Apple and Online Pricing Tactics
February 13, 2010
I found the Techwatch story “Apple Wants Cheaper TV in Time for iPad Launch” useful because it showed the tactical mismatch between Amazon and Apple. Amazon is a digital discount store, moving closer and closer to eBay. Apple blindsided Amazon with its pitch to publishers for eBook pricing that left Amazon twisting in the wind, to use a Nixon era phrase. Amazon countered with a misstep and then capitulation. To make Amazon’s management disarray more evident to me, Amazon announced the Kindle software development kit. Good luck with that. I own a Kindle first generation and a Kindle second generation. Neither has enough power to get me to use the clunky on board search system. Most system functions such as moving media from the Kindle One memory to the SD card I installed is so painful I don’t fool with the function. Amazon is going to have to add some serious horsepower to the Kindle to get the basics to work in way to find acceptable before I think of letting one of the goslings code up an Amazon app.
The Techwatch story underscored how Apple’s book play was the equivalent of sacrificing a pawn in chess. Books are just not going to be where the money is in the future. Check out your own kids. How many of them are going to buy books when there are other ways to obtain information. The Apple push for cheaper TV shows, reported in the Techwatch story, makes clear that Apple knows exactly what sells and what price points are needed to generate big bucks. I think the publishers may be in for a surprise when the iPad finally comes to market. Save the magazine and newspaper industry? Great idea. The gizmo is for TV. Book readers will pay whatever the going rate is. The problem is that there are more non book, newspaper, and magazine readers. Price accordingly.
Apple knows pricing.
Amazon wants to be Google, eBay, Apple, and Wal*Mart. I think Amazon is skating on thin ice. Some hints can be found in studies about commoditization. The difference is that plumbing and marketing are going to be needed to cope with Apple and Google.
To round out my comments, what about eBay, Microsoft, and Yahoo? Are these the first team? Here’s how I view the players. Remember, this is my opinion. eBay seems to have an identity crisis. Microsoft is more like IBM or a baby Ling Temco Vought. Yahoo is—well, I think—a 1998 portal.
In this list of four, which are the players whom you would choose first for your digital softball team:
[a] Yahoo
[b] Google
[c] eBay
[d] Apple
[e] Amazon
[f] Microsoft.
Post your answers and the one compelling reason to the comments section of this Web log. I know which I would choose. I will go with the companies that make things happen, not companies that are reactive and tactically weak.
Stephen E Arnold, February 13, 2010
No one paid me to write this. I will report non compensation for tactical metaphors to the commandant of the Army War College. Those folks are into tactical superiority.
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