Amazon Passes Competition With Fire


There has been another paradigm shift this week in technology, and it means the tablet wars as we know them have changed.

Microsoft (NASDAQ:MSFT) first caused a seismic shift in technology with its Windows operating system. The shift made hardware a commodity and put an emphasis on the higher margin Windows software.

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Steve Jobs and Apple (NASDAQ:AAPL) created the next shift when they made hardware attractive again and commoditized content.

We now have a new shift with the Amazon (NASDAQ:AMZN) Fire tablet, which again commoditized hardware.

Imagine a car manufacturer that also owns the road and makes money off of the accessories in the car and the fuel you put into it. Along comes another company that also owns roads, almost as many accessories and just as many gas stations. This other company wants to now sell cars at cost -- just so it can make money off the things other than the car. The car has now become only the medium to sell content and services.

The game has just changed.

Note, there will always be a high-end car that will sell, but the full-size car is now not a profitable enterprise unless you own everything else with it. Amazon’s new tablet is the new car. Welcome to the world where hardware has just become a commodity again.

In 1991, the future of technology would have never seen the Internet, the smartphone and tablet. In 2011 it is again hard to pick winners. However, it seems certain that only entire platforms will be successful.

Going back to the car illustration, those who don’t own the road (the cloud, browser), accessories (content -- books, movies, songs, etc) or gasoline (paid subscriptions for streaming content) will not survive making cars. Research in Motion (NASDAQ:RIMM) and Samsung are early losers in the tablet wars.

Netflix (NASDAQ:NFLX) and Barnes & Noble are also losers, because consumers will realize that there is nothing proprietary about their content and will start migrating to better deals with Amazon and Apple. I would expect both to become more attractive takeover targets for the cash rich tech companies looking to expand on their content. Microsoft, Google and Facebook need content and have the cash to buy it.

Apple is still number one, but Amazon is now a solid number two. Amazon has almost as much music as Apple, half the number of TV shows and movies of Netflix and is the world’s biggest seller of books.

Without getting into whose tablet is better, the real winner is the consumer. Imagine a book in a few years -- if you have a question about a person or a thing, you click and up pops an image or map. Books can now be filled with pictures, maps, illustrations, and graphs that could never be done in a hard copy, because of the sheer volume.

Schoolchildren’s textbooks will now all be located on one device; it will be cheaper and more affordable with a multiple of learning aids in each one.

The world changed this week -- consumers will benefit, car makers will not.

John Layfield, formerly known as JBL, was the longest reigning WWE Champion in Smackdown television history, retiring after 17 years of pro wrestling. John, a former collegiate All-American and pro football player, is a lifelong entrepreneur who has worked as an investment banker, is series 7 and 24 qualified, and is currently an active private investor. His Internet radio show can be heard at

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