The recently concluded WWDC (Worldwide Developers Conference) of Apple Inc. (NASDAQ:AAPL) grabbed eyeballs. Apple unveiled a number of upcoming products including iOS 7, the revamped version of its operating system for iPhones and iPads. The MacPro desktop got a complete makeover, which is stunning. But what very few people noticed is that some of Apple Inc. (NASDAQ:AAPL)’s announcements will give a big boost to Intel Corporation (NASDAQ:INTC), while others threatened to snatch a big chunk of e-book market share from Amazon.com, Inc. (NASDAQ:AMZN).
Apple joins hands with Intel
At the event, Apple Inc. (NASDAQ:AAPL) announced that its 13-inch and 11-inch MacBook Air series will have Intel Corporation (NASDAQ:INTC)’s fourth-generation Core processor. MacBook Air products are ready to ship immediately. The move indicates that Apple and Intel’s relationship has become stronger, contrary to market speculations that the relationship is waning.
In late 2012, Bloomberg had reported that Apple Inc. (NASDAQ:AAPL) is internally designing an ARM-compatible processor to ditch Intel Corporation (NASDAQ:INTC)’s Core processor. At the time, the microprocessor giant was battered by slowing PC sales and pessimistic Q3 guidance. So, it was the preferred target of short-sellers.
Anyway, now it’s official that MacBook Air will be powered by Intel Core processors. Apple Inc. (NASDAQ:AAPL) has promised a day-long battery life and substantially improved graphics. Using Core processors in the device proves that Intel Corporation (NASDAQ:INTC) is making exactly the same standard of products that Apple expects for its MacBook line. It means Apple doesn’t see a need to internally develop a low power/high performance chip for MacBooks.
Moreover, the most innovative product unveiled at WWDC, the revamped MacPro, will be equipped with Intel Corporation (NASDAQ:INTC)’s Ivy Bridge-based Xeon processors, which is considered the greatest product from Intel Corporation (NASDAQ:INTC)’s stable. Analysts say that MacPro badly needed an upgrade, and Apple’s focus on performance has fulfilled market expectations.
Tim Cook is a genius. He knows that a lag in performance/watt and overall performance can hamper Apple’s market share. If the company can make a MacBook class of processor with unmatched performance, and still allow a day-long battery life, the iPad may be the next Apple product with Intel inside.
Apple scares Amazon.com
Apple has geared up to expand its strength in e-books market. Its upcoming Mavericks operating system will bring iBooks to Mac. With this, the Tim Cook-led company has directly challenged e-books major Amazon.com, Inc. (NASDAQ:AMZN), which already offers e-books on computers and e-readers. And Apple already has 1.8 million book titles available on iBooks, close to the 2 million books on the Kindle Store.
The only problem for Apple is it may not compete with Amazon.com, Inc. (NASDAQ:AMZN) on price, which offers discounts on e-books. But, Apple has many other things that Amazon lacks. The biggest advantage for iBooks is that it is already available on many devices, and the app comes pre-loaded on iPads. Additionally, iBooks has crossed 130 million downloads as of March 2013.
Though Apple iPads cost almost double the money as Amazon.com, Inc. (NASDAQ:AMZN) Kindle, they are definitely more popular than Kindle. According to NewZoo, there are 30.5 million active iPad users compared to just 17.4 million active Kindle users as of March 2013.
At the end of 2012, Amazon.com, Inc. (NASDAQ:AMZN) had about 60% share in the e-books market, but that has been mainly due to its pricing advantage. In its 2013 annual report, Amazon said that its biggest risk is a change in the adoption rates and usage of digital media and e-commerce devices and web services. Amazon is losing the grip over digital media, both in the U.S. market as well as internationally. In 2012, digital media accounted for about 26% of Amazon’s North America sales, down from 30% in 2011 and 37% in 2010.
With sliding sales, price would no longer serve as a major advantage. Initially, Amazon lost money by giving discounts on e-books, but recovered that by selling Kindle hardware at higher prices. But now, Kindle is selling so cheap that Amazon has lost its income cushion from hardware.
Amazon has only one advantage, that of price, but discounts aren’t available on every e-book title. As the company is already selling e-books and Kindle is at a loss, Amazon is unlikely to hold on its pricing advantage for long. So, Apple can use its might and vast user base to sell e-books, giving tough competition to Amazon.
Colin Tweel has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Apple, and Intel. The Motley Fool owns shares of Amazon.com, Apple, and Intel.
The article Apple Helps Intel but Threatens Amazon at WWDC originally appeared on Fool.com and is written by Colin Tweel.
Colin is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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