Amazon's Flat-panel Business Will Threaten Apple

Amazon's Tablet PC has advantages of low price, wide network. It has a significant prospect of increase. It will pose a threat to Apple's position. However, the current valuation of Amazon stock has been high and does not have a significant investment opportunity.

Amazon invested in a lot of energy to the strategy of Tablet PC. This business has great potential, mainly in the following areas. Amazon's Tablet PC is priced at $ 250. The users it faces are different from the users of Apple's $ 499 iPad product. Indeed, there are still some other low-cost tablet PC products in the market. But consumer trust and distribution networks of other companies can not compare with the Amazon.

In order to promote the development of the Tablet PC business, Amazon is also making investments to build their own developer community. This will allow Amazon to build efficient ecosystem around the products so that Apple will benefit from this ecosystem model. However, because Amazon can use Android as a basis, the price will be far less than the products of Apple. Through this cost-competitive advantage, Amazon can become the vendor that has the first-mover advantage in the market after Apple.

Amazon's Tablet PC can take advantage of the multi-network benefits and a strong infrastructure of the company. The sales of Tablet PC will drive the sales of all digital media products and rental income. The analysts of the industry say that this means that the sales of Amazon's Kindle e-book reader, mp3, movie rentals and Living Social Group will rise. If Amazon has digital transaction business, then you can redefine the banking and payment services, which will pose a threat to Apple's leading position.

But I think one factor can not be ignored, that is, Amazon's stock price and earnings ratio (PE) is up to 92.59 times. But in the Standard & Poor's 500 index record, the average PE is 45 times. This is during the Internet bubble. Although I think the U.S. stock market is likely to see another bubble, but 92 times PE value is still high. In this case, Amazon's stock is still not a good investment opportunity, although its Tablet PC business has significant room for growth.

The analysts of the industry say that Apple's shareholders will pay close attention to Amazon's move. Its Tablet PC product may weaken Apple's market share. But there are many other opportunities for Apple, especially in the television business field.