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Amazon reportedly in talks to buy TI's mobile chip division

post #1 of 63
Thread Starter 
Amazon is reportedly looking to bolster its mobile device division by purchasing the smartphone chip division of Texas Instruments.

The online retailer's apparent pursuit of the TI mobile chip division has prompted speculation that Amazon plans to build its own smartphone and compete with Apple's iPhone, according to Reuters. The two companies already compete in the tablet market, with Amazon's Kindle Fire taking on the iPad.

If Amazon were to purchase TI's smartphone chip business, the deal is likely to be worth billions of dollars. The rumored deal is seen as a strategic move that would allow Amazon to better compete with Apple and Samsung, two rivals that already design their own mobile chips for tablets and smartphones.

Amazon already utilizes TI's chips in its Kindle Fire lineup, and Amazon Chief Executive Jeff Bezos also touted the performance of TI's components at a recent media event. And TI has indicated it plans to exit the wireless business in an effort to grow profits.

Apple's A-series chips


A potential buyout of TI would be of particular interest to Apple because its chips are found in many of the company's devices, including the new iPhone 5 and the latest iPod touch. TI provides the touchscreen controlling system on a chip for both newly released devices.

Last month, it was also said that Apple was actively courting employees from TI to bolster its own chip development. The A6 processor found in the iPhone 5 is the first custom ARM processor designed entirely in-house by Apple.
post #2 of 63
This get's very interesting. Your move Tim. Amazon's stock will be interesting to watch after this rumor.
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post #3 of 63
Quote:
Originally Posted by digitalclips View Post

This get's very interesting. Your move Tim. Amazon's stock will be interesting to watch after this rumor.


What do you suggest?

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post #4 of 63
Quote:
Originally Posted by digitalclips View Post

This get's very interesting. Your move Tim. Amazon's stock will be interesting to watch after this rumor.
Well their stock is down so far this morning.
post #5 of 63
Buying TI's mobile chip division for billions of dollars would make Amazon a money loser.

Last quarter, Amazon only made $7 million in profit. Amazon lives in the slim profit world and loves living there.

Yet, it costs hundreds of millions to billions of dollars to keep churning out new chips each year. For example, Apple spent about $0.5 Billion to create the A6. And it will spend another amount to create the A7. And so on.

Since Apple is in the high profit margin world, it can afford to pay for the design of its own chips.

Amazon does not.
post #6 of 63
Microsoft will make its own ARM chip optimized for Windows for Surface devices within a couple of years.
post #7 of 63
Originally Posted by eastofeastside View Post
Microsoft will make its own ARM chip optimized for Windows for Surface devices within a couple of years.


You said that before (despite only appearing to have one post), but there's no evidence of it at all.

Originally posted by Relic

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Originally posted by Relic

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post #8 of 63
I don't see ti being of much use to amazon in the near term. It's hard to imagine them entering into the worlds most capital intensive business with 0 manufacturing experience and very little mobile device experience. It may make sense a few years down the line if amazon makes some major progress in mobile devices but that is a huge if. Deja vu of hp buying palm all over again
post #9 of 63
I'm waiting for Google to buy a chip business. Because that's the natural progression from search engines.

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"Apple should pull the plug on the iPhone."

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post #10 of 63
That would seem like a very odd move, even if they made the purchase for pennies on the dollar. Amazon doesn't buy enough chips to make it justifiable at current levels; even HTC buys more processors than Amazon. The ongoing development costs are also very high, which makes it hard to imagine why another customer would purchase chips from them. The chips do have a pretty good margin in quantity, but that is only around $6/unit.
post #11 of 63
Quote:
Originally Posted by eastofeastside View Post

Microsoft will make its own ARM chip optimized for Windows for Surface devices within a couple of years.

They must hurry because they haven't started yet, Microsoft doesn't own an ARM architectural licence. 

post #12 of 63
This is really really interesting.  In the 90's and early 2000's the accepted mantra was for software OS, software apps, hardware, etc. to be separately developed, sold, and then integrated by hardware OEMs.  Apple bucked this trend and as performance currently drives the most interesting mobility [and perhaps smallest laptops, Air?], where power, weight, display, etc. performance is most demanding [including manufacturing].  As observed by Clay Christensen and observed by Horace Dedui, in this situation integration is needed to be competitive but more importantly to meet unsatisfied customer jobs to be done.  Apple has brought into house what it considers key software and hardware technologies, SAMSUNG has the hardware technologies and is trying to bring into its "platform software and eco-systems.  Amazon has ecosystems, has forked Android [so kind has the SW], but hardware is needed to get the integration complete.
 
As observed with IBM, DEC, Prime, etc., eventually, the products become good enough and modular assembly aka 90's PCs returns as right business model.  So are SAMSUNG and Amazon getting on board early or is the pace of smartphone and perhaps tablet technology moving so fast that we will be back to modular by the time they get their act together and they get disrupted by Lenovo, ZTE, and Huawie.  My bet is on the Chinese.  The danger of the fast follower [or copier] is you are so focused on the leaders butt you don't see the changes coming.
post #13 of 63
This I will believe when it happens. Lol.
post #14 of 63

I was about to say this is the dumbest idea I have heard, but that is not true, other companies have made the same stupid move.

 

Really, I am having a really hard time even entertaining this is even being considered. Apple made a smart purchase, bough a no name small company who made processor chips with one real customer (i.e. the government)  and turned it into what they wanted it to be. If Amazon buys TI mobile chip business with all its already existing contracts would be nightmare for a company who has no real clue about running a technology. They will have so many competing interest to deal with it will be a major loser for the.

 

Again you have someone who thinks apple success is due to them buying chip company, it just one piece to the pie and Apple knew they could not truly differentiate their product without controlling the design of the processor. Look what Motorola did, they own their own chip designs and manufacturing and some stupid wall street type said they was a bad ideal so they sold it all off. They could have been in prime shape to take on Apple with their own designs and they threw it all away. 

post #15 of 63
Quote:
Originally Posted by Maestro64 View Post

Apple made a smart purchase, bough a no name small company who made processor chips with one real customer (i.e. the government)  and turned it into what they wanted it to be.

It's a little more than that, Apple bought two B2B companies, one specialised into cpu power efficiency (P.A Semi) and the other (Intrinsity) responsible for Samsung's hummingbird design.  Those two acquisitions made Apple core ARM engineering dept. 

post #16 of 63
Originally Posted by Suddenly Newton View Post
I'm waiting for Google to buy a chip business. Because that's the natural progression from search engines.

 

Well, if the "natural progression" from Internet physical book sales is buying a chip company, Google will have some 'splainin' to do. lol.gif

 

I'm concerned about what happens to all this intelligence and innovation in the stuff Amazon is buying up when their bubble finally bursts and they collapse. Hope it's not lost in the chaos.

Originally posted by Relic

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Originally posted by Relic

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post #17 of 63
Quote:
Originally Posted by Suddenly Newton View Post

I'm waiting for Google to buy a chip business. Because that's the natural progression from search engines.

Google's move was getting Motorola, I still wonder about Google strategy.

post #18 of 63

it's starting to revert back to control your ecosystem.  The era of 'commodity' computing and 'layers' has evolved to App/Device/EcoSystem/Cloud.  

 

App = the stuff that does stuff

Device = The new 'API'/Library/code suite

Network Layer = the gHz of the new model (as my wife say's  I need more "G's")

Ecosystem = OS Platform 

Cloud = Data layer... 'Intelligent Storage'

 

When you look at it this way, you see how the 'money lays out,'  If you compare iOS devices with 'MS Office' or Oracle Financials, or SAP, you start to see why the hubbub.  It's the optimal point of lockin.  Microsoft was 'okay' until MS-Office and Windows kicked in... and those two things defined the 'experience' of Microsoft (badly, but it did).   

 

I posit that it's the Device (coupled with the device OS) that drives money into the system now, by attracting users, app builders and critical mass for the ecosystem (ITMS/AppStore/iCloud).

 

Amazon, realized this and saw the Kindle as the same tool... Different ecosystem, but the same ends.   

 

As that stands, it can't let Apple get too far ahead, but more importantly, it can't allow Google and Microsoft to be 'in 2nd'   3rd place is a slow death in this game.

 

In the current classic tiered model (non-Apple), the primary shares of the money is made on code suite (Office/Oracle/SAP) and in the OS (Windows).  Functions are derived by tweaking the back end (OS) and tying it to the suiteware... and let the end user or the developer integrate those into the custom apps that users then buy, which drive suiteware and ecosystem purchases. 

 

Cloud is effectively a RAID... highly redundant, and highly scalable 'data' (yes, there is a whole lotta smarts there, but to the end user, it's just a picture of a TV set on a 'Buy Me Now" page, or the 'Play Now' Button at the bottom of a NetFlix page).

