Apple Inc. v. Samsung Electronics Co. Ltd. et al
Filing
426
Reply Declaration of Sanjay Sood in Support of #86 Apple's Motion for a Preliminary Injunction filed by Apple Inc.. (Attachments: #1 Exhibit A, #2 Exhibit B, #3 Exhibit C, #4 Exhibit D, #5 Exhibit E, #6 Exhibit F, #7 Exhibit G, #8 Exhibit H, #9 Exhibit I)(Related document(s) #424 ) (Bartlett, Jason) (Filed on 11/28/2011) Modified text on 11/29/2011 (dhm, COURT STAFF).
SOOD EXHIBIT E
Anticipated Amazon Tablet to Take Aim at Apple iPad - NYTimes.com
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September 25, 2011
Amazon Has High Hopes for Its iPad
Competitor
By DAVID STREITFELD
SAN FRANCISCO — One after another, like moths to a flame, technology companies have
been seduced into entering the market for tablets. Apple made it look so irresistible, with 29
million eager and sometimes fanatical consumers snapping up an iPad in the device’s first 15
months.
But neither Samsung nor Motorola nor Acer could beg or borrow any of Apple’s magic.
Research in Motion, the maker of the BlackBerry, said it shipped only 200,000 of its
PlayBooks in three months — about what Apple sells in three days. Hewlett-Packard, which
flopped this summer with the TouchPad, was the latest to get burned.
Now comes a final competitor, the best-placed challenger of all: Amazon.com. The retailer is
on the verge of introducing its own tablet, analysts predict, a souped-up color version of its
Kindle e-reader that will undercut the iPad in price and aim to steal away a couple of million
in unit sales by Christmas.
A competition between Amazon and Apple tablets will be a battle that pits the company that
created the first popular e-reader (and set off a still-unfolding revolution in how books are
consumed) against the company that created the first popular tablet (and set off a revolution
in progress about how entertainment and other media are consumed).
Both companies are riding high, racking up record revenues and seeing their stock market
valuations cruise to new peaks. Each has ample resources to enjoy a pitched struggle for
people’s attention and their wallets.
Whichever company triumphs, said the Barclays analyst Anthony DiClemente, “the
consumer is going to be the winner.”
“The fact that Amazon is making such a huge investment might make Apple come back into
the market at a lower price point,” he suggested. “What’s to prevent them from slimming
down the iPad?”
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Anticipated Amazon Tablet to Take Aim at Apple iPad - NYTimes.com
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Most tech companies like to keep their cards close to their vests, but Amazon, like Apple,
strives to render the whole deck invisible. It has, though, scheduled a news conference in
Manhattan on Wednesday, and the speculation on technology blogs and among analysts is
that the tablet will be unveiled.
The original Kindle was not introduced until Nov. 19, 2007, which was rather late in the
holiday season. It immediately went out of stock for five months. Amazon perhaps is
learning from its mistakes.
The Amazon tablet, analysts believe, will most likely sell for about $250, half the price of the
basic iPad. Its screen will be seven inches as opposed to the iPad’s 10 inches. Unlike the
current Kindle but like the iPad and iPhone, it will operate by touch. A second tablet, with a
bigger screen, is expected next year.
The competition will be asymmetrical. Apple sells movies, music and books in order to sell
devices. Amazon sells devices in order to sell books, movies and music. Apple has never
faced an opponent with such a vastly different strategy. Apple declined to comment on its
strategy against Amazon.
Few if any analysts expect Apple to seriously stumble, but that is not to say it will emerge
unscathed. The Amazon tablet might be underpowered when set against the iPad, a Corolla
to Apple’s Lexus, but that might not matter.
“The No. 1 thing consumers do on tablets is e-mail,” said Sarah Rotman Epps, a Forrester
analyst. “The No. 2 thing is look up stuff on the Web. Then playing games and watching
video. Amazon will offer all the tablet that many consumers need.” She estimated initial sales
of as many as five million devices.
