No other example could show just how harsh the competition is than the Amazon.com Inc. (NASDAQ: AMZN) price cut of its Fire TV, which has dropped from $99 to $79 for Christmas. Amazon should have a natural advantage in the new age TV world. Its Prime streaming system is among the most popular such services in the world. It is sold via the leverage the company has gained through hundreds of millions of customers, and also simply because so many people want an alternative traditional TV.
However, Google Inc. (NASDAQ: GOOG), Apple Inc. (NASDAQ: AAPL) and Netflix Inc. (NASDAQ: NFLX) also want to be at the top of this market. Each has strategic reasons it must finish as the winner. Google’s Android system already dominates smartphones. Its needs the OS to spread to other consumer electronics. For Apple, TV is the next dance it has with content–a dance it began with the iPod and iTunes. While the percentage it took from content sales drove friction in its relationship with music producers, the size of Apple’s hardware distribution is unparalleled.
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Finally, Netflix only has one business. Without streaming TV, and relationships with the hardware and distribution networks, it has nothing. It already has a strong relationship with content producers. Ironically, it needs to cooperate with companies like Amazon and Apple as conduits to keep and increase its customer base.
The price cut on Fire TV may give many of Amazon’s customers a happy holiday and joyous new year. For Amazon, it is a complete necessity. The time is short to win in the new TV market. Amazon knows that and is happy to cut prices to gain market share.
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