Amazon Takes Aim at Apple's iPad

Amazon Takes Aim at Apple's iPad

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

U.S. stocks opened roughly unchanged this morning, and the S&P 500 and the narrower, price-weighted Dow Jones Industrial Average have moved less than a tenth of a percent as of 10:35 a.m. EDT.

One might have expected stocks to get a lift from this morning's Department of Commerce durable-goods report for August, according to which new orders for nondefense capital goods excluding aircraft (i.e., "core durable goods") rose 1.5% last month following a 3.3% drop in July. Demand for all durable goods rose just 0.1%, but that is a good deal better than the 8.1% decline in July.

Follow-up: Nasdaq's technology stock franchise
Yesterday, I noted that some high-profile technological glitches may have cost Nasdaq Twitter's stock listing, based on reports that the company is leaning toward selecting the New York Stock Exchange for its IPO. Today, it emerged that China's largest e-commerce site Alibaba will seek to list its shares on the NYSE after talks with the Hong Kong Stock Exchange collapsed. Alibaba's decision may not be linked to Nasdaq's failures, but, either way, it's another blow for an exchange that bills itself as the venue for technology companies.

Amazon does tablets differently
There is no rest for combatants in the "mobile wars." After Apple's massive weekend launch of its iPhone 5c and 5s models, Amazon yesterday introduced two high-definition tablets, named Kindle Fire HDX.

They call it technological progress for a reason: The new tablets, powered by the latest version of Amazon's Fire OS (based on Google's Android operating system) are lighter and more powerful than the existing Kindle HD line. One has a 7-inch screen, while the other has a larger display, at 8.9 inches; both come with 16 gigabytes, 32 GB, or 64 GB of storage space.

Amazon is fighting for its share of the tablet market; the current leaders are Apple, with the iPad, and Samsung, with its Galaxy tablets. How does the e-commerce giant hope to differentiate itself? Two ways:

  • Ease of use/customer service: The HDX tablets feature an innovative "Mayday button" that calls up a video chat with an Amazon representative who will talk users through a specific function or even carry out the task for them remotely. There is no cost associated with the service and it is always available -- Amazon's goal is a maximum 15 second response time.

  • Low cost: While Apple is attached to its premium pricing strategy, Amazon is happy to sell its hardware at close to cost, reasoning that this is consistent with its low-margin strategy and that the tablets are a sales channel for selling content (for example, Amazon's "X-Ray" feature enables users to buy music featured in films or television programs at the touch of a button).

Amazon and its chief executive, Jeff Bezos, have proved to be very smart, determined competitors. The mobile wars aren't over yet, not by a long shot.

Who Will Dominate the Mobile Wars?
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Fool contributor Alex Dumortier, CFA has no position in any stocks mentioned; you can follow him on Twitter @longrunreturns. The Motley Fool recommends and Apple. The Motley Fool owns shares of and Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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