Quote:
Originally Posted by ProfCrash
Someone will figure out how to build a decent e-book bookstore to compete with Amazon. There is money to be made in this industry and a smart person or group of people will figure out how to make a more main stream website that sells books in Mobi and E-Pub at competitive prices.
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Unlikely. Amazon doesn't compete "fairly" in the sense that Amazon is willing and able to have profits made from the sale of TVs and DVD players, for example, subsidize the book division. Someone who came along to build a bookstore couldn't do that.
In addition, the idea that there will always be someone willing to take on Amazon nationally is flawed because it ignores the realities of business building and financing.
Once Amazon has a monopoly, it will be free to raise prices and make a generous profit. XYZ sees an opportunity to underprice Amazon and so wants to build a new national bookstore. Amazon fights back by lowering its prices again, forcing XYZ out of business, and then raises its prices again. The only way to prevent such a scenario would be with Department of Justice intervention, as was done with IBM and Microsoft.
Also consider this. To build a business competitive to Amazon cannot be done in 24 hours; it would take years. How many of us really believe that Amazon would give such a competitor a free ride for years. And where would the competitor get the necessary financing to build an infrastructure to compete with Amazon's already-in-existence infrastructure? Venture capitalists would be unlikely to see any possibility of success in the absence of DOJ intervention and so would be unlikely to invest the billions of dollars necessary to give a shot at success.
As long as Amazon is in a position to subsidize losses in its book division, there is no chance that a new competitor could succeed in the United States. After all, the draw to a new competitor would have to be price, which would have to be a price lower than Amazon's price, yet Amazon has demonstrated a willingness to lose money on books for years in order to dominate the market.
Thinking that a new competitor could come along and immediately challenge Amazon is pie-in-the-sky dreaming.