Top-Rated Free Essay

Amazon vs Apple

Good Essays
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 Kindle Fire, which was introduced last year, it is pressing forward with a full-fledged ecosystem strategy. It is pairing substantial carryover (the entire range of its ebook activities coupled with current users' ebook libraries) with substantial investment. Amazon is sacrificing hardware margins to position the Fire as a low-priced tablet and is subsidizing the participation of book publishers and movie studios in order to allow its core Amazon Prime customers to access books and videos with the device.

It pursued this very same course with great success when it launched the original Kindle in 2007. The big difference is that the eReader market of 2007 was an open field; the tablet market of 2011 had a dominant giant. Jump-starting a competitive value proposition this time around required a significantly larger ecosystem footprint and, as Amazon's investors know all to well, a significantly larger investment.

Amazon is differentiating itself from Apple in terms of both its footprint and its profit model. Apple captures the bulk of its profits the moment an iPad is sold, while its partners capture value over time as users consume services. In contrast, Amazon's profits accrue over the lifetime of the customer with every on-platform purchase In this regard, Amazon's incentives seem more aligned with those of its media partners ("we win together over time") than Apple's with its partners ("I win first; you later...maybe").

Aligning, enticing, and — occasionally — subsidizing partners are the new ante in the ecosystem game. Amazon and Apple will go down as case studies in alternative strategies for succeeding in ecosystems. Their product-focused rivals will illustrate what it means to be "stuck in the middle."

You May Also Find These Documents Helpful

  • Better Essays

    Brief Summary Founder Jeff Bezos of Amazon created the “world’s largest bookstore” and is widely known for providing a wide selection of books which has expanded in the “late 1990’s, first with DVDs and videos and then with consumer electronics, games, toys, software and gifts.” (Kotler & Keller, 2016) Later that same year Amazon introduced Amazon MP3, which became a direct competitor to Apple iTunes and was accepted by all major music labels. Later Amazon launched the kindle which became their…

    • 1191 Words
    • 5 Pages
    Better Essays
  • Good Essays

    Article: How to see whether economy is fully recovered from recession through inflation rate? U.K. inflation slowed more than economists forecast in April to a seven-month low and producer prices rose the least since 2009 as fuel costs fell. Consumer prices rose 2.4 percent from a year earlier, down from 2.8 percent in March, theOffice for National Statistics said in London today. The median forecast of 35 economists in a Bloomberg News survey was 2.6 percent. Core inflation also cooled, while…

    • 538 Words
    • 3 Pages
    Good Essays
  • Powerful Essays

    Ebay vs Amazon

    • 2137 Words
    • 9 Pages

    EBay vs. Amazon Introduction: In a world where trade is increasingly becoming digitalized online, there are new and challenging strategies emerging. This essay aims to analyze and determine these strategies. Considering the example of eBay and Amazon, their business models and their multi-sided platforms, we can compare them to decide which strategies work in this market and how, in the future, they can keep a competitive edge as the market continuously changes. However, as Amazon and eBay…

    • 2137 Words
    • 9 Pages
    Powerful Essays
  • Powerful Essays

    Amazon vs Starbucks

    • 1815 Words
    • 8 Pages

    References: http://beta.fool.com/acardenal/2012/11/09/starbucks-swot-analysis-tasty-coffee-stock/16100/ http://beta.fool.com/ddelony/2012/12/28/swot-analysis-amazon/18812/ https://sites.google.com/site/quickservicecoffeei/vrio-analysis http://www.slideshare.net/sharvan316/starbucks-case-study-2675777#btnNext Rothaermel, F.T. 2013. Strategic Management Concepts. McGraw Hill Irwin.…

    • 1815 Words
    • 8 Pages
    Powerful Essays
  • Powerful Essays

    Might be useful for setting a background http://www.managementexchange.com/blog/whos-really-innovative Fourth are the cyborgs, companies like Google, Amazon and Apple that have been purpose-built to achieve super-human feats of innovation. You won't find much industrial age DNA in these organizations. These companies have been built around principles like freedom, meritocracy, transparency and experimentation. They are so endlessly inventive and strategically flexible they seem to have come from…

    • 6577 Words
    • 27 Pages
    Powerful Essays
  • Best Essays

    Amazon vs Wallmart

    • 2716 Words
    • 11 Pages

    Amazon vs Wallm Amazon vs. Walmart Alexandra Tikhonkikh Professor N. Kentish Metropolitan College of New York The case study Amazon vs. Walmart is illustrated several concepts, which was described in the chapter. One of them is a sales Revenue Model where companies get revenue by selling…

    • 2716 Words
    • 11 Pages
    Best Essays
  • Best Essays

    Ebay Vs Amazon

    • 3029 Words
    • 13 Pages

    Introduction Amazon and Ebay are two well-known brands of online shopping sites. They have evolved and grown from small firms to the giants of e-commerce today. In this essay, a comparison would be made between the two firms. Questioning the types of business models Amazon and Ebay’s have employed and how they have evolved over time, the driving factors of change, and finally the future outlook of each firm help distinguish the trails both firms made to become the two leaders in the market of…

    • 3029 Words
    • 13 Pages
    Best Essays
  • Satisfactory Essays

    Apple Vs

    • 377 Words
    • 2 Pages

    com/articles/2012-03-29/apple-s-war-on-android ARTICLE SYNOPSIS In the article Apple Vs Android the case dealt with technology patent lawsuit. Apple currently pays Samsung over seven billion annually for components used in the Apple Ipad and Iphone thus making them Samsung’s biggest customer. Each company depends heavily on the other for without Samsung parts Apple’s operations could come to a grinding halt. LEGAL ISSUE Apple has accused and brought suit against Samsung for “slavishly copying” Apple with their…

    • 377 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    Amazon Vs Walmart

    • 798 Words
    • 5 Pages

    case? Business Value Chain Model series of activities activities where competitive strategies can be applied primary vs secondary Porters competitive forces model view of firm, competitors and environment Traditional Competitors New Market Entrants Substitute products and services Customers Suppliers Analyze Amazon and Walmart.com using the value chain and competitive forces model Amazon Activity Example Secondary Activity Administrative, finance infrastructure Legal, accounting, financial management…

    • 798 Words
    • 5 Pages
    Good Essays
  • Good Essays

    Walmart vs Amazon

    • 607 Words
    • 3 Pages

    Oder winner and qualifiers “Today there are over 4,000 Walmart Stores in the U.S. and over 3,000 internationally.” In other side, Amazon is the world’s largest online retailer. so both of them must be covering the elements of business quite well. There are several aspects that I want to talk how they win orders from customers. First, both of them have a low price of their products. Second, they have fantastic quality management and customer services. Finally, their deliveries are satisfied by…

    • 607 Words
    • 3 Pages
    Good Essays