Microsoft and Apple should hit Amazon, not Google
Ads, devs, hardware – Bezos has it all
Posted in Management, 6th March 2012 18:32 GMT
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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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COMMENTS
Active Myth Manufacturing & The August Effect
This article is what I call Active Myth Manufacturing. I chalk them up to what I call 'The August Effect' where authors write filler articles because their brains are on vacation.
Amazon has nothing Apple wants that it hasn't already got:
• Apple's iTunes Store already rules the music market and there are no signs of Amazon changing that fact.
• Amazon LOSE MONEY with the sale of every Kindle Fire. There is no indication that the Fire has eaten ANY Apple iPad market share. This is because the Fire is in a different market. It's closest competitor is the Barnes and Noble Color Nook. Every article about the Fire competing with the iPad is merely a work of imagination. There is no money in this market. Why should Apple care?
Meanwhile:
• Amazon rules in the Internet book market and there is no sign of that changing. Apple doesn't care.
• Amazon is attempting to make a dent in the insecure Android app market. Apple doesn't care.
• Amazon is the best department store on the Internet. Apple doesn't care.
Apple isn't going to care either. Apple remains consistently FOCUSED on their best abilities and best strategies. There is no sign of that changing either.
Re: Active Myth Manufacturing & The August Effect
Agreed. A small US centric, content consumption device that has limited appeal beyond the Amazon system, really won't have Apple worried.
Something like a global Windows 8 tablet that has access to all of Amazon's content, plus the content from almost every other media company around, is the tablet Apple should/does fear.
Is it bad...
... that I correctly predicted two things from the headline alone? Thing the first: that it would be a Matt Asay article; thing the second: that I would disagree with it.
Re: And this is what sucks...
"inferior shit like Xbox and iPads"?
If a product came to market that was demonstrably (and undeniably) better I don't think any amount of budget would stop it from being a success. This is especially true now that 'the power of the internet' allows people to share their personal preferences so widely.
"Apple and Microsoft have so much money they can buy whoever they want"
Are you trying to say that these two companies are immune from criticism because of their budgets? Is this your first visit here by any chance? I think it's fair to say that El Reg has a fair few folk who haven't been brainwashed yet...
"If they designed and engineered their products correctly, they wouldn't need to fight"
Apple inparticular have quite a reputation for their design quality even if you disapprove of every other aspect. It's also quite hard to think of any product that came to market in a form which was unimprovable.
Amazon have nothing to worry about, it wasn't the last wish of a dying man that they should be destroyed at any cost.
The new Office:
