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Amazon vs Apple

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Amazon vs. Apple: Competing Ecosystem Strategies
by Ron Adner | 11:59 AM March 19, 2012
The most viable rival to Apple's iPad isn't produced by a traditional hardware firm. Samsung, Motorola, Toshiba, HP, RIM and HTC have hardly made a dent in Apple's dominance. Remarkably, the leading challenger is online retailer Amazon, with its Kindle Fire tablet.

The innovation game is changing. Delivering great products is no longer sufficient for success. And as the Fire's limited memory, ho-hum processor, and and lack of camera demonstrate, great products may not even be necessary. Rather, what matters is delivering great solutions.

This shift from products to solutions matters to everyone. In industries ranging from consumer electronics to construction and from media to mining, the firms seizing the lead are those that can best align ecosystems of offers and partners.

In the past, product-focused success depended on exploiting capabilities — in branding, manufacturing, distribution, etc. — to deliver the best product. In contrast, today's champions focus on carrying over relationships — with both consumers and partners — to deliver the best experience.

For example, when Apple expanded from music players to phones, it carried over to the iPhone not just the technology and software that powered the iPod but also users' entire music collections and its music store's entire supplier base. This was not about creating switching costs (iPod users could continue to listen to their iPod while using Nokia phones). Rather, it was about leveraging existing relationships to create enhanced offers (by porting over your iTunes collection, Apple made the iPhone more valuable to you). By carrying over elements from the iPod ecosystem, Apple gave the iPhone a running start.

In the rush to match the pieces, most of Apple's rivals have missed the critical connections that draw the entire ecosystem together into a coherent whole.

The big exception is Amazon, With the...