Jay Goldberg for VentureBeat:
Amazon is also clearly way ahead on this model. At the Kindle launch event last week, Jeff Bezos highlighted that Amazon does not make money on the Kindle, it makes money on the content it sells on top of the Kindle. There is a growing awareness of this model in the web.
Ask the game console makers how this model is working for them. I think you’ll find that Sony would much rather trade places with Apple than Amazon.
Also, not all hardware is created equal. Just because a device has a certain set of checklist features, does not make it equivalent to all other hardware with the same checkmarks.
We’ve already seen how this plays out in the PC industry. Both models seem to work. Apple makes money on hardware at the expense of marketshare. The Apple of the 90’s does not count. It wasn’t the same company or even a similar philosophy. The PC makers do fine as long as they can sell tons and tons of units, usually to businesses.
If tablets go to $45 dollars, there will still be people who pay for quality. They will be a smaller share of the market, and many will call them stupid or brainwashed, but a discerning consumer can tell the difference between cheap commodity hardware and a polished product.