 

So you start to see the reason why Amazon Apple and Google and johnny come lately Microsoft are competing at the Device Level.  Given that, in 10 years, how will you differentiate devices?

 

 

So, the next click in this game is to drive the functionality of the device, which means faster and less power consumption in the same basic form factors (phone, small tablet, and large tablet).  So that pretty much means either being the same (and lagging slightly behind the Samsung/Google alliance), or differentiating.

 
I'm not saying it's smart to copy, but it's a model that Apple is exploiting, and Microsoft is cash rich enough to attempt, and Google is BatSh*t crazy enough to doubledown on with it's MotoMobility plans.  So if I'm Bezos (a smart cookie), I'd be looking at making my Kindle's the best device possible, linked to the best retail ecosystem possible,  with arguably the best cloud system possible.   The latter 2 are done, so it really comes down to turbocharging the Kindle with power and battery to spare, to make it's uber attractive to developers.
post #19 of 63

Microsoft ARM architectural license:

http://www.eetimes.com/electronics-news/4204863/Microsoft-takes-ARM-license



 

Quote:
"Microsoft has signed an architectural license agreement with ARM Holdings plc, giving the software giant access to the ARM processor architecture and the freedom to design its own ARM chips. "

Edited by eastofeastside - 10/15/12 at 8:59am
post #20 of 63
Quote:
Originally Posted by island hermit View Post


What do you suggest?

I mean I doubt the stock holders will feel comfortable with Amazon stretching even further.
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post #21 of 63
Quote:
Originally Posted by Tallest Skil View Post

 

Well, if the "natural progression" from Internet physical book sales is buying a chip company, Google will have some 'splainin' to do. lol.gif

 

I'm concerned about what happens to all this intelligence and innovation in the stuff Amazon is buying up when their bubble finally bursts and they collapse. Hope it's not lost in the chaos.

 

Amazon is not a 'book company' It's a retail company, that is getting into building devices the help people 'consume' products that Amazon sells.   The problem is Google and Apple sell stuff too.   Amazon needs to maintain 'Point of Sale Parity'  (PoS as an acronym being a double entendre)    

 

If you look at 'splainin,' Apple was a HW company that got into the music selling business, then the movie selling business, then the movie rental, then the camera business, then the book selling, then magazine selling business.

 

I do agree that Amazon's P/E is crazy... and this is a cash sink.  But can you see a better way to compete with Google and Apple, and eventually Microsoft (who makes Google look like a saint when it comes competitive technologies sharing their platform ).

post #22 of 63
Quote:
Originally Posted by Rogifan View Post

Well their stock is down so far this morning.

That's what I expected.
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post #23 of 63

That's all Amazon stock holders need to hear. Put a few billion that they can not afford into a business that they know nothing about, while breaking even or even losing money on Kindles. Love to see how high Amazon's P/E's can go before investors wise up on this company.
 

post #24 of 63
Quote:
Originally Posted by TheOtherGeoff View Post

Amazon is not a 'book company' It's a retail company, that is getting into building devices the help people 'consume' products that Amazon sells.   The problem is Google and Apple sell stuff too.   Amazon needs to maintain 'Point of Sale Parity'  (PoS as an acronym being a double entendre)    

If you look at 'splainin,' Apple was a HW company that got into the music selling business, then the movie selling business, then the movie rental, then the camera business, then the book selling, then magazine selling business.

I do agree that Amazon's P/E is crazy... and this is a cash sink.  But can you see a better way to compete with Google and Apple, and eventually Microsoft (who makes Google look like a saint when it comes competitive technologies sharing their platform ).

There is, of course, a major difference.

Apple was not selling Samsung or Microsoft or Amazon products, so when they went into new markets, they were not setting out to compete with the customers who keep them in business.

OTOH, Google bought Motorola - which means that Google is now in competition with its Android licensees as well as some of its key advertising 'partners'.

Microsoft wants to sell Surface hardware - which puts them into competition with its OEMs.

Amazon wants to build and sell its own devices - which puts them in competition with companies who sell devices through Amazon (although the devices they are competing with make up only a very small portion of Amazon's revenues - and most of them are resellers rather than their direct competitors.
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post #25 of 63
Could Amazon want this division for something else entirely?
They have a pretty serious cloud computing business and mobile chips are starting to look like a realistic choice for some types of servers now.
post #26 of 63
Quote:
Originally Posted by digitalclips View Post


I mean I doubt the stock holders will feel comfortable with Amazon stretching even further.

