Beyond the Tablet Wars: Apple, Amazon, and the Cloud

Opinion

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the services you consume and the experiences you derive from them. Like PCs before them, tablets too will become a mere commodity.

Build It and They Will Come

As Apple builds out its iCloud and Amazon continues to expand Amazon Web Services, and as both companies secure customer loyalty within their respective clouds, this is where the real war will be fought. The real value in the hardware lies in its ability to connect the consumer to a cloud-services world worth living and working in. The war will be won by the company that continues to evolve, innovate and personalize those services, making them so useful, delightful, and entertaining that the consumer won’t dream of leaving. Think of a small business that builds its sales database, calendaring, and accounting program within a cloud that also holds birthdays, favorite restaurants, music and photos—a network on top of a network, all interconnected.

Now consider how to turn that loyalty into revenue. The ongoing lifetime value of each consumer is directly related to the volume of digital content and services they consume—and consumers who buy on a recurring basis have the power to boost the bottom line in dramatic ways. Getting a loyal customer to sign up for a recurring subscription, or renew an existing one, for example, is much easier than luring a brand new customer if done right. The company that takes better care of its current customer base now—even marginally—will, I believe, have the upper hand.

History tells us that there’s only room for three to four players in mature markets, and two healthily duking it out for the leadership position—spurring innovation with each new release and each new customer acquisition. Amazon will continue its relentless effort to disrupt entire industries, and Apple will always focus on expanding the boundaries of what’s possible in the mobile, entertainment and computing worlds. Thanks to the foundation both companies have worked tirelessly to build, the best is probably yet to come.

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Gene Hoffman, Jr., is chairman and CEO of Vindicia, which provides strategic online billing solutions to merchants selling digital content, including online game publishers such as Activision Blizzard and Atari/Cryptic. Follow @hoffmang

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