“The bottom line,” he writes, “is that consumers will now have a full range of attractive options in the tablet market, many of which are priced well below Apple’s premium tablets. This is a big change from two years ago, when the only tablet competition came in form of tablets that were both worse than the iPad AND more expensive.”
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.