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.

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Attenborough with the primates
tvWhy BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
News
Campbell: ‘Sometimes you have to be economical with the truth’
newsFormer spin doctor says MPs should study tactics of leading sports figures like José Mourinho
Sport
football
Life and Style
Agretti is often compared to its relative, samphire, though is closer in taste to spinach
food + drink
News
Kelly Osbourne will play a flight attendant in Sharknado 2
people
News
Down-to-earth: Winstone isn't one for considering his 'legacy'
people
News
The dress can be seen in different colours
i100
Sport
Wes Brown is sent-off
football
Voices
Lance Corporal Joshua Leakey VC
voicesBeware of imitations, but the words of the soldier awarded the Victoria Cross were the real thing, says DJ Taylor
Life and Style
Alexander McQueen's AW 2009/10 collection during Paris Fashion Week
fashionMeet the collaborators who helped create the late designer’s notorious spectacles
ebooks
ebooksA special investigation by Andy McSmith
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

SThree: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Recruitment Genius: Office Manager / Financial Services

£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

Jemma Gent: Year End Accountant

£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

Jemma Gent: Management Accountant

£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

Day In a Page

War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn
Yvette Cooper: We can't lose the election. There's too much on the line

Yvette Cooper: We can't lose the election. There's too much on the line

The shadow Home Secretary on fighting radical Islam, protecting children, and why anyone in Labour who's thinking beyond May must 'sort themselves out'
A bad week for the Greens: Leader Natalie Bennett's 'car crash' radio interview is followed by Brighton council's failure to set a budget due to infighting

It's not easy being Green

After a bad week in which its leader had a public meltdown and its only city council couldn't agree on a budget vote, what next for the alternative party? It's over to Caroline Lucas to find out
Gorillas nearly missed: BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter

Gorillas nearly missed

BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
Downton Abbey effect sees impoverished Italian nobles inspired to open their doors to paying guests for up to €650 a night

The Downton Abbey effect

Impoverished Italian nobles are opening their doors to paying guests, inspired by the TV drama
China's wild panda numbers have increased by 17% since 2003, new census reveals

China's wild panda numbers on the up

New census reveals 17% since 2003
Barbara Woodward: Britain's first female ambassador to China intends to forge strong links with the growing economic superpower

Our woman in Beijing builds a new relationship

Britain's first female ambassador to China intends to forge strong links with growing economic power
Courage is rare. True humility is even rarer. But the only British soldier to be awarded the Victoria Cross in Afghanistan has both

Courage is rare. True humility is even rarer

Beware of imitations, but the words of the soldier awarded the Victoria Cross were the real thing, says DJ Taylor
Alexander McQueen: The catwalk was a stage for the designer's astonishing and troubling vision

Alexander McQueen's astonishing vision

Ahead of a major retrospective, Alexander Fury talks to the collaborators who helped create the late designer's notorious spectacle
New BBC series savours half a century of food in Britain, from Vesta curries to nouvelle cuisine

Dinner through the decades

A new BBC series challenged Brandon Robshaw and his family to eat their way from the 1950s to the 1990s
Philippa Perry interview: The psychotherapist on McDonald's, fancy specs and meeting Grayson Perry on an evening course

Philippa Perry interview

The psychotherapist on McDonald's, fancy specs and meeting Grayson Perry on an evening course
Bill Granger recipes: Our chef recreates the exoticism of the Indonesian stir-fry

Bill Granger's Indonesian stir-fry recipes

Our chef was inspired by the south-east Asian cuisine he encountered as a teenager
Chelsea vs Tottenham: Harry Kane was at Wembley to see Spurs beat the Blues and win the Capital One Cup - now he's their great hope

Harry Kane interview

The striker was at Wembley to see Spurs beat the Blues and win the Capital One Cup - now he's their great hope
The Last Word: For the good of the game: why on earth don’t we leave Fifa?

Michael Calvin's Last Word

For the good of the game: why on earth don’t we leave Fifa?
HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?