 

I was actually talking about the "Your move Tim" part of your comment.

 

My suggesting for Tim would be... "Start laughing!".

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post #27 of 63
It's interesting this move towards bringing more and more chipset in-house. I wonder where it will end...
post #28 of 63
Quote:
Originally Posted by jragosta View Post


There is, of course, a major difference.
Apple was not selling Samsung or Microsoft or Amazon products, so when they went into new markets, they were not setting out to compete with the customers who keep them in business.
OTOH, Google bought Motorola - which means that Google is now in competition with its Android licensees as well as some of its key advertising 'partners'.
Microsoft wants to sell Surface hardware - which puts them into competition with its OEMs.
Amazon wants to build and sell its own devices - which puts them in competition with companies who sell devices through Amazon (although the devices they are competing with make up only a very small portion of Amazon's revenues - and most of them are resellers rather than their direct competitors.

No major difference.  You just seeing the short game, and the foibles of Apple's competitors to get to where the Long game is being played.... Control of the eyeballs now is at the device level.

 

The long game is the ecosystem.  

 

 

Apple wanted people to buy iPods/iPhones/iPads, and the original gating factor for non-nerds was the buy/rip/download aspect of it. The fact that ITMS came about made iPods easy to buy...  Apple sold music at 'break even' remember?  Apple's Ecosystem drives sales of HW, but the Ecosystem (that precious AppleID with a active creditcard) makes it hard to leave.   If anything, Apple is in the 'content delivery' business now and it's devices are optimized to give you the best content delivery (e.g. Retina displays, airplay/AppleTV) at a price you will find compelling.

 

Everyone else's plan is selling HW to maintain control of their software/adware/sellware revenue ecosystems.

 

Microsoft wants to sell Surface to remain SW viable, to drive people to Office365, to maintain a need for Windows Server in the backoffice.   It complains that it's OEM's sell crap, so it needs to make a reference platform. 

 

Google is driving people to Google  Wallet/Marketplace as well as search to makeit's ad hit numbers.  Why do you think Android is free?   Google buying Moto hasn't generated any 'flagship' products... it was all about the Patent Portfolio. 

 

Amazon wants to drive people to the Amazon Market.  I don't think you followed my logic at all.  Much like the world trying to avoid Google Search for privacy's sake,  Amazon wants to avoid Android devices and Apple devices to avoid any possibility of them seeing buying patterns of it's users.

Amazon doesn't want sell Kindles for a profit... it wants to sell kindles at such a low price  to sell books and grills and diapers for a profit.

post #29 of 63
Unless Amazon is wanting to compete in the high end, I can't see this as being a good move for them. What exactly will they be buying? The design teams? The foundries? I can understand them wanting a design team, but not a foundry.

Even so, it takes years to come up with something different. It took Apple years to come up with the A6. The chips before that were designed in conjunction with Samsung, with Apple's own advances.

As Amazon has no chip design teams at all, they would be getting is what TI is doing for them already. What advantage is there to that, especially since Amazon seems to be their biggest customer already?

This will be a burden to them. If it happens, we'll have to see exactly what was bought before giving it a useful evaluation. But we'll be reading simplistic articles about this for a while now that won't get into the gritty portions of what happens in cases like this.

For example, Apple has vast chip needs. In 2013, they will need at least 300 million SoC's. possibly a fair amount more. The next year, they will need at least 30% more than that, and possibly more.

But what about Amazon? It's not likely that even with expanding Kindle reader sales that they will need more than a fraction of that. Their tablet sales are funky. High sales the first quarter, and then dropping greatly after that.

Phones? Is that a really good idea? What can they offer? It would have to be another Android phone of some form, in a crowded market dominated by Samsung. They do have an ecosystem, but is it enough to make a big dent? They've got to get carriers to handle it too, and not just in the US, if it's going to sell well enough for its own chips.

This just seems to be another attempt by Bezos to copy Apple's successes. It will take years for it to have any impact, and I wonder if Amazon's shareholders will continue to give them the time as they have been doing so far.

Edit: typo's and spelling.
post #30 of 63
Quote:
Originally Posted by festerfeet View Post

Could Amazon want this division for something else entirely?
They have a pretty serious cloud computing business and mobile chips are starting to look like a realistic choice for some types of servers now.

