Just read a Reuters article about Apple v Amazon – addressing the question of who is going to “win”.
It’s an interesting question. The article conflates stock price growth potential with e-reader market share competition. Although stock price is somewhat correlated with e-reader sales, the two variables are not causal. Still, it’s an intriguing debate.
Apple is trading at 17X earnings. Amazon is trading at 40X earnings. Apple is a manufacturer whose success is tied to creating hit products. Amazon is a retailer whose success is tied to managing a portfolio of products. No brainer calculus in my opinion: if you believe Apple has at least one more monster hit like iPod or iPhone in it’s future, then 17X seems like a bargain compared to 40X.
As for Kindle v iPad, this is a silly debate imho. Kindle is a single purpose device and it does its thing very well. The iPad hopes to replace my netbook and kindle. It will have to be brilliant for me convert. The jury is out for now. But I am betting that apple will win. Maybe not in 2010 but soon.
Why? Who is more likely to create a monster successful consumer electronics device – a retailer competing with walmart or the inventor of the iPod and iPhone – the two most iconic devices since the Sony Walkman?
Simple math IMHO.
Full reuters article: