Could Amazon compete against Apple on ebook price (when Ipad was launched)?

Discussion in 'iPad' started by EbookReader, Apr 18, 2012.

  1. EbookReader, Apr 18, 2012
    Last edited: Apr 18, 2012

    macrumors 65816

    Joined:
    Apr 3, 2012
    #1
    Amazon is a big player but Apple is much bigger, with lot of cash.

    The market for ebook before Ipad: bookstores are wholesalers.

    Buy ebook at a price negotiated with the publishers (for example $10). Then sell it at whatever price it choose.

    $14,$13,$12,$11 for profit
    $10 at cost
    $9 as loss-leader, $8 as loss-leader etc..


    My question is that could Apple have take on Amazon on selling ebooks using the wholesale model?








    p.s. Amazon Kindle Store has always been profitable (even when they sold a few popular books at a loss).

    "The DOJ investigation (page 9, paragraph 30) indicates that Amazon has consistently turned a profit on eBooks since they began selling them."





    In my opinion, if Apple wanted it to, they could undercut Amazon on price.

    Amazon: $9 for ebook X
    Apple: $8 for ebook X

    Amazon margin is razor thin ( which mean it is less likely to fight back effectively against Apple $80 billion cash reserve). Apple can afford to wage war on Amazon in order to gain ebook market share.

    Itunes had something like 75% of music downloads market. Amazon is trying to gain some market share by selling popular songs at $0.99 (compare to $1.29 on Itunes). (fyi: Digital music selling are done wholesale by both Apple and Amazon)

    Could Apple done the same thing? (price lower than Amazon on popular ebooks to gain market share?)
     
  2. thread starter macrumors 65816

    Joined:
    Apr 3, 2012
    #2
    I think Apple would be better off TODAY if it buys ebooks at wholesale (like it does for music for Itunes) and try to compete against Amazon on price back in 2010 (when the Ipad debuted)

    Why?

    1) More people have Ipads than Kindle e-readers and Kindle Fire.
    2) People with Ipads/iphone will buy at iBookstore because it is generally cheaper than Kindle Store
    2) Apple can afford to have 0% profit margin on ebook, Amazon less likely to afford that. (Kindle Store has been profitable for Amazon).
    3) No anti-trust lawsuit ----(this will cost tens of millions in lawyers fee and it harms the company reputation)
    4) iBookstore marketshare today would be A LOT more than 10% if it competed on price with Kindle Store, especially if the iBookstore is known as offering better prices than the Kindle Store.



    .....thoughts?


    ------what if Apple went "wholesale" with ebooks and it did with digital music, digital movies, digital movie rental.

    -----better off?
    ------worst off?
     
  3. macrumors 6502

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    Location:
    Michigan, USA
    #3
    The biggest problem Apple has in the eBook world is it's inability to access their books outside the walled in iOS world. With Kindle, you can access your books online, on iOS, or Android. That's why I generally avoid iBooks because I refuse to buy a book that can only be used on a very limited number of devices.
     
  4. thread starter macrumors 65816

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    Apr 3, 2012
    #4
    so could Apple compete with Amazon on ebook prices?

    and would Apple be better off if things were done wholesale? (higher market share, no DOJ lawsuit but very low margin instead of 30% guarantee)
     
  5. macrumors 68030

    Joined:
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    Location:
    Olympia, WA
    #5
    I think this would work out well. If you think about it, Apple and Amazon have entirely opposite models. Amazon sells their Kindles at a reasonable loss (the Fire more than the e-ink models) in exchange for drawing you into their media sales to make money. Apple on the other hand sells their software/hardware at a high markup in exchange for reasonably-priced digital media (not very reasonable for videos yet, but that's probably coming). It would be a huge draw for people to spend the money for their devices in exchange for reasonably-priced media to put on them.
     
  6. macrumors G5

    ucfgrad93

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    Colorado
    #6
    That is why I don't buy iBooks. I only have and iPhone and I don't want to read on a 3.5 inch screen.

