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Microsoft and Apple should hit Amazon, not Google

Ads, devs, hardware – Bezos has it all

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Open ... and Shut Amazon is on a roll, and it's no longer just a question of dominating online retailing or public cloud computing. According to a Business Insider article, Amazon is already clearing more than $1bn each year in advertising revenue. This has Google scared. But it probably should have Apple scared, too.

Amazon, after all, is the anti-Apple. Whereas Apple only knows how to do high-margin businesses, Amazon only knows how to do low-margin businesses. Guess which one tends to dominate markets over time?

Amazon's fork of Google's Android is a far bigger threat to Apple's iOS than Samsung or other Android licensees ever were, because it comes backed by an entire ecosystem of Amazon-supplied content. This hurts Apple, but it also minimises Google's benefits from Android, as well, as Amazon's Kindle Fire comes with an Amazon browser, not Google's. And Amazon, not Google (or Apple) cleans up on content purchased through the device.

This is just one reason that Goldman Sachs has Amazon leapfrogging the now-dominant Apple in 2013 in terms of growth. In fact, this same report shows Apple's growth seriously slowing in 2013, while Amazon remains on a torrid growth pace.

High-volume, low-margin businesses can do that even as the global economy remains stagnant.

Unlike Google, which continues to invest in a dizzying array of mostly also-ran products, Amazon follows Apple's model of doing a few things really, really well. In Apple's case, this translates into a tight selection of hardware. In Amazon's, it means high-volume, low-cost sales, whether it is selling books or cloud storage.

Simplicity, as Cloudscaling's Randy Bias notes, scales. And Amazon, more than any other cloud provider or online retailer, knows simplicity – and scale. This is perhaps Amazon's greatest strength, as Redmonk's James Governor illustrates.

All of which is why Apple, Microsoft and others should be focusing their attention on Amazon, not Google. Google is bearing the brunt of patent attacks from Microsoft and Apple, for example, but it is Amazon that is best positioned to walk away with the grand prize. Amazon is looking good in online advertising, hardware (Kindle), content sales, and more. It is also increasingly understands how to appeal to developers – more so than Google or even Microsoft.

Amazon is the team to beat because it appeals to consumers, as well as the developers who serve them.

Yes, it has plenty of challenges. Some, like Zynga, have outgrown AWS and have moved on to build their own private clouds. And yes, some partners and customers are growing wary of potential lock-in to Amazon's cloud services, even as content providers worry about the retailing giant undercutting their margins on everything from books to lawn mowers.

But this is just a symptom of its success. When companies like Netflix start calling you the "iPhone of the Cloud," it means they may resent your success, but it also means they can't afford to ignore it. ®

Matt Asay is senior vice president of business development at Nodeable, offering systems management for managing and analysing cloud-based data. He was formerly SVP of biz dev at HTML5 start-up Strobe and chief operating officer of Ubuntu commercial operation Canonical. With more than a decade spent in open source, Asay served as Alfresco's general manager for the Americas and vice president of business development, and he helped put Novell on its open source track. Asay is an emeritus board member of the Open Source Initiative (OSI). His column, Open...and Shut, appears three times a week on The Register.

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