How Apple Could Crush Amazon.com and Save Retail

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NEW YORK (TheStreet) -- Amazon.com did not introduce Kindle Fire to compete with Apple .

Jeff Bezos is not an idiot. Bezos knew/knows he had/has no chance of even denting Apple's tablet market share. Bezos conceived Kindle Fire, not as an iPad knockoff, but as one means to the end of driving Amazon's e-commerce sales.

If we believe recent comScore data, Kindle Fire, at least relative to iPad, might be falling short. For a synopsis of the numbers see my article, Apple Leads Amazon In Mobile Commerce Race or, as Jim Cramer put it in a tweet, Apple Pantsing Amazon?

Simply put, iPad owners engage in a wide range of e-commerce activities, such as making purchases and researching items, at a much higher rate than Kindle Fire users. Before discussing how Apple could punkslap Amazon and save brick-and-mortar retail's sorry butt, a few disclaimers on comScore's stats:
  • Lower mobile commerce-related engagement rates cannot lead us, without question, to the conclusion that Kindle Fire does not do its job for Amazon. Plus, some iPad users could be shopping through an Amazon.com app.
  • I'll make the presumably safe assumption -- iPad buyers are more affluent than Kindle Fire owners, thus leading to more purchases.

If Kindle Fire triggers the level of engagement Amazon required to produce the revenue Amazon needs to make money on the venture, I'm not sure Bezos cares much about any of this. Again, it's not a competition. Amazon likely generated internal models of how much each Kindle Fire user needs to spend to define project success. If that happens, it's all good.

That, however, does not stop Apple from firing off a competitive salvo of its own. And, if I work in brick-and-mortar retail, I'm on the phone asking Apple to fleece me like it did the music industry and wireless carriers. For many retailers, growth and, in some cases, survival depends on it.

As long as it exerts its typical high level of control over the process, Apple should include a "Shopping" app on its iPad. The app would feature a handful of merchants, potentially on a rotating basis. For every sale generated, Apple takes a cut.

Skew it to the high-end and pick and choose from the others on the basis of whom you think should live or die.

It never made sense to me that Apple ran with the store-within-a-store concept at some Best Buy and Target locations. I'm surprised Apple even lets its products inside another retailer's doors, let alone via some formal collaboration.

Keep the brand exclusive and in its own habitat. Whatever revenue Best Buy and Target squeezes for Apple cannot be worth placing your products in the soulless corridors of a big box store. Within the Apple platform, however, the tables turn.

Relative to, say, Microsoft , Apple does an excellent job ensuring it only includes quality apps on its devices. Even so, stinkers squeak through. At day's end, you can do anything on your Apple product, from the high brow to the low brow.

Thus, creating a shopping app, fueled by other retailers, doesn't feel like slumming it. Instead, it's all about monetizing the high level of mobile, e-commerce-related engagement iPad and, presumably, iPhone users exhibit relative to competing devices, particularly Kindle Fire. It's Apple monetizing mobile usage by providing a well-delivered service, not serving up ads.

At the time of publication, the author had a position in MSFT.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

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