Amazon's Hate-Love Relationship With Apple

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Jeff Bezos is a genius. The (Nasdaq: AMZN  ) CEO has commissioned a Mac OS software store to keep Apple (Nasdaq: AAPL  ) from taking too large a piece of his company's e-commerce business.

Notice I didn't say "app store." A trademark dispute between the two companies has Amazon treading carefully when it comes to how it sells downloadable software. In this case, Amazon calls its Mac-themed digital shelves "Mac Software Downloads."

Yet the similarities are hard to miss. As with Apple's iOS App Store and Mac OS App Store, which will be a fixture in the forthcoming Lion edition of Mac OS X, Amazon's store displays software according to price and popularity. Inventory is where they'll differ.

For example, Microsoft (Nasdaq: MSFT  ) is selling the downloadable edition of Mac Office 2011 through Amazon but not the App Store. What gives? License fees would be my guess; Apple takes a 30% cut of all software sold through its App Stores.

We don't yet know what Amazon charges for Mac software sales, but it's a good bet that this is the second major assault on Apple's retail pricing scheme. During its I/O developer conference this month, Google (Nasdaq: GOOG  ) announced a 5% license fee for app sales via the Chrome Web Store. Now, Amazon wants its piece.

Investors should be thrilled. Amazon is creating a cohesive strategy to dominate the delivery channel for every type of e-commerce -- both click-to-brick (order online for physical delivery) and click-to-click (order online, receive online). Every type of product is included, even system software. Well done, Mr. Bezos. Very well done.

Do you agree? Disagree? Let us know what you think about Amazon's software store strategy using the comments box below. You can also add to your watchlist to get more Foolish analysis of this stock.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He owned shares of Apple and Google at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool owns shares of Microsoft, Apple, and Google. Motley Fool newsletter services have recommended buying shares of Google, Apple, Microsoft, and Motley Fool newsletter services have recommended creating a diagonal call position in Microsoft and a bull call spread position in 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.

Read/Post Comments (2) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 27, 2011, at 9:11 PM, ConstableOdo wrote:

    One thing for certain. Everything Amazon does has Wall Street and investors blessings and it always manages to drive Amazon's share price upward. Everything that Apple does gets ragged on, disappoints Wall Street and manages to push the shares down. Jeff Bezos is always seen laughing and I can understand why. He's laughing all the way to the bank.

    I can already picture when Apple announces its cloud strategy and has to charge for it due to licensing fees. A collective sigh will be heard and send Apple's stock down another $10. Everyone will wonder why Apple can't be more like Amazon and make things cheap. It certainly is interesting that Amazon is basically stealing the Mac App Store's name and strategy and Apple can't do a thing about it. Maybe Apple should start running an online general retail business to compete against Amazon but I doubt if it would get the same warm welcome that Amazon gets.

  • Report this Comment On May 28, 2011, at 1:45 AM, bbrriilliiaanntt wrote:

    Amzn's p/e is 84, aaplis 14 subtracting out cash. Aapl is growing multiples faster than amzn, see y'all on the other side in 5 years, aapl at-the-money Jan-2013 calls, shhhhhhhhhhh! <;)

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