Column: The government's case against Apple
The curtain has just gone up on the Justice Department's anti-trust case against Apple (NASDAQ:AAPL), but whatever the verdict is, we've already gotten a whole graduate-level business course on the different paths to profit off Apple and its rival, Amazon (NASDAQ:AMZN), as demonstrated in the $40 billion-per-year book publishing business.
Here it is in a nutshell:
Amazon swoops into a market with surprisingly low prices on its kindle hardware, and a bargain-bin $9.99 price on books. It does this even if it loses money, until its competitors fold and its suppliers scream for mercy but receive none. Amazon makes plenty of profit eventually, because of the awesome volume of its sales.
Apple creates premium products, and prices them at a premium. It also makes money on all of the entertainment media that the device intended to play, and it routinely demands 30%. It makes plenty of profit, too, because 30% of all media sales adds up nicely over time.