An interesting thesis here, that it is really Amazon that Apple should be worrying about. Indeed, the argument is taken further, in that it's Amazon that everyone should be worrying about, including Microsoft and Google.
The basic idea is that yes, Apple is superb at making high end, high margin, products that people are willing to pay top dollar for. Microsoft as we know has a lock on the PC operating system, on Office and does well in games. Google, while we all think of it as a search company is really an advertising company. I can't recall whether it's 90% or 98% of their revenues that come from advertising but either number shows that that's what they are, a very good media sales company.
Now, the thing is that the cloud is making such things as operating systems and office productivity suites somewhat moot: they're not about to disappear but they are seeing their market being eaten into. Games are also moving online and this might affect that area of Microsoft's business. And who is the leader in the cloud? That would be Amazon.
As for advertising, Amazon's ad revenue has just gone through the $1 billion barrier. Sure, small compared to Google but it is moving in the right direction.
And as for Apple, here's the point that resonates with me the most:
Whereas Apple only knows how to do high-margin businesses, Amazon only knows how to do low-margin businesses. Guess which one tends to dominate markets over time?
I wouldn't say that I'm entirely convinced, not wholly, but it is something worth thinking about. You can carry on and prosper in high margin businesses only so long as you are sufficiently ahead of everyone else's offerings to be able to continue to charge those high prices. Absent that it really is the low price, low margin, guys who will come and eat your lunch.
So the crux of this is how long, or even whether, Apple can keep ahead of everyone else's innovation efforts. No, I don't know either but that is essentially what the long term bet is.
