Stephen Foley: So will it be Amazon or Apple taking the honours in the Tablet Premiership?

 

US Outlook: Sometimes we business reporters can feel a lot like sports commentators. Certainly this week, we have been writing about two of the world's largest technology companies as if they were United and City.

Amazon's manager, Jeff Bezos, has unveiled his team for the coming season of the Tablet Premiership, including a cut-price Kindle and a new full-service tablet called the Fire. Apple, which has just promoted Tim Cook to the manager's job, has a new iPhone out next week and is racking up sales of iPads at the rate of more than one per second. It's game on.

Mr Bezos did some trash talking of Apple this week, which always makes for good copy. Meanwhile, there is no shortage of pundits to quote, predicting which team will score most with consumers. Mainly, it is just great to have a real top-tier rivalry on our hands, after the embarrassing relegation of Hewlett-Packard, BlackBerry, Sharp et al.

You can take your own view on whether the Kindle Fire, launching in the US first in time for Christmas, will take a meaningful bite out of Apple's iPad franchise, and whether Amazon can now become the same major force in selling digital movies and music as it is in electronic books. For what it's worth, I think the absence of a phone from Amazon's line-up of devices puts it at a permanent handicap, but we will have to see.

The irony is that, although Amazon is the underdog in this fight between tech giants, and although Apple is the undisputed leader in consumer fandom and media hype, the stock market actually rates Amazon much, much more highly. If the price-earnings multiples of their respective shares were all you had to go on, you would think Amazon was Manchester United and Apple was Bolton.

On the Reuters calculation of consensus estimates, Apple trades on 14 times its current-year earnings, and on 13 times next year. Amazon is on a stratospheric 107 times, falling to the merely Icarusian 67 times.

How to explain the discrepancy? Apple, for all its innovative genius, has a decades-long stock market history as a common-or-garden computer manufacturer, one among many and one that went through the fire of near-oblivion in the Nineties. Amazon has never fallen from the dot.com bubble heights at which it launched. Mr Bezos has, more or less, met investors' expectations for the retailing core of the company, and raced effectively into vast, emerging businesses providing cloud computing services and distributing digital media. He is a class act, and the shares have never had the "reset" that surely will one day come.

Amazon cannot grow into its earnings multiple. That would require heroic improvements in margins, when at the moment Amazon's profitability is contracting sharply. Subsidising sales of the new Fire (on which one analyst reckons the company is losing $50 per device) and acquiring rights to content from TV broadcasters and movie studios will only depress margins further.

So I have this one prediction at the start of the Tablet Championship. Regardless of what happens on the field of play, regardless of whether it is Mr Cook or Mr Bezos who lifts the trophy of consumer sales, Amazon shares will be the loser.

PROMOTED VIDEO
News
Jamie and Emily Pharro discovering their friend's prank
video
News
i100
News
Tim Vine has won the funniest joke award at the Edinburgh Festival 2014
peopleTim Vine, winner of the Funniest Joke of the Fringe award, has nigh-on 200 in his act. So how are they conceived?
News
people
Life and Style
techApp to start sending headlines, TV clips and ads to your phone
Arts and Entertainment
Taylor Swift crawls through the legs of twerking dancers in her 'Shake It Off' music video
musicEarl Sweatshirt thinks so
Life and Style
tech
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Arts and Entertainment
Daniel Radcliffe and Zoe Kazan in What If
filmReview: Actor swaps Harry Potter for Cary Grant in What If
News
Our resilience to stress is to a large extent determined by our genes
science
Travel
travel
Sport
sportBesiktas 0 Arsenal 0: Champions League qualifying first-leg match ends in stalemate in Istanbul
News
Pornography is more accessible - and harder to avoid - than ever
news... but they still admit watching it
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Techincal Accountant-Insurance-Bank-£550/day

£475 - £550 per day + competitive: Orgtel: Senior Technical Accountant-Insuran...

