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Now browsing: Hometown News > Computer/Technology > Geekspeak

This Week | Archive

Amazon vs. Apple is new tech battle
Rating: 3 / 5 (45 votes)  
Posted: 2012 Sep 14 - 02:54

It wasn't all that long ago that two companies called Microsoft and Apple were locked in mortal combat over the desktop PC market. Microsoft won that war, but that was then and this is now.

Desktop PCs no longer matter, and some believe, are doomed to extinction. Tablets are where it's at now. And the roles have reversed. Apple now is the undisputed king of the hill and Microsoft has been relegated to the role of a minor also-ran.

But the times they are a changin' and there is a new warrior on the battlefield - Amazon.

The Seattle-based company, which began life as a humble online bookseller, has evolved into a goliath of Internet retailing and is positioning itself to become the dominant player in digital content - movies, TV shows, books and music.

So it's not too surprising that Amazon also wants to be the top dog in terms of electronic devices to consume that content. Which could be very bad news for Apple.

That company had no problem holding off dozens of other rivals attempting to muscle into its tablet business. Major players like HP, Toshiba, Motorola and RIM all tried, but barely made a dent in Apple's market share. That all changed a year ago when Amazon introduced the Kindle Fire. It was smaller, less powerful and a far less capable tablet than the much adored iPad, but it also was a hell of a lot cheaper -- $199 vs $499 for the cheapest iPad.

Apple fans sneered. "Price doesn't matter," they said. "The iPad is just soooo much better."

They were wrong, at least about the price. Amazon claims it captured 22 percent of tablet sales in the past year - a remarkable feat given how poorly every other iPad competitor has done.

And now, Amazon is about to double down. Just after Labor Day, the company announced an entire new line of Kindle Fire tablets that are arguably just as capable as the current generation iPad - and certainly superior in some respects. And perhaps more importantly, still a lot cheaper.

The cheapest is an updated version of the current Fire with a faster processor and more memory. Price: $159. But the real news is new Kindle Fire HD. The two versions, with 7-inch and 8.9-inch screens, will have almost the same resolution as the much ballyhooed Apple "Retina" display, a comparable processor and, according to Amazon, far superior Internet streaming capabilities - all the better for consuming all that Amazon digital content. Pricing: $199 and $299. (The 8.9-inch model, a tad smaller than the iPad, is scheduled to go on sale in late November.)

This could be a real game changer for all those folks who have been sitting on the sidelines when it comes to tablets. It's one thing to shell out $500 for one of these gadgets on the hope you might actually find it useful. Quite another to get nearly the same thing for $200 less. My bet is a lot of these tablets are going to be under Christmas trees this year.

How can Amazon sell these things so cheap? The company is quick to admit it is basically selling them at cost. It hopes the big money will be in the digital content sales. And, of course, the Amazon tablets are designed expressly to nudge users into buying as much of that as possible.

The tablets will be powered by an Android operating system - the same as nearly all other Apple competitors. But Amazon has customized it to look different and, more importantly, to lock users into buying only from Amazon's own marketplace. The broader Google "Play" store, used by generic Android tablets, is not available. (Google owns Android.)

This is bad for consumers but good for Amazon - a move very similar to what Apple has done with its entire ecosystem. If you own an Apple product, you must go to Apple's own stores to download music, books, movies and apps.

So you see the two divergent business strategies at work here. Amazon sells hardware at cost on a bet it can make more money on digital content. Apple sells hardware with huge profit margins but makes less on content. It will be interesting to see how this plays out.

Tony Briggs has been writing about technology issues for more than 20 years in the Daytona Beach area.

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