parislemon:

Just to follow up, Amazon has released their numbers. As expected, net income doesn’t look great — $177 million, down 58 percent year over year. But at least it’s not a loss (which Amazon had warned it might be).

That $177 million is on sales of $17.4 billion. Crazy. That’s what low margins — and selling hardware at a loss — will do to you.

Speaking of 177, that’s also the percentage that Amazon says Kindle sales increased during the holiday period when compared to the previous year — which means basically nothing since Amazon refused to release actual numbers last year. And they still refuse to this year.

Looking forward, Amazon expects profit to be anywhere from $100 million — to a $200 million loss next quarter. Ouch.

To be fair, unlike my earlier statement, Amazon did make more money in the entire quarter than Apple did in one day last quarter, but just barely: $177 million versus around $145 million.

But that’s an average. I’m sure during some of the busy shopping days, Apple actually did make more money in one day than Amazon did for the entire quarter.

Amazon’s profit for all of 2011 was $631 million. As a reminder, Apple made $13.06 billion in profit last quarter. Perhaps not a fair apples-to-apples comparison, but not exactly apples-to-oranges either.

Rafer sez:
It’s rather exactly apples-to-oranges.

Both companies are strategic giants, and certainly Apple is more valuable by just about every financial indicator one cares to mention. And the two companies are now the top two tablet brands on the planet, with Apple being at least 4x Amazon’s size. Amazon did earn the #2 spot within two weeks of shipping for what it’s worth.

Let’s also look at the differences. Tablets are driving e-commerce at stunning levels. Which company do you think will clear more margin and gain more customer knowledge on tablet commerce a year from now? One sells mobile devices, media, and apps; the other sells everything. 

Apple is beating the world by inventing new product categories and executing. Pardon my morbidity, but do they really have the ability to create any more categories after Jobs’ AppleTV vision is rolled out? If not, they’ll need to start messing with Amazon on it’s own turf — execution alone.

Finally, let’s look very hard at what it means to be a high margin business like Apple (and Facebook and Google). The stock market simply won’t let you massive low margin grabs for market share like Amazon is very successfully doing with Fire and — just as importantly — with AWS. AWS crushed Google App Engine without breaking a sweat. Bezos’ income statement improves with a (I’m guessing here) 12% gross margin IT hosting business at scale. Google can’t afford for such a business to succeed. Their stock would do much, much worse than its current lackluster dogpaddling.

Google can afford — a la Android — to give consumer software away, but only if they control the media on it. Amazon is the strongest of many companies liberating Android (somebody give me a Roy Batty joke quick) from Google by owning the whole stack right up to my credit card. Check out the stock chart below for what that all means.

I’m long the stock of both companies, Apple for 9 years this month (58x my money, huzzah!) and Amazon for about 4 years. I bet that I’ll own each of them for about 12 years from the time I bought them. Apple’s got the sex, but Amazon’s got the legs.