    Excellent summary of how Amazon and Apple approach things.
     
  7. macrumors member

    Joined:
    May 19, 2010
    #7
    For me the cost of the book has nothing to do with which store I choose to buy from. Reading on the Kindle is far and away a much much better reading experience than either iPhone or iPad. If it came down it it I probably wouldn't even notice if I was paying an extra dollar or two per book on the Kindle store, and if I did notice I wouldn't really care.

    I think that this whole line of thinking that price is a big factor would make more of a difference to the really casual book reader who only reads 1 or 2 books a year, but people who read a lot more (and therefore spend a lot more) are much more likely to care about how much better an experience reading on a Kindle is.

    EDIT: The real game changer is going to be when the publishing industry starts to produce real mass market interactive books. You can't pull those off on an e-ink reader, so the iBookstore will do better in that particular market. If I were to guess I would say that's exactly why Apple has made it so easy for anyone to self publish an interactive iBook - so they can try and jump start the market that they will be stronger in.
     
  8. thread starter macrumors 65816

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    #8
    For most people, the cost of a product is a major reason to shop at one store vs. another.
     
  9. macrumors 68000

    thewitt

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    Sep 13, 2011
    #9
    Apple could bury Amazon in the wholesale eBook market if it wanted. How about $.99 eBooks? Say goodnight Amazon.

    Drop a few billion on the project Apple, it's ok...

    Will they? Unlikely.
     
  10. macrumors 6502

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    #10
    wasn't apple just sued by the DOJ for price fixing?

    anyways i much prefer the kindle app as it is multi-platform
     
  11. macrumors 68000

    thewitt

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    Sep 13, 2011
    #11
    Just starting. They will be found innocent in court.

    Selling all their pre-purchased titles for cheap in order to force Amazon out of business is not illegal - should they wish to play that game.

    The DOJ suit is politically motivated, and is meant to benefit Amazon. The Amazon.com PAC has put thousands in the pockets of both Democrats and Republicans, and they are calling in their chits.
     
  12. macrumors 604

    BaldiMac

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    #12
    Because something that isn't working in the music downloads market is sure to have worked in the ebook market? :confused:
     
  13. macrumors 65816

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    #13
    Given that Apple is currently fighting the DOJ in an anti-trust matter, I highly doubt that it would resort to predatory pricing in order to force Amazon out of the business. That would most definitely draw the ire of the DOJ and land them in court again.

    However, even if Apple did drop iBook prices drastically, there are two huge hurdles it faces to dominating the e-book market: 1) the iBook store offers far fewer titles than does Amazon (there are plenty of books that are available only on the Kindle or the Android Kindle app and not on the iOS Kindle app, by the way), and 2) there are lots of people who enjoy reading e-books on a much cheaper Kindle and don't want to drop hundreds of dollars more for an iPad.
     
  14. macrumors 68000

    thewitt

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    Sep 13, 2011
    #14
    There is no law on selling at a loss. The DOJ can scream all they want.

    Apple won't do it of course, as they are not petty, but if they really want to punish Amazon, they can.
     
  15. macrumors 604

    BaldiMac

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    #15
    There is in certain circumstances. It's called predatory pricing. I'm not sure which situation you are referring to, so I'm not sure if this applies or not.
     
  16. macrumors 68000

    thewitt

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    #16
    Simply selling at a loss is not predatory pricing.
     
  17. macrumors 604

    BaldiMac

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    Jan 24, 2008
    #17
    I didn't say it was. Did you miss "in certain circumstances"? You did not specify which situation you were commenting on, so I was unsure whether or not it applied.
     
  18. macrumors member

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    Aug 22, 2011
    #18
    I'm ready for the amazing deals on ipads that will come of apple declares war on amazon.
    [​IMG]
     
  19. thread starter macrumors 65816

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    Apr 3, 2012
    #19
    Amazon: okay with very low margin (often offer discount)
    Apple: 30% commission

    Amazon is competing against Apple in selling digital music. Both use wholesale. Both are able to offer discount if they want.
     

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