Peter Kafka

Recent Posts by Peter Kafka

Amazon: We’re No Apple

Nope, no Apple TV device from Jeff Bezos today.

Instead, the Amazon CEO spent most of his time going after one of Apple’s core products: His new line of Kindle Fires is aimed directly at Apple’s iPad, even though he never mentioned the company or its tablet a single time.*

But beyond the specs and stats Bezos trotted out today, his most interesting compare-and-contrast exercise was rhetorical: Amazon, he spelled out, isn’t in the gadget business, but the retail business.

In his words: “We want to make money when people use our devices, not when they buy our devices.”

That is: Amazon is selling Kindles and Kindle Fires so it can sell more stuff to consumers. That could be by selling them more media, like ebooks and videos, or by getting them to buy more physical goods, via Amazon Prime. Or it could be by advertising, which was also curiously absent from Bezos’s pitch today.**

All of which Apple does as well. Except for Apple, the equation is reversed — it is most definitely in the hardware business.

Last quarter, Apple generated $9 billion in iPad sales, and another $16 billion in iPhone sales. But it only generated $2 billion in iTunes sales, and its iAd business is mostly an afterthought.

That disparity certainly isn’t a new idea, and I’m not sure if it matters at all to consumers, who are unlikely to see how the strategy impacts any of their retail choices.

But Bezos must think it matters, or he wouldn’t belabor it onstage.

*Bezos did mention other tablets running Google’s Android, but only in passing, and only to argue that no one wanted to buy them. And now, thanks to Dan Frommer and The Verge, I see that the iPad was mentioned on Bezos’s slides more than once.

**Bezos didn’t mention ads, but he’s selling them: All of the new Kindle Fire models will feature at least a dusting of ads.

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Just as the atom bomb was the weapon that was supposed to render war obsolete, the Internet seems like capitalism’s ultimate feat of self-destructive genius, an economic doomsday device rendering it impossible for anyone to ever make a profit off anything again. It’s especially hopeless for those whose work is easily digitized and accessed free of charge.

— Author Tim Kreider on not getting paid for one’s work