Interesting Concept.  Sort of like Google's custom CPU blade...  a potential  'side benefit' but I don't see AC2 as the driver, as long as electrical power is as cheap as it is.  OTOH, the ability to have a device where I can read a book for 20 hours without charge is a big deal.

post #31 of 63
Originally Posted by tasslehawf View Post
It's interesting this move towards bringing more and more chipset in-house. I wonder where it will end...

 

Every platform has its own chip architecture. Apps must be specifically written and optimized for each platform to get decent performance anywhere. 

 

Now that the dystopia's out of the way… 

Originally posted by Relic

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Originally posted by Relic

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post #32 of 63
Quote:
Originally Posted by TheOtherGeoff View Post

No major difference.  You just seeing the short game, and the foibles of Apple's competitors to get to where the Long game is being played.... Control of the eyeballs now is at the device level.

The long game is the ecosystem.  


Apple wanted people to buy iPods/iPhones/iPads, and the original gating factor for non-nerds was the buy/rip/download aspect of it. The fact that ITMS came about made iPods easy to buy...  Apple sold music at 'break even' remember?  Apple's Ecosystem drives sales of HW, but the Ecosystem (that precious AppleID with a active creditcard) makes it hard to leave.   If anything, Apple is in the 'content delivery' business now and it's devices are optimized to give you the best content delivery (e.g. Retina displays, airplay/AppleTV) at a price you will find compelling.

Everyone else's plan is selling HW to maintain control of their software/adware/sellware revenue ecosystems.

Microsoft wants to sell Surface to remain SW viable, to drive people to Office365, to maintain a need for Windows Server in the backoffice.   It complains that it's OEM's sell crap, so it needs to make a reference platform. 

Google is driving people to Google  Wallet/Marketplace as well as search to makeit's ad hit numbers.  Why do you think Android is free?   Google buying Moto hasn't generated any 'flagship' products... it was all about the Patent Portfolio. 

Amazon wants to drive people to the Amazon Market.  I don't think you followed my logic at all.  Much like the world trying to avoid Google Search for privacy's sake,  Amazon wants to avoid Android devices and Apple devices to avoid any possibility of them seeing buying patterns of it's users.
Amazon doesn't want sell Kindles for a profit... it wants to sell kindles at such a low price  to sell books and grills and diapers for a profit.

Despite some people calling Bezos a genius, like SJ has been called, there's no evidence that his ideas of profit making products is actually working. Indeed, the evidence is that it is not! His genius is in making investors think that he is a genius in what he is doing. Meanwhile profits at his company have been continuing to be elusive, long after he promised they would be steady, and much larger.

He's underestimated how much his business would cost to run, and expand. This idea of selling hardware for break even, or at a loss, as seems more likely, is a foolhardy one.

Apple understands where profits come from, while Amazon does not. Apple intentionally produces a small profit from content in order to prevent those divisions from falling into loss, as they should, while reaping excellent profits from the hardware people buy because of the low prices on the content.

But Amazon makes no more profit on content than does Apple, and has no where else to make their profits from on their hardware. It must be remembered that even before Amazon came out with Kindle's, their profits were low, nonexistent, or negative. For years, investors were told that big profits were coming, if they just gave Amazon a bit more time. It never happened.

It's not going to happen now!

This seems to be much more of a vanity product line for Bezos than anything else. He just wants to be seen in a high tech area, rather than in low tech retail.

Spending billions on this now, it a mistake. They don't need it. Do they think that suddenly, the guys at TI will come up with something much better than they are doing now? What's the likelihood of that?
post #33 of 63
Quote:
Originally Posted by island hermit View Post

I was actually talking about the "Your move Tim" part of your comment.

My suggesting for Tim would be... "Start laughing!".

Gotcha ... well I was meaning get your own production away from Sammy and safe somewhere else and also what you said.
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post #34 of 63
Quote:
Originally Posted by TheOtherGeoff View Post

No major difference.  You just seeing the short game, and the foibles of Apple's competitors to get to where the Long game is being played.... Control of the eyeballs now is at the device level.

Nonsense. The long term objectives have nothing to do with how easy it will be for each party to accomplish this.

Microsoft is competing directly with all of their major customers - and will have to deal with the repercussions of that.

Apple is NOT competing with its customers, but is rather bringing even more value to its customers.

