco’s statements, and this detailed report by Kuo, I did expect we’d see the e-Ink announcements. I thought another clue was that their announcement a week earlier was 95% in b&w with a splash of orange. That struck me, as it seemed a statement by Bezos, that their Ground was still e-Ink.
Kuo gave just too many details in an interesting table as far as the innards were concerned, and companies shipping will have this info. Where he was wrong was, as with Digitimes most of the time, with being too optimistic with shipping dates to customers. I think they feel that once it leaves Taiwan, then it’s ready for the customer, but no, there’s a lot of work to be done after that.
Len Edgerly did a couple of reports about going into the NY event and hearing an always on-top-of-everything blogger and also Gizmodo’s Brent Rose both saying they’d be seeing only a tablet that day and they expected no e-Ink announcements. But the clues had been there.
It’s just that the world is in color (although novel pages tend to be in b&w and that’s another important factor), and so it’s natural that people get more excited about bringing more color into their lives and tend to ignore what’s currently considered by most gadgeteers not cool and, of course, colorless
I’m mixed. For fun stuff I have the NookColor while enjoying more than ever expected the Pocket Edge, which I rooted to v2.2.1 and I love that I can send long text reports from webpages to the ePaper screen that’s on the other side of it and write notes w/ the stylus. Playing with Android everything is fun and I’ll miss that on the Fire but am looking fwd to what they do with the Silk browser and the server calcs. I can’t imagine they won’t be somewhat bogged down at first
I’ve never had a spot of trouble with Cloud Player though (mp3′s).
That they’re so busily sync’g things everywhere on everything (and now Personal Docs even on the apps, as Nate and you predicted for us) , that’s just a monster system.
The Library lending is as smooth as can be, in my case, so I’m delighted and hope the Silk, with a lot to do, actually does work for us. That is such a scaled-down tablet, it’ll be important that it does.
BYTE magazine had a podcast on an eventual hybrid device from Amazon, e-Ink and LCD back to back. KUO, who has been so accurate on the NYC announcements was reported by Joshn Ong as saying,
“The company is also reportedly preparing an 8.9-inch tablet with an “amazing form factor” for release in the second half of 2012, though suppliers are said to be having a tough time meeting Amazon’s requirements for the device.”
Maybe that’s it. But I’ll be watching Kuo’s predictions a bit more than I had before.
Meredith,
Digitimes says that “recent market speculations indicate that Apple is likely to launch a lower-cost iPad model” ($250-$299 US) … “in early 2012)…”
Howard, we’re talking about takes on producing and marketing competing toys, so I don’t understand the harsh language … it’s all just opinions.
Amelia – I honestly suggest that your comment illustrates my very point.
Andrys: “Howard, we’re talking about takes on producing and marketing competing toys, so I don’t understand the harsh language … it’s all just opinions.”
I don’t think I am being ‘harsh’. I am being forthright and strongly critical. We’re all grown ups here. I haven’t been personal, or offensive or insulting. As you say, it’s all opinion. But there are facts at their core and they should be straightened out sometimes.
Howard wasn’t being harsh; he was merely inserting his opinion in among the facts, something all humans do.
I did however laugh very hard at “obviously she’s from the Amazon marketing team.” Wouldn’t that be nice? I suppose, using your logic, that you are on Apple’s?
Meredith .. I am glad you didn’t take my comments personally, as they most certainly weren’t intended to be so. Everyone is entitled to their opinion and assessment, especially your good self.
and long may it continue to be so.
As regards your quote, I cannot find that quote in my comments anywhere … but responding to your wider point, what I would say is that the difference between your article and my comment/response is that you are the article writer and blogger, and I am a mere responder. I would also point out the several factual corrections I made. Other than that I agree that it’s one person’s assessment against another
Best wishes.
None taken at all, in fact I appreciate reading the opposing views as much as the congenial. If I mixed up your remarks with another’s, please accept my apologies. I read a ridiculous number of articles,poem,stories and comments each day and it is a struggle to keep them from running together. Regards – MG