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Linus Torvalds: Is Engadget really that stupid? Just corrupt? Trolling us all?

316 points by cramforce 14y ago

sosuke 14y ago
You could take the Engadget article as a defense for the iPad Mini pricing, or you could say it illustrates that it is tough to compete with companies who can sell devices at cost. I took it as the latter before reading Linus's opinion. In case you missed the HN comments on the original article: http://news.ycombinator.com/item?id=4737154 http://news.ycombinator.com/item?id=4737154
- hyperbovine 14y ago
  Sorry, I must be missing something -- isn't AAPL, the company furthest away from selling anything at cost, the most valuable company in history and making more money in a week than most of these other companies make all quarter?
  - duaneb 14y ago
    Not everyone can make luxury hardware.
  - seanmcdirmid 14y ago
    They have incredibly great logistics, they have made lots of forward looking investments. It is difficult for competitors to produce similar devices at similar costs to Apple, and their margins are much crappier when they do. But they should catch up, as long as Apple stops improving logistics and making forward looking investments (or the competitors do).
- esolyt 14y ago
  Yes. It is difficult to compete with companies who can sell devices at cost. But as a consumer, I don't see why I should be unhappy about it.
  - alpeb 14y ago
    The problem is over the longer term. Competitors will have to exit the market, creating a monopolistic situation with all the problems that entails.
    - cdash 14y ago
      Competitors that can not compete are not competitors.
      - HCIdivision17 14y ago
        And a competition with only one competitor is Solitaire. Unfortunately, these types of large markets play continuous/repeating games, not one-shots. Ideally, consumers wouldn't want to waste the time it takes for a monopoly to become complacent and be disrupted by a fresh competitor. We can be fairly confident that if the market's inefficient (as it hopefully is in a monopoly), someone would certainly jump in and try to eat that inefficiency as profit for themselves and compete. But that takes time. Rather, we'd prefer the competition play out continuously. There's overhead in time and wasted opportunity waiting for these games to restart, when we could have been incrementally improving the whole time (say, a lost product cycle or two: 18-36 months maybe?). In this hypothetical ideal, the immediate cost to maintain this competition is higher to the consumer, but cumulatively lower in the long term since we gain though the innovation and efficiency forced by active competition. Of course, we can certainly think of Solitaire as a one-person competion, but most companies don't have the wherewithal to actively compete against themselves (there are a few really awesome counter-examples, but they're at least partially awesome in light of how much everyone else fails to live up to that ideal). It's much easier to cheat: take the short-term pay-off since no-one is available next round to punish. Lacking alternatives, the consumer can't even properly punish the monopoly for cheating, and will instead have to either pay higher costs or accept passive innovation as the company coasts (or abstain, becoming a noncomsumer and shrinking the market - a worst-case scenario!). Or worse, they drive their efficiencies enough that none may even afford to enter to compete, and since there won't be competition next round, the consumer faces all the same negatives and a much lower hope of competition-driven innovation/cost reduction for the round after that. Now the best hope is a hidden competitor with the funds to jump in suddenly and without warning with a fully formed alternative (say, an iPhone perhaps); this happens rarely, and will likely take years to prepare. TL;DR: When you're the only player, no one is there to stop you from cheating. And the consumers are paying for the game. That's why monopolies are lousy: consumers can't compete, but are still invested players - albeit disenfranchised.
larrybolt 14y ago
I like Torvalds posts/articles. Most important people that blog/post/comment about stuff in their field of "expertise" (I'm assuming in this case that would be technology in general) try to do research on the topic, give advantages and disadvantages. Which isn't bad! But Linus just seems to post his own opinion on things, just the way he sees it.
rbn 14y ago
Engadget stopped being Engadget when everyone moved to the Verge.
- zubup 14y ago
  "when a bunch of crap moved to the verge" - fixed
forgotusername 14y ago
Torvalds must be on drugs or also trolling hard to be talking about an absence of carrier lock-in and Android in the same sentence - an OS rendered practically unusable should you elect not to associate your device with a Google account, and all that such entails.
- jackowayed 14y ago
  Those are very different problems. Cell-phone carriers have formed an oligopoly due to the extremely high cost of building nationwide service and the limited amount of mobile spectrum. This will naturally lead to a situation where the industry can stagnate and overcharge with there being very little pressure from new entrants to the market that try to exploit the market failure. Carrier-lockin makes this problem even worse because they make it even more expensive to use their services unless you lock yourself in longterm in exchange for a phone subsidy that amounts to a discount. Sure, there are lots of concerns about Google having lots of information about you. But at least you have choices, and at least you don't have to pay Google $100/month and pay them more if you want to leave.
- chongli 14y ago
  He's talking about the new Nexus 4 which is $299 unlocked with no contract; hence no carrier lock-in.
  - recoiledsnake 14y ago
    If you're in the US, the Nexus 4 doesn't support CDMA, which rules out Sprint and Verizon. AT&T doesn't give a discount for bringing your own phone, so you'd be losing money if you don't take a device for them but buy a data plan. So you're effectively locked into Tmobile.
    - eropple 14y ago
      Postpaid plans are the problem here. They're something of a tax upon people who can't do math if you have a subsidized phone; they're terrible if you bring your own phone. If you bring your own phone, you want to be looking at the prepaid arrangements. AT&T has considerably cheaper prepaid plans than their postpaid plans (I think it was like $40 cheaper when I looked?). T-Mobile's prepaid plans are even cheaper; I pay $30/month for 100 voice minutes ($0.10/minute overage, which I've hit a couple times), unlimited data (speed-throttled at 5GB), and unlimited texts. I paid $350 for my Galaxy Nexus and ditched my $90/month AT&T postpaid plan for the $30/month T-Mobile prepaid plan, and the delta in plan costs paid off the cost of the phone (over a carrier subsidy) in about four months.
jsz0 14y ago
I'm guessing most of Engadget's traffic comes from the US where unsubsidized/unlocked phones are not popular at all. That should explain it. No need for conspiracy theories.
- grecy 14y ago
  And if the media never covers the fact those are valid (and much liked) options in other countries, all you get is confirmation bias, and a continuation of the (broken) status quo.
  - fleitz 14y ago
    Yeah, a big problem is that no one offers unsubsidized plans, so you can either pay $199 for your phone and $100 a month for three years, or $699 for your phone and $100 a month til you decide you no longer need phone service. About the only advantage paying for your phone gives you is the opportunity to leave your carrier, but since the buyout is usually less than the subsidy on a smartphone it's usually better to use the buyout.
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jordanthoms 14y ago
Engadget has really gone downhill recently, AOL screwed up bad and everyone left for The Verge. Just compare the quality of their Nexus coverage...
- w1ntermute 14y ago
  Yep, The Verge is the only site I visit for gadget-related news these days. The production value on their videos is ridiculously high - just take a look at the one in this article[2]. And on top of that, they have absolutely amazing features[0], which integrate various aspects of culture as well. Finally, there's On The Verge[1], the show they record in front of a live audience - I think it matches the quality of shows broadcast on TV. 0: http://www.theverge.com/features http://www.theverge.com/features 1: http://www.theverge.com/on-the-verge http://www.theverge.com/on-the-verge 2: http://www.theverge.com/2012/10/29/3570034/inside-android-building-the-nexus-4-nexus-10-android-4-2 http://www.theverge.com/2012/10/29/3570034/inside-android-bu...
  - btipling 14y ago
    Agreed, although ArsTechnica is pretty good and I'm starting to like anandtech
    - masklinn 14y ago
      Anandtech has long been a staple of my tech browsing, especially when it comes to hardware and devices. I think their whole series on SSDs a few years back, before SSDs being A Good Thing becoming accepted wisdom, is nothing short of legendary. The day-to-day stuff is not very interesting, but when they dig into something they dig deep. They're my go-to resource for all explanations on new CPU, chipsets and GPUs.
gaving 14y ago
oh look another Linus Torvalds Google Plus link
- lrobb 14y ago
  Said the exact thing his other post said: Enter profile information Your profile and +1's appear publicly in search, on ads, and across the web.
shimon_e 14y ago
Yes because it really costs $600 per phone to make a quality one.... so 600 billion would be the cost for 1 billion people to have quality phones. These phones should be dropping to $150 already... but there isn't enough competition for that yet.
ericHosick 14y ago
The entire "cell phone thing" in Vietnam (and I am sure other Asian countries) is far superior to the USA (in my opinion). I can go to practically any corner and get a SIM card for 5 USD and put it in a phone. I don't have to give my name or an ID or join some plan. I just give them the phone, they put a sim in and it works. I can get a cell phone within a few blocks of basically anywhere I am. The carriers make money selling calls and data: not phones. And while I'm talking about this kind of thing... I can go anywhere and get "free" wifi: even at Circle K. Ya. They have free wi-fi at the Circle K. I can sit at a coffee shop, get a 3 dollar coffee, and work all day. Restaurants are the same. Admittedly, the internet speeds to the USA are not that great. However, internal to Vietnam, they are really good.
- grecy 14y ago
  Across most of Argentina, gas stations have free wi-fi. Such a great idea.
- mtgx 14y ago
  That's pretty much how it works in all of the EU zone, too.
  - kome 14y ago
    I wonder how it works in the good ol' USA. Somebody cares to explain?
    - EvanAnderson 14y ago
      It works badly. If you want any kind of post-paid plan you typically are forced to purchase a phone with a carrier lock. Some pre-paid plans will let you purchase SIMs and "bring your own phone" (Wal-Mart's "Straight Talk" being the largest that I'm aware of-- they're an AT&T MVNO). The average US cell phone user has no idea that phones and service aren't one-in-the-same.
      - michael_h 14y ago
alpeb 14y ago
The editorial raises some valid concerns, namely how unfair competition can destroy an industry. Not surprised at Linus' again calling people stupid, and his cortege blindingly cheering him up.
doctorpangloss 14y ago
Linus misses two key points. First, Engadget focuses on tablet pricing moreso than cellphone pricing. Second, all Engadget is inelegantly saying that the lowest price for something isn't necessarily its most efficient one. Efficient prices versus low prices will play out spectacularly poorly in U.S. v. Apple and publishers, the book price fixing case. Like with tablets, Amazon undercut the true price of books, which harms authors and publishers. Hilariously Apple and publishers did a legal "corrective action" that is precisely described in the DoJ's own guidance on anti-trust. But I digress. I would agree with Engadget that Amazon and Google selling tablets at or below cost is unequivocally bad for the tablet industry. I'd prefer efficient prices. Otherwise, Amazon undercuts everyone, all the other tablet manufacturers cease to exist, and then they let the product stagnate.
mdasen 14y ago
I think there's a real issue here and that's one of sustainable pricing. There are times when companies or countries are willing to dump goods at cost or even below cost for a certain period of time in order to gain market power. That's a bad thing for consumers. What we want is vibrant competition with many players offering low prices. However, if companies dump their products at or below cost, we may find we're left with fewer players as some companies exit the industry. Apple and Samsung are both doing wonderfully, but others including HTC, LG, and Motorola Mobility aren't in such a sunny position. Amazon hasn't said this, but some have justified Amazon's high P/E ratio by saying that Amazon is going to be the future of retail and once they've killed off some of their competition, they'll be able to raise their margins. That may or may not be true, but such a situation would be bad for consumers. We want low prices (that's a great thing), but we also don't want to lose options and competition in the future (that's a bad thing). Amazon is running razor thin on its profits to be popular. I'm not suggesting that Amazon is evil. Rather, it seems to just be Jeff Bezos' attitude towards margins: they should be low so that people can buy more stuff. However, that attitude may not always prevail, especially if competition dies out. It's good to make things cheaper and more accessible (as Linus has said). However, sometimes you can make something too cheap to be really sustainable. Often times large players will sacrifice profits to gain marketshare and that can sometimes be justified. Still, it's important to recognize as the play for market power that it may be and the temporary situation that it may be. A company does not intend to lose money forever. If they're able to eliminate competition in their industry, that gives them power in the future to raise margins. It can be hard to judge an industry sometimes. Apple and Samsung are clearly going to be sticking around: they're making products people want and raking in money. However, other players just haven't been so profitable. Having to compete with a device like the Kindle Fire being sold at cost is hard to do and may drive them out of the industry. You can say, "well, they weren't able to compete" and that's somewhat true. However, it hides the fact that Amazon may not be playing "fair" (for some definition of fair that I'll explain). Let's say (hypothetically) that Amazon is actually Evil, Inc. They have a war chest of money and are willing to lose money over the short term to become monopolistic. So, they price the Kindle Fire even below cost - $50 maybe. Some competitors will just fold. Others might try to continue competing for a short time, but their war chests are empty before Evil, Inc.'s. So, we end up with only Evil, Inc. selling us tablets. Nice for Evil, Inc. They can now charge a healthy $300 as well as up the margins on content purchases - charging higher prices to consumers as well as negotiating harder against content providers. "Ah, but if they did that, someone else would come in with a $250 tablet to compete!" Probably not without government intervention. Why? Because they know Evil, Inc. will temporarily drop the price on their Kindle Fires until