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In Kindle vs. Apple Tablet, Sony Surefire Loser

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The company never never should have messed with a product like this in the first place.

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Editor's Note: The following was posted in real time on our premium Buzz & Banter (click for a free trial).

Greetings from New York where I remain an unabashed fanboy when it comes to Amazon's (AMZN) Kindle. As such I'm looking forward to the fight looming between my machine and the seemingly inevitable Apple (AAPL) whatever-Tablet. Based on rumors and the fact that the iPhone has a pathetic book application, reading books, magazines and the web are smart bets to be positioned front and center on the new product. What does it mean for the companies and related stocks? Here's the back-of-the-envelope handicapping:
  • The Reading Public (You) breaks about even. The Kindle hardware is expensive. The Apple tablet will likely be priced around a gazillion dollars. The price of e-books won't go down as Amazon is already squeezing the life-blood out of publishers. If anything, the book prices will go higher as Apple and Amazon curry favor (note the improved terms Amazon is offering publishers in the deal announced today).

  • McGraw-Hill (MHP) and John Wiley & Sons (JW.A) win slightly but not huge. Both companies sell books and both claim to be "information providers via electronic and printed mediums." Denial, thy name is book publishers. The heavyweights in this industry are private and not likely to do IPOs based on another reader.

  • Time Warner (TWX) is my sleeper pick as a winner. Magazine websites are generally horrible. The rise of tablets gives them another shot at making user-friendly, rich experiences. Being huge, Time Warner will probably bungle it but, hey, what do they have to lose? The relevance of SportsIllustrated.com? Please, my grandpa doesn't surf.

  • Apple and Amazon is about a push. Neither company is relying on e-books for their core revenues or profits. Apple can't revolutionize reading the way they did listening to tunes, but they can take a meaningful bite out of the online magazine business. The Kindle is a black and white reader. An Apple tablet is going to be a tech marvel with explosive colors. The former stinks at magazines. The latter will be huge overkill for books or even newspapers. Look for magazine deals with the tablet announcement.

  • Sony (SNE) is your only surefire loser from this. Their reader hasn't gotten a foothold yet and more competition simply greases the mountain on a product Sony shouldn't have messed with in the first place.

All of which is a long way of saying "I don't want to write about this horrible tape." If Toddo held the business end of a gun to my head, I'd offer that you can try a long at S&P 1130 with an 1125 stop. Whatever you try, have an exit plan and stick to it. Today, the plan is to be out of today's trade by the bell.
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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