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  • nemesis_editor_2007 nemesis_editor_2007 Feb 14, 2013 12:25 PM Flag

    Conflating Cash with Motivation to Spend

    "Sure they can. They stock price might go down, but Apple and Google maintain large cash positions so they can do the right thing for the business blah, blah, blah..."

    Apple's problem is this not for components. This if for content retailing. They don't know enough about this kind of consumer behavior and don't have the means to learn. This is why they could say no one reads any more and that ebooks would never amount to anything. Now, after the fact, they are following Amazon's lead.

    Apple may have a lot of money, but if they don't know what to spend it on and how it won't do Amazon shorts any good. Amazon may have less room for error but then they are playing with a full set of data on customers. This is like my playing pin the tail on the short donkey with you being blindfolded and me not. I can easily just walk over to the target and pin it. Zero room (even) for error, but zero errors made. I can give you a million times as many chances (Apple's cash advantage) and maybe after bungling around for a few hours you'll get it. But the party will be long over by then.

    You conflate "a cherry picked set of fundamentals" with a full set of data about expansion cycles. Instead of looking at say Year 1 to 5 of the previous cycle you cherry pick as your starting point Year 4 or 5, the peak of one cycle, and on top of that, omit the implications of that previous cycle from your projections about the current cycle. How dumb can you be?

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    • Dumb is anyone buying at these levels...

    • Not remotely an apt analogy. Apple has been the world's most successful consumer products company over the past decade. Apple knows plenty about consumers. It also knows about capturing economic rents and how and when to alter competitive strategy. Google knows plenty about consumer behavior as well and will know VASTLY more about purchase habits as Google shopping expands. The advantage Amazon has there is limited. And, once they make the changes, their reach and resources will enable them to close the gap rapidly -- they can remove the blindfold quickly...

      • 1 Reply to techstrategy
      • You're conflating two different things. Apple sells 3 or 4 products. Amazon sells millions. They don't know about content retailing. That they missed the boat on ebooks is pretty much proof of this.

        Apple simply sells their own product which is a high ticket item so they get categorized as a "retailer" but they aren't one in the same sense that Amazon is. Amazon can follow you all around their site seeing what reviews you read, when you do so, what you purchase across a wide variety of consumer products, not just the 3 or 4 product lines that Apple sells. All kinds of discussions go on on Amazon's discussion boards about all these millions of products. Apple has no community like this to track sentiment with.

        When was the last time you logged on to iTunes or read or posted a review there? Probably almost never, zero and zero. Jobs cited some data about how people don't read any more when he famously said ebooks would never amount to much. Probably fed to him by some underling. This is how Apple works. They are followers, when it comes to content trends, not leaders. You're confused about producing 2-3 kinds of devices with fancy edges and colors as "knowing consumers" and Amazon's total retail skill sets.

        Another bungle was the price fixing scandal. Only a company that did not understand customers at all could have undertaken such an ill-advised course of "retailing". Apple knows about "design" and about "high margins"; they don't really know much about retailing content. People used to buy their content simply as a consequence of having already bought the fancy hardware. But now that even a lowly near cashless entity such as BKS can produce a sufficient device (Nook) to steal share away form them, this content/hardware combination and it's future don't seem quite as bright as it once was.

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