the new company goes bust. That's an exaggeration, but dumping products like this isn't unheard of. The more people that get Kindles, the better Amazon's market power is over content providers and consumers. Similarly, if the margins become so low that many companies can't create devices, we end up with them exiting the market and competition is reduced. The fewer competitors in the tablet market, the better it is for Amazon long term. Basically, we want competition today AND competition tomorrow - sustainable competition rather than one or a few companies winning. We want prices at a point where they're low, consumer friendly, and encourage wide adoption while making sure that 5 years from now, we're benefitting from similar low, consumer friendly prices. If we're left with only Apple, Samsung, and Amazon, we'll be worse off. It can be hard to think about. In some ways, we might see a company like Amazon as winning by providing things cheaper in a way that's good for consumers. However, we don't want Amazon to win - we want others to be able to match Amazon so that Amazon will have to keep innovating and competing in the future. At the same time, we want the lowest price. It's a balance similar to investing in the future (or taking on debt). We don't want to starve ourselves now (we want to enjoy our lives). At the same time, we know that we shouldn't just rack up debt in the present having fun because we want a strong future. We don't want to pay high prices for devices now, but at the same time we don't want one or two companies to come out as the survivors of the "tablet price wars" who can then charge us more money now that the competition has been vanquished. * I know I picked on Amazon a bit here and that's just because the Kindle Fire is being sold at cost below the competition. I'm not saying that Amazon is evil, but even in the absence of evil, we wouldn't want Amazon to win because competition brings innovation and discourages slacking off. Even if you're a good company trying to do positive things, seeing what others are doing makes you better. As such, even a purely altruistic company is bad as a monopoly.
brisance 14y ago
That g+ post is particularly bad because it shows that Linus is opinionated (we knew that already), that he doesn't understand business (predatory pricing) and that he doesn't read very well (the Engadget article clearly explains that in the short-term, lower prices work in favor of the customer). In fact his own post can be considered a trolling piece since at the end he suddenly switches tack and justifies his choice of Nexus phones. Which is due to his own preference of the UI, but similarly ignoring others who may instead prefer iOS.
- no_more_death 14y ago
  It's not about his preference of the UI, it's about his preference of phones that do not appear locked down. He prefers Nexus because of the stock Android UI (nothing to do with iOS UI here!), but even more he prefers nexus phones because Google is fighting the proprietary locked down carrier approach -- the one that makes us slaves to our carriers in order to get a good phone at a decent price. I may get a Nexus 4, and in that situation I can purchase my freedom from my current slavery to Verizon for a paltry $100. I can actually evaluate all the carrier options and determine which phone is the best. If this kind of freedom takes hold, it is likely that carriers will actually have to compete at some point, instead of customers being forced into one carrier their whole life (basically). Then other aspects of carriers will probably improve because they have to compete. In other words: It's not a preference for one design over another, it's a preference for freedom. You may disagree with the freedom argument, but this is certainly what it's about. This is why Linus is coming out to bat for Android -- not because he likes Google or Google's style, it's a pragmatic decision because he thinks Google is his friend as far in trying to reintroduce competition into the market.
- drivebyacct2 14y ago
  >Which is due to his own preference of the UI, but similarly ignoring others who may instead prefer iOS. Projecting much? At best he said he likes Android's UI. He didn't even mention iOS.
  - brisance 14y ago
    You have to read the Google post in its entirety and the context; in this case, the Engadget article was about the different business models of Amazon/Google as compared to Apple, and how they hope to profit not from the hardware but from complementary services. Thus the implicit meaning is that Android is "open", which we all know not to be true. Getting "carrier lock-in" is more symptomatic of American carriers' way of doing business rather than a universal once, since, as pointed out by many others, Apple sells unlocked iOS devices in many parts of the world.
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drivebyacct2 14y ago
So what happens if Desktop Linux ever takes off? What's going to happen when there isn't one organization to target and attack and villanize?
dewiz 14y ago
my 2 cents: complaining that underpriced hw kills competition, is like saying that a free Linux will kill Apple and Microsoft. I can see where Linus is coming from here :) Well, that is apparently not happening yet after how many years of free software? Welcome then to free hardware, however free hw won't happen thanks to volunteering, there are paid ads, content, services, is that bad? good ? did free Skype, Gmail, Github, Youtube, Zip compression kill the market, or was the market itself creating the conditions for them to be free?
shinratdr 14y ago
All I learned from that article is that Linus Torvalds is as uninformed as your average Engadget commenter. I thought that was one of the most spot on and original pieces to come out of Engadget in months if not years.
TechNewb 14y ago
I agree with what his argument is with cell phones, but if it were not for Apple's higher margin tablets and laptops we would probably be using crapy netbooks today with a crappy OS. Both Engadget and Torvalds have a good point.
CountSessine 14y ago
Isn't this the same Linus Torvalds who just last week complained about how PC laptops, commoditized and cut down to their marginal cost of production for years now, weren't the target of innovation and how they were stuck using low resolution screens?
- doctorpangloss 14y ago
  Yes.
- drivebyacct2 14y ago
  You missed the part where the Nexus 4 out specs the iPhone? And many do? And many outperform the iPhone?
  - CountSessine 14y ago
    I don't disagree with that, but remember that the development of each of these smartphones is made more than a year ago with the profits of the last smartphone. If LG is just scraping by with the Nexus 4, and Apple and Samsung are ultimately forced to lower their prices to remain competitive, can we really say that anyone in this industry is going to have the money to keep pushing the technological envelope? On the other hand, maybe the big players have exhausted themselves of their creativity for the time being. After all, how creative is an extra row of icons on the home screen? Or an even wider, bigger version of last year's phone?
effinjames 14y ago
Linus keep telling us he owned the web. Unfortunately linux is not directly important to end-user. Just another ass.
ricardobeat 14y ago
The post is cut off at the third paragraph, is there a way to read this on mobile?
- sounds 14y ago