If you can't see the difference, you have no business even commenting.
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post #35 of 63

As an AAPL investor, I'd love to see Amazon make this move.  It would make no strategic sense and drain the company further of working capital with "losses made up in volume".   It fits exactly in the Bezos wheelhouse  Most of Amazon's working capital is made up of holding cash from consumer purchases and delaying payments to merchants and vendors.  It is a house of cards.  And when it falls, it is going to fall fast and hard 

 

And, as much as I dislike Google, I hope Google figures a way to shut Amazon off from getting future versions of Android..  The way they went around it was just bad business.  In the same vein as how Google stole multi-touch from Apple  

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post #36 of 63
Quote:
Originally Posted by melgross View Post

Unless Amazon is wanting to compete in the high end, I can't see this as being a good move for them. What exactly will they be buying? The design teams? The foundries? I can understand them wanting a design team, but not a foundry.

Even so, it takes years to come up with something different. It took Apple years to come up with the A6. The chips before that were designed in conjunction with Samsung, with Apple's own advances.

As Amazon has no chip design teams at all, they would be getting is what TI is doing for them already. What advantage is there to that, especially since Amazon seems to be their biggest customer already?

This will be a burden to them. If it happens, we'll have to see exactly what was bought before giving it a useful evaluation. But we'll be reading simplistic articles about this for a while now that won't get into the gritty portions of what happens in cases like this.

For example, Apple has vast chip needs. In 2013, they will need at least 300 million SoC's. possibly a fair amount more. The next year, they will need at least 30% more than that, and possibly more.

But what about Amazon? It's not likely that even with expanding Kindle reader sales that they will need more than a fraction of that. Their tablet sales are funky. High sales the first quarter, and then dropping greatly after that.

Phones? Is that a really good idea? What can they offer? It would have to be another Android phone of some form, in a crowded market dominated by Samsung. They do have an ecosystem, but is it enough to make a big dent? They've got to get carriers to handle it too, and not just in the US, if it's going to sell well enough for its own chips.

This just seems to be another attempt by Bezos to copy Apple's successes. It will take years for it to have any impact, and I wonder if Amazon's shareholders will continue to give them the time as they have been doing so far.

Edit: typo's and spelling.

 

 

 

I agree with your points.

 

Stepping back a bit... It seems to me, what Microsoft, Google and now Amazon (and to some extent Samsung) are doing -- is jockying for control of the [non-laptop] mobile market.

 

If we take it as a given, today, Apple has control of the mp3 player, high-end smart phone and tablet markets, as well as the digital content delivery ecosystem... Then:

 

  • Had Microsoft devoted the time and effort, they, likely, would have a first-class mobile Office suite running on smart phones and tablets and integrating with the Microsoft Office suites running on Windows and OS X computers.
  •  
  • Had Google been satisfied with their lot in life in 2008, dominating search, maps and advertising -- they, arguably, might be in a better position serving searches, maps and ads to the mobile market.
  •  
  • Had Amazon been satisfied with integrating the best 'hard-goods" ecosystem into the dominant mobile digital content ecosystem -- they too, arguably, would be better off than they are today.
  •  
  • Then, there's Sammy... ahh, what can I say.

 

 

When Apple disrupted the mp3, smart phone, and tablet markets -- there were a few under-performers  -- addressing, but not satisfying, a limited market.  There were no markets (by today's standards) until Apple created them.

 

 

Now, these outliers (Microsoft, Google, Amazon and Samsung) are trying to control already established markets that are being successfully served.   There really isn't anything to disrupt.  There are only a few niches that can be served -- but no low-hanging  fruit.

 

 

The siren-song of "control" has tempted these companies to risk their businesses (or even their survival) on "quick fixes" or short term gains....

 

 

IMO, these will fail!

"...The calm is on the water and part of us would linger by the shore, For ships are safe in harbor, but that's not what ships are for."
- Michael Lille -
Reply
"...The calm is on the water and part of us would linger by the shore, For ships are safe in harbor, but that's not what ships are for."
- Michael Lille -
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post #37 of 63
Quote:
Originally Posted by jragosta View Post


Nonsense. The long term objectives have nothing to do with how easy it will be for each party to accomplish this.
Microsoft is competing directly with all of their major customers - and will have to deal with the repercussions of that.
Apple is NOT competing with its customers, but is rather bringing even more value to its customers.
If you can't see the difference, you have no business even commenting.

 

Again, you're looking for similarities in HOW companies are getting to where they need to be...   I'm focusing on where they need to be to compete, and Amazon's purported tactics to get there

 

First: All Corporate/Customer relationships are a competition.  Corps want maximum profit (reven/cost), Customers want maximum value (function/cost).

