Amazon and Apple's historic paths collide

Twin tech giants will survive - but price war is set to wipe out tablet market’s smaller players
Amazon's billionaire CEO Jeff Bezos unveils the $199 Kindle Fire tablet

Amazon's billionaire CEO Jeff Bezos unveils the $199 Kindle Fire tablet

The recent histories of technology giants Amazon and Apple are colliding.

The online retailer's cheap new Kindle Fire tablet reflects the company's roots - it's a tool for the sale of content. Apple, by contrast, used music and movies to hook customers into buying its gadgets.

The two currents are now clashing, and survival requires strength in both.

Amazon knows that movies and books are going digital. If it can get Kindles into people's hands, they will buy lots of digital content from Amazon. In keeping with its role as a device for delivering content, the Kindle Fire - the company's first device that gets anywhere near the functionality of Apple's iPad - is cheap. It debuts at $199, against the basic iPad at $499, and given Amazon's history of price-cutting the price tag could sink further in a matter of months.

Tablets are already popular, and Apple has sold about 30 million iPads. But Amazon's pricing could seriously rev up sales. Buyers flocked to Hewlett-Packard's unpopular tablet when the company recently cut its price to $99 from $399 in anticipation of discontinuing it.

Apple's history is almost the opposite. It established the iTunes store and ran it on a break-even basis as a means to sell its pricey iPods, iPhones and iPads. It's telling that the iPad has useful features such as a camera, microphone and 3G wireless that the Kindle Fire lacks - and that the iPad's price tag is more than twice as much.

Which tack will be more successful isn't clear. Indeed, both strategies could win from the convergence of content and hardware. After all, the tablet market pioneered by Apple isn't even two years old, and people are still figuring out plenty of new uses for the devices, and new ways to use content.

The losers could be companies that lack strength in one stream or the other.

Dozens of manufacturers have jumped into the tablet market, but only Amazon, Apple and perhaps Google - after its purchase of Motorola Mobility - look as if they have sufficient access to content, desirable (or potentially desirable) hardware and enough cash to see them through the shakeout.

(Robert Cyran is a Reuters Breakingviews columnist. The opinions expressed are his own.)

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