I call it "hipster-like" because the uber-cool, pseudo-philosophical rhetorical tone of the argument blocks its wholly nonsensical nature. It's the type of lofty -- albeit interesting -- thought that has roughly zero practical application.
Apple generates the vast majority of its revenue from hardware sales, not software. If the next piece of hardware bombs, Apple takes a hit. If the piece of hardware after that bombs, Apple takes another hit and we might have a trend. And so on.
Without useful and beautiful hardware that people want to mix business and pleasure with, Apple dies. Or maybe the devices remain useful and beautiful, but, for one reason or another, people no longer want to buy them. Same outcome: a fall from greatness.
Software, services, apps, media -- it's all a dime a dozen. The only thing that matters in this life, other than getting them to sign on the line that is dotted (pat on the back to whoever names
movie), is tying it all together into an ecosystem that works better than everybody else's. Hardware drives Apple's superior ecosystem. Without hardware, it's pretty much useless.
At both companies, success results from how they're able to merge the ingredients. But the soft stuff, namely platforms and services, powers
e-commerce ecosystem. Without it, Amazon falls even harder than Apple would. While a nice driver, at day's end, hardware at Amazon is just one means to an end.
Amazon just disrupted the competitive landscape. In fact, it provided Apple the succession plan shareholders weren't sure it had when Steve Jobs was ill. It goes like this: Amazon unseats Apple as the dominant force in tech and related spaces.
At several points over the last year, Apple stopped dictating the rules of engagement. As a result, Amazon will unseat Apple this decade as America's premier company, without being No. 1 in market share for any device. It doesn't even have to make money on hardware sales.
CEO Jeff Bezos made the business plan clear last week in Santa Monica: Amazon is not a gadget company; it's a services company. It doesn't want to make money when people buy devices; it makes money when they use them.
Later, Bezos said something to
that the entire tech world, including Cupertino and AAPL bulls to the north and south, should pay close attention to.
Bilton asked whether we should expect a smartphone or television from Amazon, and Bezos said: "We'll have to wait and see. We won't do something unless we think we have some interesting new way to do it."
Amazon devices serve a core strategy: to drive e-commerce revenue and lock people into the company's ecosystem. It's all about engagement and loyalty.
That, in and of itself, is interesting and innovative. In fact, it's probably only a matter of time before another retailer takes a stab at the same strategy.
Think about it, a major retailer, say
, partners with
Research in Motion
to build a tablet. Then it says to consumers: Spend $500 or more and get our exclusive tablet for free. Of course, when you fire the thing up, it's a conduit to buying stuff, seamlessly, from Best Buy.
Would that work? Probably not. Best Buy is closer than other brick-and-mortar outfits, but, chances are, its ecosystem cannot support a loss leader like Amazon's can.
Then, as Bezos said, there's the "interesting" part.
Folks who attempt to discount what Bezos did last week live in denial.
The features in the Kindle are simply out of this world. Parental controls that limit everything but reading. A "time to read" indicator that tells you how long it will take you, based on your reading style, to reach the end of a chapter. Eight-week battery life on the Kindle Paperwhite, even when backlit. I don't have enough space to list and do justice to every innovation.
Device usage drives e-commerce revenue. These new Kindles will increase usage.
If we get a ho-hum iPhone reiteration on Wednesday followed by the iPad Mini -- nothing but a reaction to the Amazon threat -- the pain will begin sooner rather than later. That said, even without Steve Jobs, Apple will not go down easy. They have sleeves with more than a pack of cigarettes stuffed in them.
I expect more. We'll likely see more than we expect.
However, If you look toward the middle and end of the decade, there's a ton more uncertainty in Cupertino (can you say Apple TV?) than there is in Seattle.
As Apple sits on obscene amounts of cash, Amazon reinvests heavily in its business. It continues to roll like a perpetual startup with the appropriate mix of tunnel vision, natural ability, calm and reckless abandon.
Amazon doesn't live off of interest like a dying senior citizen. It riffs immortal as it makes the population reconsider the question of which tech company will rule the world.
Wall Street loves stable, well-oiled machines that don't miss. It will run AMZN to $1,000 on confident anticipation of a dynasty by the end of the decade.
At the time of publication, the author held no positions in any of the stocks mentioned in this article
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Rocco Pendola is a private investor with nearly 20 years experience in various forms of media, ranging from radio to print. His work has appeared in academic journals as well as dozens of online and offline publications. He uses his broad experience to help inform his coverage of the stock market, primarily in the technology, Internet and new media spaces. He has taken a long-term approach to investing, focusing on dividend-paying stocks, since he opened his first account as a teenager. Pendola, 37, is based in Santa Monica, Calif., where he lives with his wife and child.