Why Amazon can't win a tablet price war against Google

31.03.2012

In any standards-based, network-effects-based, application platform-based or aftermarket-based business, the rich tend to get richer. The more customers and partners any company has, the more attractive that company is to additional customers and partners.

The tablet market is all four. Apple is by far the richest, and is therefore in the enviable position to keep dominating.

Apple has by far the most tablet customers. These customers are by default embracing Apple's standards, which are part of services like iCloud and iTunes. For example, people who have uploaded personal content to iCloud and invested in content on iTunes have a strong incentive to buy future Apple tablets, because only Apple's products participate in those standards.

Apple has network effect advantages. A network effect is when the value of a network increases with the number of people using it. Apple networks like iMessage and FaceTime are more valuable as more people get on them.