 

And Apple has shat on it's customers (mac pro, XServe, OS 9 to OS X, Lightning Bolt connectors) in the past to get to a place where then needed to go as a company.  How many apple developers (another 'customer' of Apple's) were smiling happy and glad when the new App Store Rules came out.  Apple never delivers everything their customers want... just enough to sell them a new devices

 

 

Again, my point (orthogonal to yours) is it's not about 'customers' it's about the path to maximum sustainable 'profit.' and reducing dependency in your partners (as each partner must takes it's profit as well...  

 

 

Apple by far and away was the first in trying to get closer to the money... to the individual who uses the thing they buy, and to do so, Apple built a compelling end to end experience... even buying an apple thing is 'fun.'   But to do so, they 'bet the bank' several times flying against conventional wisdom (not the least of which was taking Steve back on board).  And Apple pissed off customers and software and OEM and sales partners continually.  

 

And we think Amazon is taking a big risk?;-)

 

Microsoft sold to the corporate buyer. Google sold to the Advertising dept.   But make no mistake, All of them are trying to morph their key products (Amazon: a retail virtual marketplace, google, eyeballs for sale, microsoft, corporate productivity) into a model that can be sold via an ecosystem that meets 'most' of what you want without leaving it.

 

The problem is Apple has built an ecosystem that starts with the device... it's not a 'PC' (generic), it's an iPhone 5.   Apple is now extending that lead by building custom chips to make those devices even more responsive. Any smart person can see that current trends are leading that people with disposable income are buying iPhones and iPads.  Google/Amazon/Microsoft have to compete on this, and wherever they are, they are doing what it takes to be competitive. 

 

Bezos to me is the only _guy_ that is focused/bold/bright/ enough to compete (out Apple) with Apple.    Google is too fractured and Microsoft is bumbling.

I do think that Amazon is cash poor and can't make this move, but it may be the 'bet the business' move that you need to do, especially against Google, who is the only company with the infrastructure to effectively build out a competitor to Amazon's core business. 

post #38 of 63
Quote:
Originally Posted by jragosta View Post

Quote:
Originally Posted by TheOtherGeoff View Post

No major difference.  You just seeing the short game, and the foibles of Apple's competitors to get to where the Long game is being played.... Control of the eyeballs now is at the device level.

Nonsense. The long term objectives have nothing to do with how easy it will be for each party to accomplish this.

Microsoft is competing directly with all of their major customers - and will have to deal with the repercussions of that.

Apple is NOT competing with its customers, but is rather bringing even more value to its customers.

If you can't see the difference, you have no business even commenting.

 

 

Yes, MS is competing with its customers...

 

Google is competing with its customers:

  • Android vs iOS
  • robust Android maps ve feature limited iOS maps
  • Motorola Android handsets (tablets?) vs Android OEM  handsets tablets

 

Samsung is competing with its main customer -- Apple

 

To me, this is the essence of stupidity -- and will cost them dearly.

 

 

As to Enron...  er, ah... Amazon...  Who  the hell knows what they're trying to do?   This is a big bubble waiting to burst...  The last time I looked, Bezos was the major AMZN shareholder -- and he will fall the hardest.

 

I believe that there is a profitable way to do Online Shopping ala what Amazon offers...  but it will be done by someone with greater vision and retail experience...

 

 

With apologies to Hot Tuna:

 

 

Quote:

Well, nickel is a nickel, I said, dime is a dime

I need to make a profit if you don't mind

Tell me how long do I have to wait

Can I get you now, I said, must I hesitate?

"...The calm is on the water and part of us would linger by the shore, For ships are safe in harbor, but that's not what ships are for."
- Michael Lille -
Reply
"...The calm is on the water and part of us would linger by the shore, For ships are safe in harbor, but that's not what ships are for."
- Michael Lille -
Reply
post #39 of 63
Quote:
Originally Posted by Dick Applebaum View Post

 

 

 

I agree with your points.

 

Stepping back a bit... It seems to me, what Microsoft, Google and now Amazon (and to some extent Samsung) are doing -- is jockying for control of the [non-laptop] mobile market.

 

If we take it as a given, today, Apple has control of the mp3 player, high-end smart phone and tablet markets, as well as the digital content delivery ecosystem... Then:

 

  • Had Microsoft devoted the time and effort, they, likely, would have a first-class mobile Office suite running on smart phones and tablets and integrating with the Microsoft Office suites running on Windows and OS X computers.
  •  
  • Had Google been satisfied with their lot in life in 2008, dominating search, maps and advertising -- they, arguably, might be in a better position serving searches, maps and ads to the mobile market.
  •  
  • Had Amazon been satisfied with integrating the best 'hard-goods" ecosystem into the dominant mobile digital content ecosystem -- they too, arguably, would be better off than they are today.
  •  
  • Then, there's Sammy... ahh, what can I say.