Sales Performance Manager, Gloucester - £290 p/day

£200 - £290 per annum + competitive: Orgtel: Sales Performance Manager, Key Ba...

Junior Database developer (SQL, T-SQL, Excel, SSRS, Crystal rep

£25000 - £30000 per annum + bonus+benefits+package: Harrington Starr: Junior D...

Java/Calypso Developer

£600 - £800 per day: Harrington Starr: Java/Calypso Developer Java, Calypso, ...

Day In a Page

Ferguson: In the heartlands of America, a descent into madness

A descent into madness in America's heartlands

David Usborne arrived in Ferguson, Missouri to be greeted by a scene more redolent of Gaza and Afghanistan
BBC’s filming of raid at Sir Cliff’s home ‘may be result of corruption’

BBC faces corruption allegation over its Sir Cliff police raid coverage

Reporter’s relationship with police under scrutiny as DG is summoned by MPs to explain extensive live broadcast of swoop on singer’s home
Lauded therapist Harley Mille still in limbo as battle to stay in Britain drags on

Lauded therapist still in limbo as battle to stay in Britain drags on

Australian Harley Miller is as frustrated by court delays as she is with the idiosyncrasies of immigration law
Lewis Fry Richardson's weather forecasts changed the world. But could his predictions of war do the same?

Lewis Fry Richardson's weather forecasts changed the world...

But could his predictions of war do the same?
Kate Bush asks fans not to take photos at her London gigs: 'I want to have contact with the audience, not iPhones'

'I want to have contact with the audience, not iPhones'

Kate Bush asks fans not to take photos at her London gigs
Under-35s have rated gardening in their top five favourite leisure activities, but why?

Young at hort

Under-35s have rated gardening in their top five favourite leisure activities. But why are so many people are swapping sweaty clubs for leafy shrubs?
Tim Vine, winner of the Funniest Joke of the Fringe award: 'making a quip as funny as possible is an art'

Beyond a joke

Tim Vine, winner of the Funniest Joke of the Fringe award, has nigh-on 200 in his act. So how are they conceived?
The late Peter O'Toole shines in 'Katherine of Alexandria' despite illness

The late Peter O'Toole shines in 'Katherine of Alexandria' despite illness

Sadly though, the Lawrence of Arabia star is not around to lend his own critique
Wicken Fen in Cambridgeshire: The joy of camping in a wetland nature reserve and sleeping under the stars

A wild night out

Wicken Fen in Cambridgeshire offers a rare chance to camp in a wetland nature reserve
Comic Sans for Cancer exhibition: It’s the font that’s openly ridiculed for its jaunty style, but figures of fun have their fans

Comic Sans for Cancer exhibition

It’s the font that’s openly ridiculed for its jaunty style, but figures of fun have their fans
Besiktas vs Arsenal: Five things we learnt from the Champions League first-leg tie

Besiktas vs Arsenal

Five things we learnt from the Champions League first-leg tie
Rory McIlroy a smash hit on the US talk show circuit

Rory McIlroy a smash hit on the US talk show circuit

As the Northern Irishman prepares for the Barclays, he finds time to appear on TV in the States, where he’s now such a global superstar that he needs no introduction
Boy racer Max Verstappen stays relaxed over step up to Formula One

Boy racer Max Verstappen stays relaxed over step up to F1

The 16-year-old will become the sport’s youngest-ever driver when he makes his debut for Toro Rosso next season
Fear brings the enemies of Isis together at last

Fear brings the enemies of Isis together at last

But belated attempts to unite will be to no avail if the Sunni caliphate remains strong in Syria, says Patrick Cockburn
Charlie Gilmour: 'I wondered if I would end up killing myself in jail'

Charlie Gilmour: 'I wondered if I'd end up killing myself in jail'

Following last week's report on prison suicides, the former inmate asks how much progress we have made in the 50 years since the abolition of capital punishment