Henry Blodget started it with a long Business Insider post entitled “Sorry, Apple Fans, Amazon Is Sucking The Profit Out Of iPads — iPhones Next?” in which he argued that Apple’s enviable (and growing) profit margins are finally getting seriously challenged.
SplatF‘s Dan Frommer followed up with a simple chart, produced for ReadWriteWeb, that summarizes the differences between Apple’s and Amazon’s approaches to profitability. Apple makes hardware in order to make money. Amazon makes hardware to get people to spend money in its stores — stores that so far are only marginally profitable, at least compared with Apple.
Which leads us to the question Apple investors have been asking for years. If Apple makes so much more money for its shareholders than Amazon, why do Amazon’s shares command such a premium on Wall Street? See chart below.