Advertisements

This Is The Amazon Ad That Scared The Crap Out Of Apple’s Top Executives

This Is The Amazon Ad That Scared The Crap Out Of Apple’s Top Executives

JAY YAROW AUG. 27, 2013, 10:00 AM 4,542

On November 22, 2010, at 7:55 PM, Apple’s Senior Vice President of marketing, Phil Schiller, blasted an email to top Apple executives. He had just seen an ad from Amazon, and he was not happy. He emailed Steve Jobs, Eddy Cue, who runs Apple’s Internet services, and Greg Joswiak, VP of marketing:

I just watched a new Amazon Kindle app ad on TV. It starts with a woman using an iPhone and buying and reading books with the Kindle app. The woman then switches to an Android phone and still can read all her books. While the primary message is that there are Kindle apps on lots of mobile devices, the secondary message that can’t be missed is that it is easy to switch from iPhone to Android. Not fun to watch.

Steve Jobs replied a few hours later:

What do you recommend we do? The first step might be to say they must use our payment system for everything, including books (triggered by the newspapers and magazines). If they want to compare us to Android, let’s force them to use our far superior payment system. Thoughts?

GigaOm first dug up this email exchange. It is evidence in the Department of Justice’s eBook case against Apple. A few months after Jobs sent this email, Apple decided to cripple Amazon’s Kindle app for iPhones and iPads. Apple said that if Amazon wants to sell a book through iOS, Apple’s mobile operating system, then Apple would collect 30% of the sale. Amazon abandoned selling books straight through its app. Instead, users have to buy a book through the web, then it’s sent wirelessly to the app. A bit of a pain, but it doesn’t seem to have slowed Kindle sales. Quartz writer Zachary Seward notes that the larger point from this exchange is that Apple executives realized the oft-discussed eco-system lock-in advantage for Apple is not that strong. Since this email exchange, Apple’s lock-in has only gotten weaker. Just about every great app for iOS is also available on Android. People are increasingly using services like Netflix and Spotify, which work on both platforms. Those apps make iTunes less powerful, and therefore Apple’s lock-in less powerful. Apple would counter any concerns by saying it has the highest customer satisfaction rate of any smartphone on the planet. And that’s the best indication that customers are going to stick with the iPhone. This seems to be the ad from Amazon that prompted the email:

Advertisements

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: