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Apple, Google, and Amazon Are So Profitable Because They Know What to Lose Money On


No company makes significant money from both content and hardware.

Explaining the iPad mini, and Google's forthcoming cheaper, larger tablets

Seen from this perspective, it makes sense that Apple's forthcoming iPad Mini is not that "mini" after all. With a screen that is 40% larger than other "7 inch" tablets like those from Google, Samsung and Amazon, it remains different enough from its competitors to justify Apple's usual premium. (Rumor has it that the device will be priced between $299 and $349, or at least $100 more expensive than competing tablets of similar size.) Apple can continue to command these prices because of its wealth of apps and content, and not only because of its hardware.

Google, meanwhile, will probably soon release both a larger, 10″ tablet to compete with the original iPad, as well as a remarkably inexpensive, $99 version of its 7″ tablet. By selling its hardware at cost, Google will continue to drive all but no-name, commodity competitors out of the marketplace for low-end devices.

All this means that any firm that now wants to start building mobile devices, and especially tablets, faces an extremely high barrier to entry. It must choose between trying to create a content ecosystem comparable to those belonging to Google, Amazon and Apple-which are already deeply entrenched-or stay small and regional, and accept cutthroat competition and slim margins.

This story by Gloria Dawson and Christopher Mims originally appeared on Quartz.

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