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Originally Posted by Pardoz
I don't think you can separate the two that cleanly. You could as easily say that Amazon is fundamentally a content company: selling Kindles is primarily a means to drive e-book sales.
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You could, but in the case of ebooks, you'd be wrong.
Bezos has publicly and explicitly stated that Amazon's intent is for both the devices and the content to earn a profit. They did not want to go for the "cell phone model" (where the device is subsidized by content revenues and/or enforced contracts) or the "iPod model" (where content is subsidized by hardware sales). As a result, you have Kindle apps for multiple devices, including ones that would otherwise present a competitive challenge (e.g. iPhone, iPad etc). That could change, but so far it seems to still be the case.
In comparison:
In Q4 2009, Apple generated approximately $9 billion on iPhones and iPods, but only $1 billion on all iTunes store sales. iTunes revenues have been flat for years, while iPhone revenues in particular have expanded dramatically. And note that is revenues, not profits; i.e. they don't have to fork over 70% of their hardware revenues to 3rd party content providers.
Again, I don't think Apple is going to treat all that content as loss leaders, but I have little doubt they view selling the iPad itself as a much higher priority than selling ebooks. To Apple, ebooks are just one of many things you can buy for your iPad, and by setting up their own store they gain a higher level of control over the experience. (I'm mildly surprised they even set up their own ebook store.) At a minimum, they aren't worried about beating the ebook content competition on price.
It's pretty well understood that at its core, Apple is a hardware company, and it views software and content as a means to drive hardware sales. The revenue figures and trends should make that very clear. That's a primary reason why they didn't turn into a software company like Microsoft; why Jobs put the brakes on "Macintosh clones;" why they go for vendor lock-in; why they aren't likely to produce a netbook or a cheap desktop (it would cannibalize higher-margin sales) and so forth.
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Originally Posted by Pardoz
Apple saw that synergy with music but dropped the ball completely on books. Amazon picked it up and ran with it, and now Apple's moving to intercept before they get completely shut out of the game.
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...?
The ebook market it still small, and "first-mover advantage" is largely superfluous -- as Sony, who entered the ebook reader market years before Amazon, can attest.
Apple doesn't care about dominating the ebook market, if they did they would never have let a competitor have a 50% price advantage over them.