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Old 02-07-2013, 08:17 AM   #13
fjtorres
Grand Sorcerer
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Slate has an interesting take on this:
http://www.slate.com/articles/techno...ndle_fire.html

Quote:
By printing money and putting it in the hands of Kindle Fire owners, Amazon will increase the demand for Kindle Fire content. More importantly, because Kindle Fire developers will expect higher future demand, they’ll have an incentive to invest in creating things for people to buy. It’s a developer subsidy, but with several advantages over Microsoft’s approach. For starters, since the subsidy directly passes through customers’ hands rather than being hidden from them, it builds goodwill and brand loyalty. More importantly, it avoids the problems with Microsoft’s central planning. The basis of competition is still who can make the apps people want to buy not who can talk executives into writing a subsidy check.
And the free money they'll be giving to users? It's "free" to Amazon.
Last fall they took out "loans" at rates that are lower than the inflation rate. So Amazon is going to stimulate the growth of the FIRE ecosystem with "Other People's Money". Danny DeVito would be proud.

Quote:
And where does the money come from? Let’s go back to those bonds. Amazon’s three-, five-, and 10-year bonds pay interest rates of 0.65, 1.2, and 2.5 percent respectively. That’s nothing. In fact, in inflation-adjusted terms, the three- and five-year bonds literally pay less than nothing. Apple is earning huge profits, then stacking the money up in a vault where its short-term securities earn less than inflation in today’s low-interest environment. Amazon, by contrast, is taking advantage of those low rates to skate by on razor-thin margins and even take on debt to strengthen its ecosystem. It’s a great strategy that other companies—and for that matter national governments—could learn a lot from.
Definitely out-of-the-box thinking going on.
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