Now that Amazon and Apple are rivals, which one is likely to win? For the next few years, at least, the answer will be both.
The rivalry between Amazon (AMZN) and Apple (AAPL) has been emerging for some time. Earlier this year, Amazon launched the Amazon Appstore for Android apps, and Apple quickly sued for trademark infringement. (Amazon maintained the term was a generic.) Shortly after, Amazon unveiled its Cloud Drive and Cloud Player, two media-storage services that put it on a collision course with Apple's plans for iTunes.
The past two weeks have not only raised the stakes in the Apple-Amazon rivalry, it's also offered a clearer indication of how it may shake out. First, Amazon announced its Kindle Fire, a tablet that many are saying could be the first solid competitor to the iPad, which still holds an 80% share of the North American tablet market. Then, Apple said its iCloud service, announced last June, would ship Oct. 12.
Both companies aim to host your entertainment content in the cloud. Both have huge, loyal customer bases to start from. And now, both are selling tablet computers that their customers can use to buy and access millions of songs, videos, apps, games and magazines.
But the rivalry isn't likely to be a bitter, bloody one. Instead, it might prove mutually beneficial, at least for the next few years. Amazon's store and iTunes have competed for years with little detriment to either. (The same can't be said for Wal-Mart (WMT), however.) After Steve Jobs began publicly chiding music publishers, iTunes began offering DRM-free songs in April 2007. Amazon, following suit in May, made it that much harder for the labels to keep pushing for DRM.
Having two major digital-content retailers coaxing users to store their content in the cloud could speed up adoption of both iCloud and Cloud Drive. And in tablets, the Kindle Fire looks nothing like an "iPad killer." Instead, it's a relatively stripped-down version of the iPad, a tablet aimed at the low-end of the market, leaving the high-end open for Apple.