Apple & Amazon ($AMZN) have been riding high based on their market leading iPod/iPhone and Kindle platforms. And deservedly so.
But even market leaders with great products can be affected by strong competition. Despite the strength of these market leaders, they’ve got it coming in spades.
- the impending launches of the Verizon ($VZ) Droid, the Dell ($DELL) Streak and many other powerful devices based on $GOOG’s Android operating system – and the distinct possibility of a new music service to go along with them
- the launch of Barnes & Noble’s ($BKS) new Nook e-book reader
- and, of course, the long-awaited launch of Windows 7 from Microsoft ($MSFT) which, by many accounts, will finally restore some true quality competition for $AAPL in the core operating system market. Dopey marketing aside, if Walt Mossberg says nice things about a Microsoft product – especially one that competes with Apple – that definitely gets my attention.
What does this all mean? Certainly there have been other iPod/Kindle/etc… ‘killer’ products launched previously, such as Sony’s ($SNE) Reader and Microsoft’s Zune. Kill they didn’t – so far those launches have only served to reaffirm the dominance of the current market leaders, not threaten it.
But at least in my opinion, these new products do pose a real threat from both a quality and a market recognition perspective. That’s great news for customers – as with any ecosystem, the system gets unstable when there is too little competition.
But for investors in $AAPL & $AMZN? These threats are off in the distance, and it’s still bright and sunny in the near term. But you might want to at least think about what the end of market dominance means – for revenue and earnings growth going forward. Because in my opinion, the easy money’s been made – and it gets much tougher from here.