
“Think Profit.” - FluidDjango
http://techcrunch.com/2012/02/01/is-this-nuts/
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x3c
Article is off base. Telling corporations to think about profit is like
telling someone to think about breathing. It's always in Corporation's mind to
think of profits. What differs here is the strategy. Profit in the long term
compared to profit in the short term.

Apple is in a unique position to achieve one without compromising the other.
But Amazon is not in that position. Majority of their business is reselling
products, they need to make sure their platform is best at reselling products.
Kindles are not the products they're selling, it is a platform they're using
to sell products.

So, they're investing in platforms that will keep users loyal to the company
and be a preferred destination for buying things. One can always analyze if
this strategy is good for it's intended purpose or not, but that analysis is
no part of the article. Discussion on this strategy is worthwhile.

Comparison with Walmart, to some extent, is fair. But brick and mortar sellers
face very different challenges than the virtual shopping platform like Amazon.

EDIT: By "reselling product" I meant to convey "selling other people's
products". Not the best choice of words.

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jasin
The juxtaposition between hardware being the loss-leader over software, and
vice versa, is interesting. The article states that "clearly one model is
working and one isn't". I'm not sure if this is really the case. For example,
in the games console business, the devices were loss-leaders for a long time,
but at least Microsoft is now doing more than OK with its Xbox business -
granted it took a while to get there. So, over time, loss-leader hardware
isn't necessarily a bad strategy.

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mathattack
Interesting article. It basically cover loss leaders. Not news, but perhaps it
was to apple.

HP gives away printers to sell ink.

Safeway cuts the price of bananas to 30 cents a pound so you'll buy overpriced
oranges.

It appears the same with Amazon and the Kindle.

It's possible to make a great product, but lose money with poor strategic
positioning. What makes Apple so much money is they nailed BOTH the product
and the business model that allows them to make money.

It seems clear the business model mindset is there to stay. Will the product
revolution continue? This is one reason the P/E is closer to that of a more
mature company.

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Zakuzaa
Can someone with knowledge explain to me why is AAPL's P/E 12.99 and AMZN's
130.72?

Source: Google Finance.

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fraserharris
Investors don't believe AAPL can appreciate significantly more than it is
already valued. A mature blue-chip stock has a P/E ratio of 8 - 12.

More generally, it is really hard to compete with AMZN, because they maintain
such narrow margins. AAPL relies on continued (hit-generating) innovation
which is prone to distruption.

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rimantas

      > AAPL relies on continued (hit-generating) innovation
      > which is prone to distruption.
    

And as history shows, the disruptor is Apple itself.

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pagekalisedown
The uncertainty now is that they don't have Steve Jobs.

I hope, for Apple's sake, they don't become Steve Ballmer's Microsoft.

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rimantas
iPhone was introduced after 2,5 years since inception. I guess they have some
stuff in pipeline for some years to come, also (I hope) the culture is still
there.

