Amazon, The Best and Foremost Enemy of Apple Part.II

Amazon's strategy could not be further from that of Apple, who swears by the gross margin, but the two companies come together on several issues, starting with the extreme loyalty of their customers. Better roads Amazon and Apple seem to be closer to the point of cross soon: as Apple has expanded the distribution and service (iTunes Store, App Store, icloud), Amazon’s has ventured into the field equipment (Kindle, a tablet soon). Soon, the two companies may well be in direct competition: each will have a complete ecosystem of distributing content to custom equipment designed and equipped with built-in software.

Amazon launched its music store in late 2007, more than four years after the opening of the iTunes Store. The lack of DRM, the highest quality and lower prices than iTunes Store helped catch up: Amazon has quickly become a viable number two, at least in the United States. The size of the catalogs of the two shops is now similar (14 to 16 million according to the counts): Amazon is characterized by regular lower prices, and generally a more flexible fee schedule, while Apple is known to afford some exclusives (the Beatles to name a few).

Jeff Bezos's company managed to consolidate its position as she was only 4% of purchases of digital music in the United States in early 2008, it now accounts for 11.6% of the market. This growth is currently not at the expense of iTunes, solid leader slight increase, reaching 70% market share. In a sense, Amazon helps strengthen Apple, eliminating weaker competitors such as Rhapsody, but Amazon is growing quickly: Apple may need to be wary.

Amazon's business practices are in fact just as formidable as in the early days. For the promotion of Amazon MP3 and its natural extension, the Cloud player, Jeff Bezos has not hesitated to sacrifice millions of dollars to provide music for song bread and gain new customers. Obviously the transaction cost as much as a traditional advertising campaign, with a different conversion rate.

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