Apple, Google Are Profitable Since They Know Where to Lose Money

To understand which firms are going to end up dominating the market for tablets and mobile phones, it helps to notice that we now live in an era in which every successful company selling hardware and content is giving something away for free. And the companies that can’t afford to give something away for free are now competing with commodity manufacturers that could drive them into bankruptcy. 

photo: modmyi.com

Subsidy — either of hardware by content, or content by hardware — is the common thread running through Apple’s iPad mini (due to be announced Tuesday), Microsoft’s move into hardware with its Surface tablet (due later this week), Nokia’s slow demise, Amazon’s ascent, and the modest success of every regional Android handset manufacturer on the planet. It’s notable that the successful firms have opted for either one model or the other: none makes significant money from both content and hardware.

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