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Technology Stocks : Apple Inc.

AAPL 273.40

-0.1%

Dec 26 9:30 AM EST

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To: inaflash who wrote (69177)	9/25/2007 5:23:40 PM
From: Doren	Read Replies (2) of 213177

I warned some time ago that Amazon is the real competitor Apple should fear in the download market. They might not have it exactly right NOW, but they will. This is not good news for Apple investors and I don't see that Apple is positioned well to combat Amazon's assault. Amazon is in an interesting position because shifting CD sales to downloads isn't going to gain any revenue. It only avoids loss of CD sales, which they will need to do eventually. In this matter, they're in a similar situation as Kodak was a few years back. Sorry but I have to disagree. Amazon, unlike eBay/half is constantly adding functionality and APPROPRIATE products. For example they just started selling... LPs! This makes sense. They are not going to sell as many LPs as CDs but its enough for them to make a profit and why not? It helps them compete against the (hated) ebay machine. LPs are higher margin than CDs or downloads. I now also use Amazon rather than HomeDepot to buy some easily shipped high ticket items like power tools. Amazon beats Office Depot and Staples on office supplies almost every time. I buy vitamins at Amazon rather than Drugstore.com. The main thing to remember is the people at Amazon are smart AND they are creative. They understand the retailing business very VERY well, they have deep pockets. They respond to customers needs like Apple, rather than relying on the squeeze as Microsoft and Ebay do. So what does this mean for Apple? Well they are going to lose a big percentage of their download traffic. I expected this and I don't think its a dire situation. The margin on the retail portion of downloads are going to get as thin as the price of servers. But it will affect Apples hegemony on the iPods eventually. I think the situation is similar to the Walkman, let's just hope that Apple doesn't forget Sony's harsh mistakes and slack off.

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