A few months back Amazon filed a patent for books supported by Advertisements.
A few weeks back Apple filed a patent for an operating system supported by advertisements.
Predictably, both patents were met with considerable dismay and disdain.
How could Apple (Amazon) do this?
Amazon (Apple) will destroy the sanctity of books (operating systems).
It makes little sense for Apple and Amazon to go with Ads
Apple sell high-end operating systems, mp3 players, and phones. Why would they ever want to run advertisements.
Can you ever imagine Steve Jobs running ads on one of his perfected masterpieces?
It’s pretty similar with Amazon.
If people are buying $10 ebooks, advertisements are pretty redundant.
Why exchange the $10 price of ebooks for the 20-30 cents per ebook you could make from running ads?
Well, there’s a simple answer.
There is a company that is debuting both an ebook store and a new Operating System next year.
This Company specializes in ads and will subsidize both its OS and its eBooks via Advertising
At that point we have a problem.
- This company’s scale and expertise in advertising means it can make more money off of ads than anyone else (as Microsoft is painfully realizing).
- This company has its own infrastructure including unused dark fiber which makes distribution and updates almost free.
- It has enough revenue coming in to take losses on both ebooks and OSes for a long time.
Quite frankly, only Apple has enough cash reserves to survive. Amazon might not be able to.
This is where the patents enter. While Apple and Amazon have no intention of polluting their products and their revenue streams with advertisements, they do intend to prevent any other company from killing their profit streams.
Will it Work?
Perhaps.
They’ll both have to release some ad-supported version of their products to show they have good intent with the patents.
At that point, they can say they aren’t just blocking another company’s entry.
This really shines a light on the nature of the Internet -
- The Internet is partly this magic catalyst for disruption – any company that wants to upend an existing business model can leverage the Internet and cause destruction.
- It’s also the ultimate platform. At some level, the really big companies must be trying to replace or take over the Internet. It’s the only long-term defensible strategy.
Both the Kindle Store and the iTunes Store are attempts to create a separate Net. It’s a surprise that Microsoft and Google don’t have efforts of their own.
Filed under: evolution Tagged: | amazon plus apple
