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Old 12-21-2012, 12:33 AM   #46
wizwor
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Posts: 979
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Join Date: Nov 2011
Device: kindle, fire
Let's start at the beginning. Fire does not compete with iPad. Bezos said so and I believe him. Amazon phone will not compete with iPhone. Amazon's ecosystem is and product line is competing with Apple's ecosystem and product line. With me so far?

Apple understands this. That is why Apple introduced the mini. The mini says, "Amazon doesn't sell anything we don't sell."

When someone wants to buy or rent media, they will be choosing between Amazon with it's tablets, phones, Prime, and Instant services and Apple's tablets, phones, and itunes.

Unless you are already invested in Apple, Amazon is significantly less expensive. If their products are good enough, a lot of people will choose cheaper. If you are an AAPL investor, you should be wondering if it will be more difficult to attract new customers for existing and future products. Already, I can buy my whole family Fires for the price of an iPad. What if this Amazon phone comes with a family friendly shared plan? Supported by offers? AAPL investors may wonder if Apple is going to have to reduce margins to maintain market share.

If Apple has to start competing on price, their model falls apart. The profits fund R&D, marketing, and dividends. If Apple doesn't roll out the next amazing thing, then they ae just expensive versions of what everyone else is selling. If they cut marketing, then no one will know how amazing their products are. If they cut dividends, their investors will flee.


So, when it was announced that the Amazon phone is a lot closer than the next amazing iThing, there was a great disturbance in the Force, as if millions of AAPL share holders suddenly cried out in terror and were suddenly silenced.
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