[Alderete]

Originally Posted by brecklundin

I think you are forgetting that Amazon and Apple are competitors in other arena's.

They are less competitors than you think. About all that adds up to interesting money is the Amazon Music store, selling music MP3s. Which are, probably 90%, being played on Apple iPods.

The iTunes Store certainly makes money for Apple, but nothing, not even remotely close, to what they make on hardware. With music, most of the sale, from either store, is going to the record companies. Apple is secretly laughing at the record companies that think they are "screwing" Apple, by giving Amazon first access to music that isn't wrapped in DRM, but Apple is hardly hurt by that.

People who download music, the vast majority, own iPods; whether they buy their music from the iTunes Store, from Amazon, or on traditional CDs, it almost doesn't matter. Indeed, the Amazon store strengthens Apple, because it increases the quantity of downloadable music available that is compatible with the iPod.

Sure, having the iTunes Store do well gives Apple bragging rights, publicity, and a general aura of invincibility. They'll be happy to have all of the major labels represented in the iTunes Plus section of the store. But to think that Amazon's music store makes Apple and Amazon serious competitors is pretty seriously wrong.

Originally Posted by brecklundin

[Jobs] is in a way backed into a corner. His sales are actually keeping a competitor profitable and growing. And he really can't stop it from happening or he risks further alienating the few Apple users who are objective as to what gets them the best deal for their money.

(A) Apple and Amazon really are not competitors in any meaningful way, as I described above. (B) So many people think that business is a zero-sum game: for one company to win (sell more), another needs to lose (sell less). This is very 19th Century thinking. Today business relationships are much more complex, and while two (or more) organizations might have competitive interests in one arena, they are most often far less important than their mutual interests.

If your metaphor that Apple was screwed because Amazon was their source for audiobooks, wouldn't the same be true in reverse for iPods and Macs? After all, Apple makes them and sells them themselves, but also sells them through Amazon. Hundreds of millions of dollars of them. Way, way more money involved here than in the audiobooks arena. Don't you think that if Apple really was getting hurt by Amazon, they would apply a little pressure with that lever?

The reality is that both Apple and Amazon want downloadable entertainment -- music, audiobooks, movies, TV shows, etc. -- to succeed, and become more important than physical versions of the same. In a world where that is true, both companies are many times larger, making many times more money. So any expansion of that segment of the industry is good for both companies.

Originally Posted by brecklundin

What happens when Amazon begins promoting that people can buy Audible books directly from them for less. Then Amazon grabs the price conscious customers plus Amazon still gets a cut from those status conscious sorts who like the "warm fuzzy" they get buying Apple at full price while Amazon likely makes the same either way.

How is this any different from Apple's relationship with Audible today? Audible actually sells more audiobooks than the iTunes Store. They have a trusted brand, they do a lot of advertising and marketing, they're quite successful, and the business relationship between Audible and Apple is the same as the new one will be between Amazon and Apple (for audiobooks).

It will always be important for customers to have multiple ways to purchase goods. There's direct from the manufacturer, online stores, Best Buy, Costco, Walmart, etc. Apple doesn't care where iPod customers buy their content. They make a little more when they buy it directly from Apple, but the important thing is for the iPod business to continue to thrive. That will only be true while customers continue to find the devices useful or fun, and in that regard, Amazon is very much helping Apple, to their mutual benefit.