 

 

When Apple disrupted the mp3, smart phone, and tablet markets -- there were a few under-performers  -- addressing, but not satisfying, a limited market.  There were no markets (by today's standards) until Apple created them.

 

 

Now, these outliers (Microsoft, Google, Amazon and Samsung) are trying to control already established markets that are being successfully served.   There really isn't anything to disrupt.  There are only a few niches that can be served -- but no low-hanging  fruit.

 

 

IMO, these will fail!

 

In general I'm in alignment with these thoughts.   I do however, disagree with the underlying issue.

 

I also think the 'non-laptop mobile market' is morphing into the 'personal device' market.  You will have a home 'computer' and everyone your household will have a 'personal device' (or 5).  That device is 'your interface' to the general consumer world.  it's your menu, your newspaper, your radio, your gameboy, your TV, your movie theater, your pizza delivery device.

 

It's not about mobility, it's about ease of transaction.

 

Apple is building a near lock in the 'personal device' for people with 'disposable income'    Amazon sees this a potential disintermediator for its digital content and well as hard goods delivery system (Those 400Million credit cards attached to AppleIDs).   Books, MP3s, Videos are one thing, but with those 400Million AppleIDs with active credit cards, Apple can pretty much walk into any consumer market and say, "we can do the same as Amazon does."  That's gotta scare Amazon.

 

Under the same circumstances, Google, needs eyeballs to survive.   Even building great maps and searches, they got to be able to sell impressions on those pages to advertisers, and in a non-pageview world, how does that work? Even if you get some demographic info from your services, Apple could negotiate a greater premium on those eyeball impressions, cutting your viability even more.

 

Microsoft, well, they are idiots.  But suffice it, they make money by corporations buying their corporate productivity, and hope universities, colleges and schools 'prepare' people to into using their ecosystem and 'knowledge lockin' (I only want to use one type of page editor) becomes their model to sell consumer grade OSes, to consumer through OEMs.  Also, as personal devices become both personal/professional (the BYOD dilemma where corps cut costs by driving their employees to supply phones/laptops for their own convenience), MS loses even more traction.

(Microsoft has a fundemental issue with *aaS too, hence their reason that AD and Outlook will pretty much be cloud products in 5 years, and MS will charge to manage them for you).

 

In that future,  the more you control that 'end device' the greater control of the back end profits you have, let alone the front end.  Apple's model, is an elegant device with a great dev environment and just enough privacy and security to be trusted, has a up front premium.   

 

Amazon needs transactions, and Google needs eyeballs, and Microsoft, well Microsoft needs a lot of things.

 

Hence you're seeing all of them trying to get a piece of the end device market, and the differentiators will be quality of build, quality of SW, Quality of performance, and integration to your core ecosystem, while support of other ecosystems via app integration (you pay for your app to be put on someone else's device) or HTML5.  (and we saw how that worked for Facebook).

 

Hence the reason why all of these corporations are racing to compete with Apple, and will burn any bridge needed  to get there, as the long term viability of their business models depend on being that 'personal device.'   

post #40 of 63

Dick,  I agree with your points - well made,  the really interesting thing is how much has turned round - almost back to proprietary operating systems on custom silicon - Apple and IBM are the last remnants of an industry where every manufacturer had their own end to end ecosystem - DEC, Apollo, Sun etc. etc. admittedly some were more open than others but it was the cost of support carried by customers which eventually broke down into the Wintel world.

 

Apple has survived in the 'closed ecosystem' world by simply making things people find desirable that actually work.

 

Regarding the TI mobile business, would Amazon benefit?, IMO, not a chance,  its all about volume and commodity. Amazon has the commodity, but not the volume.

 

Its a dog fight over the 'low hanging fruit', all based on an operating system that is essentially free.

 

Does Apple need a chip fab?, not really,  what Apple does have is deep pockets and the ability to go buy practically any company they deem necessary to either acquire a desirable technology or disrupt the business of other companies in the IT world - witness the fall-out from buying AuthenTec.

 

The really interesting question is, who would benefit? Lenovo? HP? Dell?, watch this space :-)..
 

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