Newsletter Issue #618: Don’t Forget That Apple,
Amazon and Google Have Different Business Plans

October 3rd, 2011

I suppose you might think that companies who build or license competing products are in the same business, with similar business plans. But that’s not always true.

Take Apple. You know precisely what butters their bread. They are in the business of selling hardware and services. Just about everything they sell is intended to deliver a good (some say high) profit, and they are experts at it. Consider how they manage to maintain those profit margins, even in areas where you just know their prices are equal or better than the competition. The struggles makers of tablets face to meet the cost of an iPad comes to mind.

With the release of the new Kindle Fire, you have to think that Amazon is in the business of making consumer electronics gear. That may be true, but not necessarily to do so at a profit. Indeed, what surprised some is the revelation that it costs more to build a Fire than the $199 sale price. Well, at least that’s the price that Amazon will charge when the gadget goes on sale in November. Some speak of a loss of up to $50 for each unit sold.

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