NEW YORK (TheStreet) --Both Apple (AAPL - Get Report) and Amazon (AMZN - Get Report) sell smartphones. Both Apple and Amazon sell tablets. They both sell music and videos. But Amazon can never be like Apple. Ever.
The difference between Apple and Amazon is in the business model of the two companies. To understand each one deeply is to understand the future prospects of each tech giant.
Currently, Amazon is about the business of laying the groundwork to not just sell stuff more efficiently but to so completely understand every customer, in a digital sense, that it can greatly flourish by selling ever more stuff.
One of the key elements to selling more and more is to seize the purchase authority of the customer by eliminating that annoying unpredictability and contrariness of human behavior. If the customer is presented at every turn with what seems like logical necessities, effective control of that credit card on file is obtained.One technical way of describing that control is the seizure of what's called the mind's executive function. I ran across an article recently that talked about how chess is good training for young people because it helps to develop executive function, that is: what's important, what's next, how does one focus on a goal and then plan to achieve it? Many people, young and old, have trouble with exactly that process. The activity of making a purchase decision is driven by the mind's exercise of executive function and authority. A person may want something, indeed, even need something. But a mindful sense of purpose, economy, responsibility, consequences and deferred gratification may lead to a decision not to buy. Obviously, that's bad for Amazon and can't be tolerated. The self-admitted basic business model of the Amazon Kindle Fire and the Fire smartphones is to reduce the friction when shopping. That's another more polite way of saying that Amazon would like to seize the individual's executive function disguised as convenience. The long-term effect of this kind of intervention cannot be favorable for a company, no matter how good it makes the bottom line look in the short term. That's because it flies in the face of what people consider more important than spending, and that's human responsibility. A rough analogy is a bartender who keeps on selling a customer strong drinks late into the night because it's good for business. Then the customer drives home -- with predictable results.
Good stewardship of a credit card, a family's well-being (and a family's privacy) seem to be eroding, but the good news is the pendulum will eventually swing back. That's because the concept that a corporation can seize more and more of a customer's wealth until the customer has nothing and the corporation owns everything cannot endure without destroying the very fabric of the society that made the original business model possible.
And Then There's Apple Apple has had quite a different history than Amazon. The passion of Steve Jobs (and now Tim Cook) to use technology to make our lives better, to reside at the intersection of the technology and the humanities, means Apple has a different business model for selling hardware. Apple isn't isn't trying to sell stuff for the sake of commercial success. Apple sells things that allow us to be more human, more empowered and have more dignity. For that, Apple is embraced and rewarded financially.
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