Amazon’s willingness to sell the Kindle e-reader at a loss — it dropped to $114 from $399 in
less than four years — will doubtless be duplicated with its tablets. By concentrating on
direct sales from its own Web site, Amazon does not have to share margins with another
store.
All that makes Amazon “a nasty competitor,” Ms. Epps wrote in a recent report, and leaves
Apple vulnerable among those who want a tablet solely for entertainment and not for
professional uses. Since that is about two-thirds of tablet users, Apple’s product strategists
will finally have to take a competitor seriously, she concluded.
Apple is not the only vulnerable one. The Amazon tablet will sell for the same price and offer
many of the same things as Barnes & Noble’s successful color Nook e-reader. The once-
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Anticipated Amazon Tablet to Take Aim at Apple iPad - NYTimes.com
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mighty book retailer is staking its future on making the transformation to digital; otherwise
it will end up like its one-time competitor Borders, now vanquished.
Amazon has 52 percent of the e-reader market against 21 percent for Barnes & Noble,
according to the data firm IDC. A small harbinger of the cutthroat struggle between the two
booksellers came this summer in the unlikely form of a best-selling German historical novel,
“The Hangman’s Daughter” by Oliver Potzsch.
Amazon bought the rights to the book and had it translated. Aggressive marketing on
Amazon’s site and a low price resulted in sales of over 200,000 electronic copies. That was
enough to entice Houghton Mifflin Harcourt to pick up the rights to republish it in
paperback. But since the electronic version was available only from Amazon, Barnes & Noble
declined to promote the physical book in its stores.
Barnes and Noble’s chief executive, William Lynch, warned publishers and agents that any
deals they struck with Amazon that excluded Barnes & Noble from offering a book in all
formats would incur the chain’s disapproval. Such disputes, which spur market
fragmentation and consumer confusion, are likely to become more common as the tablet
wars intensify and Amazon tries to achieve what analysts call lock-in, where all transactions
flow back to the company.
The classic lock-in company was AOL in the early years of the Web: Subscribers dialed in to
its site and then never left. It made AOL rich and powerful until the rest of the Internet
became more enticing and subscribers left. AOL never recovered.
In Amazon’s case, it has spent the last few years developing a vast buffet of electronic books,
music and video capable of being delivered in an instant. The tablet is meant to hasten their
consumption.
“Lock-in is the holy grail of a tech company, but it’s difficult to keep up,” said Bill Rosenblatt
of Giant Steps Media Technology Strategies. “Amazon has already achieved dominance with
e-books, but finding a niche with its tablet to boost all of its content services is going to be a
challenge.”
Mr. Rosenblatt’s prediction: “I don’t think it’s going to be a stiff,” like the H.P. TouchPad,
“but its success will be moderate.”
The stereotypical image of the Amazon user involves someone sitting in an office, stealing a
few moments from his employer to order a new best seller. It is a desk-bound activity. But
that is changing.
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Anticipated Amazon Tablet to Take Aim at Apple iPad - NYTimes.com
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Sam Hall, Amazon’s director of wireless products and services, talks about the company’s
move into mobile devices as liberating the consumer from the constraints of the personal
computer. The limits on shopping will fall away.
“We’re trying to remove the barrier between ‘I want that’ and ‘I have it,’ ” Mr. Hall said in a
recent interview.
One thing that may hold back the first version of the tablet is the smaller screen. Steven P.
Jobs, then chief executive of Apple, said last year that it would never make a device that size
“because we think the screen is too small to express the software.”
Apple also has a lead in design that will be tough to surmount. People want to own its
products because they are so good-looking. On the basis of the first Kindle, which critics
often compare to an oversize calculator, Amazon has some catching up to do.
Mr. DiClemente, the Barclays analyst, is another Amazon skeptic. He thinks it will sell two
million units this year. “The great thing about the Kindle is that it was really the first ereader,” he said. “With the tablet, Amazon is a follower. That’s never as good.”
http://www.nytimes.com/2011/09/26/technology/anticipated-amazon-tablet-to-take-aim-at-... 9/26/2011
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