  Linus Torvalds 4:11PM Editorial: is Engadget really that stupid? Or just corrupt? Or trolling us all? Here is another "race to the bottom is bad" article, this time in the form of an "editorial" from Engadget. It's even more idiotic than usual. The whole "race to the bottom" concept is odd to me: people complaining about how technology gets less outrageously expensive, and more available to everybody, and more commoditized. Like that would be a bad thing? So the whole argument is fundamentally flawed to begin with - any time I see some pundit or CEO complaining about how the competition is making things cheaper, I go "Uhhuh, crybaby". But when it comes to cellphones, it's not just a flawed argument, it's doubly stupid. Because in that market, particularly in the US, the alternative is the whole broken carrier subsidy model, with all that entails. None of which is good, and all of which is much worse than any (hypothetical) "race to the bottom" arguments. And at no point did that deeply flawed editorial even mention carrier lock-in issues. What crock. I have many reasons to like the google nexus phones: I just think that the plain android experience is generally cleaner than most of the skinned ones, and even when there is superior hardware (Samsung Galaxy SIII) I tend to prefer the Nexus model (honesty in advertizing: I've gotten free phones from both google and Samsung, but I actually bought my own Nexus One and Galaxy Nexus on google play store. And I installed CyanogenMod on the SIII Samsung gave me, because I wanted the JellyBean experience). So I like the Nexus phones just because I think they have a nicer interface. But I like the Nexus phones even more because they are clearly pushing the whole "no carrier lock-in" model. And price is absolutely part of it. Link to http://www.engadget.com/2012/11/03/editorial-amazon-and-google-are-undermining-mobile-pricing http://www.engadget.com/2012/11/03/editorial-amazon-and-goog...
programminggeek 14y ago
This is one part of Apple's model that I swear people just don't get at all. Apple, as a company, refuses to operate in unprofitable hardware markets. So, they make a $329 7" tablet instead of $199. They make a $400 tablet with "outdated" hardware, they make a $500 tablet that is top of the line. They won't sell a sub $999 laptop. Apple then focuses on selling as much of those products as they can irrespective of market share. They don't deep discount just to gain "mindshare" or "marketshare". Engadget and others could moan that it isn't fair, but to be fair the only company that has been able to build and sell even remotely comparable hardware at comparable margins is Samsung, and frankly that is largely because Samsung supplies the same parts to Apple, so Apple is effectively subsidizing Samsung's overhead. Other companies could play Apple's game, there certainly is room to do so, but it is a low volume/high margin strategy traditionally. The anomaly is Apple's been able to take low volume/high margin to very high volumes while leaving the high volume/low margin business to everyone else as prices fall downward. I don't feel bad for Acer, LG, ASUS, Sony, Dell, or HP because they've all become so bad at designing, building, and selling a premium product that they really don't deserve to be competing. Ironically, much of iPhone's design was inspired by Sony's design heritage, and yet, Sony is still yet to truly match it. To put it another way, you know it's kind of a sad state of affairs when Microsoft can put their own team together and ship a legitimate competitor to the iPad in a very short period of time and Microsoft isn't even a hardware company.
- UntitledNo4 14y ago
  I disagree with the comment about Sony unable to match Apple's design. I have an Xperia S and although I don't flaunt it around, people who have seen it made comments about how good it looks. Including a few Apple Fans with iPhones. A couple of friends even bought Sony phones after seeing mine. The design of the phone was one of the main two reasons I chose Sony (the other is sound quality when playing music on the phone). They even manage not to screw up the Android experience, in my opinion. They are not the most popular phones, but I think the design is not the reason for that.
  - GFischer 14y ago
    A coworker has a Sony (Live Walkman, not Xperia), and I don't like what they did to his Android (maybe I'm too used to Samsung's TouchWiz). Other than that, it's a nice phone.
mycodebreaks 14y ago
Linus is right. I agree with him. Engadget is stupid, corrupt and trolling in this case. Lower prices aren't hurting consumers. Good quality Nexus devices around $200-400 ranges aren't hurting consumers. In fact, it encourages a fair competition. As a result, Apple/Samsung have to work hard to make their $600 & up devices feature-rich to justify higher price. Consumer wins!
Ramonaxvh 14y ago
Linus is a socialist, and has always hated big corporations and profiteering too much off technology. Thats why I think he's awesome.
b1daly 14y ago
Aside from the technical argument about whether predatory pricing really exists there is another aspect of "race to the bottom" that is at least worth a thought. Ironically, Torvald's post and the Engadget article both have an assumption that whatever provides better quality(innovation) and product choice at lower prices to consumers is an unequivocal good. While seems likely to me that this is true, I don't quite get the conflation in popular culture between "consumers" and the public good. I recently picked up a Nexus 7 and I was a bit stunned at the level of technology I could get for $200. If the margin is getting squeezed, that means entities on the other side of the transaction are too, including labor. At what cost to humans (and the environment) is this rock bottom technology being created? Is there a connection between ultra competition and increasing income inequality in the US, if not the world. It seems at least intuitively plausible.
beloch 14y ago
The Engadget piece seems to argue that Amazon and Google are engaging in predatory pricing when it really boils down to the fact that Apple and Google are trying to fight the iPad's market incumbency. Let's look back a decade for a moment. i.e. The iPod. Apple made the iPod good. Then they made the iPod cheap. Nobody could compete. Could companies like Diamond or iRiver have made better devices if they didn't have to compete with cheap iPod's? Almost certainly. Once Apple diversified the iPod line into the extremophile niches other mp3 player manufacturers were clinging to it was game over. Complete and utter dominance. Now almost nobody buys iPod's because everybody's phone can do the same job. Apple knew that the key to maintaining dominance was to drive down prices faster than the competition without compromising quality. By offering premium devices at prices that are just barely above that of inferior devices Apple made the iPod a no-brainer purchase for consumers. They did this so well that it was only Apple themselves who finally obsoleted the iPod with the iPhone. They've tried to do the same thing with the tablet and have arguably built up some degree of incumbency with the iPad. Low-margin pricing on the Nexus 7 and Kindle's can be seen as attempts by Google and Amazon to fight Apple's tablet incumbency before they're locked out of the market completely. Let's face it, if Amazon or Google tried to sell their tablets at the same price as Apple's offerings they'd never catch up. Even if they were of exactly equal quality, Apple's is the proven product because it's been around longer. If Google and Amazon made poorer quality tablets and sold them cheap, but with decent profit margins, they'd wind up like Diamond and iRiver. Only their ability to sell at low-margin and profit from ads/media sales gives Google and Amazon the edge they need to compete with Apple and have any hope of catching up. The end result of this is a three-way battle for tablet superiority where there would have only been one choice: the iPad. Oh, and now Microsoft is throwing their hat into the ring too... Quite frankly, I think the next few years are going to be very kind to tablet-fans, and that's partly in thanks to "predatory" pricing.
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316 points by cramforce 14y ago

You could take the Engadget article as a defense for the iPad Mini pricing, or you could say it illustrates that it is tough to compete with companies who can sell devices at cost. I took it as the latter before reading Linus's opinion. In case you missed the HN comments on the original article: http://news.ycombinator.com/item?id=4737154 http://news.ycombinator.com/item?id=4737154

hyperbovine 14y ago
Sorry, I must be missing something -- isn't AAPL, the company furthest away from selling anything at cost, the most valuable company in history and making more money in a week than most of these other companies make all quarter?
- duaneb 14y ago
  Not everyone can make luxury hardware.
- seanmcdirmid 14y ago
  They have incredibly great logistics, they have made lots of forward looking investments. It is difficult for competitors to produce similar devices at similar costs to Apple, and their margins are much crappier when they do. But they should catch up, as long as Apple stops improving logistics and making forward looking investments (or the competitors do).
esolyt 14y ago
Yes. It is difficult to compete with companies who can sell devices at cost. But as a consumer, I don't see why I should be unhappy about it.
- alpeb 14y ago
  The problem is over the longer term. Competitors will have to exit the market, creating a monopolistic situation with all the problems that entails.
  - cdash 14y ago
    Competitors that can not compete are not competitors.
    - HCIdivision17 14y ago
      And a competition with only one competitor is Solitaire. Unfortunately, these types of large markets play continuous/repeating games, not one-shots. Ideally, consumers wouldn't want to waste the time it takes for a monopoly to become complacent and be disrupted by a fresh competitor. We can be fairly confident that if the market's inefficient (as it hopefully is in a monopoly), someone would certainly jump in and try to eat that inefficiency as profit for themselves and compete. But that takes time. Rather, we'd prefer the competition play out continuously. There's overhead in time and wasted opportunity waiting for these games to restart, when we could have been incrementally improving the whole time (say, a lost product cycle or two: 18-36 months maybe?). In this hypothetical ideal, the immediate cost to maintain this competition is higher to the consumer, but cumulatively lower in the long term since we gain though the innovation and efficiency forced by active competition. Of course, we can certainly think of Solitaire as a one-person competion, but most companies don't have the wherewithal to actively compete against themselves (there are a few really awesome counter-examples, but they're at least partially awesome in light of how much everyone else fails to live up to that ideal). It's much easier to cheat: take the short-term pay-off since no-one is available next round to punish. Lacking alternatives, the consumer can't even properly punish the monopoly for cheating, and will instead have to either pay higher costs or accept passive innovation as the company coasts (or abstain, becoming a noncomsumer and shrinking the market - a worst-case scenario!). Or worse, they drive their efficiencies enough that none may even afford to enter to compete, and since there won't be competition next round, the consumer faces all the same negatives and a much lower hope of competition-driven innovation/cost reduction for the round after that. Now the best hope is a hidden competitor with the funds to jump in suddenly and without warning with a fully formed alternative (say, an iPhone perhaps); this happens rarely, and will likely take years to prepare. TL;DR: When you're the only player, no one is there to stop you from cheating. And the consumers are paying for the game. That's why monopolies are lousy: consumers can't compete, but are still invested players - albeit disenfranchised.

larrybolt 14y ago

I like Torvalds posts/articles. Most important people that blog/post/comment about stuff in their field of "expertise" (I'm assuming in this case that would be technology in general) try to do research on the topic, give advantages and disadvantages. Which isn't bad! But Linus just seems to post his own opinion on things, just the way he sees it.

rbn 14y ago

Engadget stopped being Engadget when everyone moved to the Verge.

zubup 14y ago
"when a bunch of crap moved to the verge" - fixed

forgotusername 14y ago

Torvalds must be on drugs or also trolling hard to be talking about an absence of carrier lock-in and Android in the same sentence - an OS rendered practically unusable should you elect not to associate your device with a Google account, and all that such entails.

jackowayed 14y ago
Those are very different problems. Cell-phone carriers have formed an oligopoly due to the extremely high cost of building nationwide service and the limited amount of mobile spectrum. This will naturally lead to a situation where the industry can stagnate and overcharge with there being very little pressure from new entrants to the market that try to exploit the market failure. Carrier-lockin makes this problem even worse because they make it even more expensive to use their services unless you lock yourself in longterm in exchange for a phone subsidy that amounts to a discount. Sure, there are lots of concerns about Google having lots of information about you. But at least you have choices, and at least you don't have to pay Google $100/month and pay them more if you want to leave.
chongli 14y ago
He's talking about the new Nexus 4 which is $299 unlocked with no contract; hence no carrier lock-in.
- recoiledsnake 14y ago
  If you're in the US, the Nexus 4 doesn't support CDMA, which rules out Sprint and Verizon. AT&T doesn't give a discount for bringing your own phone, so you'd be losing money if you don't take a device for them but buy a data plan. So you're effectively locked into Tmobile.
  - eropple 14y ago
    Postpaid plans are the problem here. They're something of a tax upon people who can't do math if you have a subsidized phone; they're terrible if you bring your own phone. If you bring your own phone, you want to be looking at the prepaid arrangements. AT&T has considerably cheaper prepaid plans than their postpaid plans (I think it was like $40 cheaper when I looked?). T-Mobile's prepaid plans are even cheaper; I pay $30/month for 100 voice minutes ($0.10/minute overage, which I've hit a couple times), unlimited data (speed-throttled at 5GB), and unlimited texts. I paid $350 for my Galaxy Nexus and ditched my $90/month AT&T postpaid plan for the $30/month T-Mobile prepaid plan, and the delta in plan costs paid off the cost of the phone (over a carrier subsidy) in about four months.

jsz0 14y ago

I'm guessing most of Engadget's traffic comes from the US where unsubsidized/unlocked phones are not popular at all. That should explain it. No need for conspiracy theories.

grecy 14y ago
And if the media never covers the fact those are valid (and much liked) options in other countries, all you get is confirmation bias, and a continuation of the (broken) status quo.
- fleitz 14y ago
  Yeah, a big problem is that no one offers unsubsidized plans, so you can either pay $199 for your phone and $100 a month for three years, or $699 for your phone and $100 a month til you decide you no longer need phone service. About the only advantage paying for your phone gives you is the opportunity to leave your carrier, but since the buyout is usually less than the subsidy on a smartphone it's usually better to use the buyout.

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jordanthoms 14y ago

Engadget has really gone downhill recently, AOL screwed up bad and everyone left for The Verge. Just compare the quality of their Nexus coverage...

w1ntermute 14y ago
Yep, The Verge is the only site I visit for gadget-related news these days. The production value on their videos is ridiculously high - just take a look at the one in this article[2]. And on top of that, they have absolutely amazing features[0], which integrate various aspects of culture as well. Finally, there's On The Verge[1], the show they record in front of a live audience - I think it matches the quality of shows broadcast on TV. 0: http://www.theverge.com/features http://www.theverge.com/features 1: http://www.theverge.com/on-the-verge http://www.theverge.com/on-the-verge 2: http://www.theverge.com/2012/10/29/3570034/inside-android-building-the-nexus-4-nexus-10-android-4-2 http://www.theverge.com/2012/10/29/3570034/inside-android-bu...
- btipling 14y ago
  Agreed, although ArsTechnica is pretty good and I'm starting to like anandtech
  - masklinn 14y ago
    Anandtech has long been a staple of my tech browsing, especially when it comes to hardware and devices. I think their whole series on SSDs a few years back, before SSDs being A Good Thing becoming accepted wisdom, is nothing short of legendary. The day-to-day stuff is not very interesting, but when they dig into something they dig deep. They're my go-to resource for all explanations on new CPU, chipsets and GPUs.

gaving 14y ago

oh look another Linus Torvalds Google Plus link

lrobb 14y ago
Said the exact thing his other post said: Enter profile information Your profile and +1's appear publicly in search, on ads, and across the web.

shimon_e 14y ago

Yes because it really costs $600 per phone to make a quality one.... so 600 billion would be the cost for 1 billion people to have quality phones. These phones should be dropping to $150 already... but there isn't enough competition for that yet.

ericHosick 14y ago

The entire "cell phone thing" in Vietnam (and I am sure other Asian countries) is far superior to the USA (in my opinion). I can go to practically any corner and get a SIM card for 5 USD and put it in a phone. I don't have to give my name or an ID or join some plan. I just give them the phone, they put a sim in and it works. I can get a cell phone within a few blocks of basically anywhere I am. The carriers make money selling calls and data: not phones. And while I'm talking about this kind of thing... I can go anywhere and get "free" wifi: even at Circle K. Ya. They have free wi-fi at the Circle K. I can sit at a coffee shop, get a 3 dollar coffee, and work all day. Restaurants are the same. Admittedly, the internet speeds to the USA are not that great. However, internal to Vietnam, they are really good.

grecy 14y ago
Across most of Argentina, gas stations have free wi-fi. Such a great idea.
mtgx 14y ago
That's pretty much how it works in all of the EU zone, too.
- kome 14y ago
  I wonder how it works in the good ol' USA. Somebody cares to explain?
  - EvanAnderson 14y ago
    It works badly. If you want any kind of post-paid plan you typically are forced to purchase a phone with a carrier lock. Some pre-paid plans will let you purchase SIMs and "bring your own phone" (Wal-Mart's "Straight Talk" being the largest that I'm aware of-- they're an AT&T MVNO). The average US cell phone user has no idea that phones and service aren't one-in-the-same.
    - michael_h 14y ago

alpeb 14y ago

The editorial raises some valid concerns, namely how unfair competition can destroy an industry. Not surprised at Linus' again calling people stupid, and his cortege blindingly cheering him up.

doctorpangloss 14y ago

Linus misses two key points. First, Engadget focuses on tablet pricing moreso than cellphone pricing. Second, all Engadget is inelegantly saying that the lowest price for something isn't necessarily its most efficient one. Efficient prices versus low prices will play out spectacularly poorly in U.S. v. Apple and publishers, the book price fixing case. Like with tablets, Amazon undercut the true price of books, which harms authors and publishers. Hilariously Apple and publishers did a legal "corrective action" that is precisely described in the DoJ's own guidance on anti-trust. But I digress. I would agree with Engadget that Amazon and Google selling tablets at or below cost is unequivocally bad for the tablet industry. I'd prefer efficient prices. Otherwise, Amazon undercuts everyone, all the other tablet manufacturers cease to exist, and then they let the product stagnate.

mdasen 14y ago

I think there's a real issue here and that's one of sustainable pricing. There are times when companies or countries are willing to dump goods at cost or even below cost for a certain period of time in order to gain market power. That's a bad thing for consumers. What we want is vibrant competition with many players offering low prices. However, if companies dump their products at or below cost, we may find we're left with fewer players as some companies exit the industry. Apple and Samsung are both doing wonderfully, but others including HTC, LG, and Motorola Mobility aren't in such a sunny position. Amazon hasn't said this, but some have justified Amazon's high P/E ratio by saying that Amazon is going to be the future of retail and once they've killed off some of their competition, they'll be able to raise their margins. That may or may not be true, but such a situation would be bad for consumers. We want low prices (that's a great thing), but we also don't want to lose options and competition in the future (that's a bad thing). Amazon is running razor thin on its profits to be popular. I'm not suggesting that Amazon is evil. Rather, it seems to just be Jeff Bezos' attitude towards margins: they should be low so that people can buy more stuff. However, that attitude may not always prevail, especially if competition dies out. It's good to make things cheaper and more accessible (as Linus has said). However, sometimes you can make something too cheap to be really sustainable. Often times large players will sacrifice profits to gain marketshare and that can sometimes be justified. Still, it's important to recognize as the play for market power that it may be and the temporary situation that it may be. A company does not intend to lose money forever. If they're able to eliminate competition in their industry, that gives them power in the future to raise margins. It can be hard to judge an industry sometimes. Apple and Samsung are clearly going to be sticking around: they're making products people want and raking in money. However, other players just haven't been so profitable. Having to compete with a device like the Kindle Fire being sold at cost is hard to do and may drive them out of the industry. You can say, "well, they weren't able to compete" and that's somewhat true. However, it hides the fact that Amazon may not be playing "fair" (for some definition of fair that I'll explain). Let's say (hypothetically) that Amazon is actually Evil, Inc. They have a war chest of money and are willing to lose money over the short term to become monopolistic. So, they price the Kindle Fire even below cost - $50 maybe. Some competitors will just fold. Others might try to continue competing for a short time, but their war chests are empty before Evil, Inc.'s. So, we end up with only Evil, Inc. selling us tablets. Nice for Evil, Inc. They can now charge a healthy $300 as well as up the margins on content purchases - charging higher prices to consumers as well as negotiating harder against content providers. "Ah, but if they did that, someone else would come in with a $250 tablet to compete!" Probably not without government intervention. Why? Because they know Evil, Inc. will temporarily drop the price on their Kindle Fires until the new company goes bust. That's an exaggeration, but dumping products like this isn't unheard of. The more people that get Kindles, the better Amazon's market power is over content providers and consumers. Similarly, if the margins become so low that many companies can't create devices, we end up with them exiting the market and competition is reduced. The fewer competitors in the tablet market, the better it is for Amazon long term. Basically, we want competition today AND competition tomorrow - sustainable competition rather than one or a few companies winning. We want prices at a point where they're low, consumer friendly, and encourage wide adoption while making sure that 5 years from now, we're benefitting from similar low, consumer friendly prices. If we're left with only Apple, Samsung, and Amazon, we'll be worse off. It can be hard to think about. In some ways, we might see a company like Amazon as winning by providing things cheaper in a way that's good for consumers. However, we don't want Amazon to win - we want others to be able to match Amazon so that Amazon will have to keep innovating and competing in the future. At the same time, we want the lowest price. It's a balance similar to investing in the future (or taking on debt). We don't want to starve ourselves now (we want to enjoy our lives). At the same time, we know that we shouldn't just rack up debt in the present having fun because we want a strong future. We don't want to pay high prices for devices now, but at the same time we don't want one or two companies to come out as the survivors of the "tablet price wars" who can then charge us more money now that the competition has been vanquished. * I know I picked on Amazon a bit here and that's just because the Kindle Fire is being sold at cost below the competition. I'm not saying that Amazon is evil, but even in the absence of evil, we wouldn't want Amazon to win because competition brings innovation and discourages slacking off. Even if you're a good company trying to do positive things, seeing what others are doing makes you better. As such, even a purely altruistic company is bad as a monopoly.

brisance 14y ago

That g+ post is particularly bad because it shows that Linus is opinionated (we knew that already), that he doesn't understand business (predatory pricing) and that he doesn't read very well (the Engadget article clearly explains that in the short-term, lower prices work in favor of the customer). In fact his own post can be considered a trolling piece since at the end he suddenly switches tack and justifies his choice of Nexus phones. Which is due to his own preference of the UI, but similarly ignoring others who may instead prefer iOS.

no_more_death 14y ago
It's not about his preference of the UI, it's about his preference of phones that do not appear locked down. He prefers Nexus because of the stock Android UI (nothing to do with iOS UI here!), but even more he prefers nexus phones because Google is fighting the proprietary locked down carrier approach -- the one that makes us slaves to our carriers in order to get a good phone at a decent price. I may get a Nexus 4, and in that situation I can purchase my freedom from my current slavery to Verizon for a paltry $100. I can actually evaluate all the carrier options and determine which phone is the best. If this kind of freedom takes hold, it is likely that carriers will actually have to compete at some point, instead of customers being forced into one carrier their whole life (basically). Then other aspects of carriers will probably improve because they have to compete. In other words: It's not a preference for one design over another, it's a preference for freedom. You may disagree with the freedom argument, but this is certainly what it's about. This is why Linus is coming out to bat for Android -- not because he likes Google or Google's style, it's a pragmatic decision because he thinks Google is his friend as far in trying to reintroduce competition into the market.
drivebyacct2 14y ago
>Which is due to his own preference of the UI, but similarly ignoring others who may instead prefer iOS. Projecting much? At best he said he likes Android's UI. He didn't even mention iOS.
- brisance 14y ago
  You have to read the Google post in its entirety and the context; in this case, the Engadget article was about the different business models of Amazon/Google as compared to Apple, and how they hope to profit not from the hardware but from complementary services. Thus the implicit meaning is that Android is "open", which we all know not to be true. Getting "carrier lock-in" is more symptomatic of American carriers' way of doing business rather than a universal once, since, as pointed out by many others, Apple sells unlocked iOS devices in many parts of the world.

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drivebyacct2 14y ago

So what happens if Desktop Linux ever takes off? What's going to happen when there isn't one organization to target and attack and villanize?

dewiz 14y ago

my 2 cents: complaining that underpriced hw kills competition, is like saying that a free Linux will kill Apple and Microsoft. I can see where Linus is coming from here :) Well, that is apparently not happening yet after how many years of free software? Welcome then to free hardware, however free hw won't happen thanks to volunteering, there are paid ads, content, services, is that bad? good ? did free Skype, Gmail, Github, Youtube, Zip compression kill the market, or was the market itself creating the conditions for them to be free?

shinratdr 14y ago

All I learned from that article is that Linus Torvalds is as uninformed as your average Engadget commenter. I thought that was one of the most spot on and original pieces to come out of Engadget in months if not years.

TechNewb 14y ago

I agree with what his argument is with cell phones, but if it were not for Apple's higher margin tablets and laptops we would probably be using crapy netbooks today with a crappy OS. Both Engadget and Torvalds have a good point.

CountSessine 14y ago

Isn't this the same Linus Torvalds who just last week complained about how PC laptops, commoditized and cut down to their marginal cost of production for years now, weren't the target of innovation and how they were stuck using low resolution screens?

doctorpangloss 14y ago
Yes.
drivebyacct2 14y ago
You missed the part where the Nexus 4 out specs the iPhone? And many do? And many outperform the iPhone?
- CountSessine 14y ago
  I don't disagree with that, but remember that the development of each of these smartphones is made more than a year ago with the profits of the last smartphone. If LG is just scraping by with the Nexus 4, and Apple and Samsung are ultimately forced to lower their prices to remain competitive, can we really say that anyone in this industry is going to have the money to keep pushing the technological envelope? On the other hand, maybe the big players have exhausted themselves of their creativity for the time being. After all, how creative is an extra row of icons on the home screen? Or an even wider, bigger version of last year's phone?

effinjames 14y ago

Linus keep telling us he owned the web. Unfortunately linux is not directly important to end-user. Just another ass.

ricardobeat 14y ago

The post is cut off at the third paragraph, is there a way to read this on mobile?

sounds 14y ago
Linus Torvalds 4:11PM Editorial: is Engadget really that stupid? Or just corrupt? Or trolling us all? Here is another "race to the bottom is bad" article, this time in the form of an "editorial" from Engadget. It's even more idiotic than usual. The whole "race to the bottom" concept is odd to me: people complaining about how technology gets less outrageously expensive, and more available to everybody, and more commoditized. Like that would be a bad thing? So the whole argument is fundamentally flawed to begin with - any time I see some pundit or CEO complaining about how the competition is making things cheaper, I go "Uhhuh, crybaby". But when it comes to cellphones, it's not just a flawed argument, it's doubly stupid. Because in that market, particularly in the US, the alternative is the whole broken carrier subsidy model, with all that entails. None of which is good, and all of which is much worse than any (hypothetical) "race to the bottom" arguments. And at no point did that deeply flawed editorial even mention carrier lock-in issues. What crock. I have many reasons to like the google nexus phones: I just think that the plain android experience is generally cleaner than most of the skinned ones, and even when there is superior hardware (Samsung Galaxy SIII) I tend to prefer the Nexus model (honesty in advertizing: I've gotten free phones from both google and Samsung, but I actually bought my own Nexus One and Galaxy Nexus on google play store. And I installed CyanogenMod on the SIII Samsung gave me, because I wanted the JellyBean experience). So I like the Nexus phones just because I think they have a nicer interface. But I like the Nexus phones even more because they are clearly pushing the whole "no carrier lock-in" model. And price is absolutely part of it. Link to http://www.engadget.com/2012/11/03/editorial-amazon-and-google-are-undermining-mobile-pricing http://www.engadget.com/2012/11/03/editorial-amazon-and-goog...

programminggeek 14y ago

This is one part of Apple's model that I swear people just don't get at all. Apple, as a company, refuses to operate in unprofitable hardware markets. So, they make a $329 7" tablet instead of $199. They make a $400 tablet with "outdated" hardware, they make a $500 tablet that is top of the line. They won't sell a sub $999 laptop. Apple then focuses on selling as much of those products as they can irrespective of market share. They don't deep discount just to gain "mindshare" or "marketshare". Engadget and others could moan that it isn't fair, but to be fair the only company that has been able to build and sell even remotely comparable hardware at comparable margins is Samsung, and frankly that is largely because Samsung supplies the same parts to Apple, so Apple is effectively subsidizing Samsung's overhead. Other companies could play Apple's game, there certainly is room to do so, but it is a low volume/high margin strategy traditionally. The anomaly is Apple's been able to take low volume/high margin to very high volumes while leaving the high volume/low margin business to everyone else as prices fall downward. I don't feel bad for Acer, LG, ASUS, Sony, Dell, or HP because they've all become so bad at designing, building, and selling a premium product that they really don't deserve to be competing. Ironically, much of iPhone's design was inspired by Sony's design heritage, and yet, Sony is still yet to truly match it. To put it another way, you know it's kind of a sad state of affairs when Microsoft can put their own team together and ship a legitimate competitor to the iPad in a very short period of time and Microsoft isn't even a hardware company.

UntitledNo4 14y ago
I disagree with the comment about Sony unable to match Apple's design. I have an Xperia S and although I don't flaunt it around, people who have seen it made comments about how good it looks. Including a few Apple Fans with iPhones. A couple of friends even bought Sony phones after seeing mine. The design of the phone was one of the main two reasons I chose Sony (the other is sound quality when playing music on the phone). They even manage not to screw up the Android experience, in my opinion. They are not the most popular phones, but I think the design is not the reason for that.
- GFischer 14y ago
  A coworker has a Sony (Live Walkman, not Xperia), and I don't like what they did to his Android (maybe I'm too used to Samsung's TouchWiz). Other than that, it's a nice phone.

mycodebreaks 14y ago

Linus is right. I agree with him. Engadget is stupid, corrupt and trolling in this case. Lower prices aren't hurting consumers. Good quality Nexus devices around $200-400 ranges aren't hurting consumers. In fact, it encourages a fair competition. As a result, Apple/Samsung have to work hard to make their $600 & up devices feature-rich to justify higher price. Consumer wins!

Ramonaxvh 14y ago

Linus is a socialist, and has always hated big corporations and profiteering too much off technology. Thats why I think he's awesome.

b1daly 14y ago

Aside from the technical argument about whether predatory pricing really exists there is another aspect of "race to the bottom" that is at least worth a thought. Ironically, Torvald's post and the Engadget article both have an assumption that whatever provides better quality(innovation) and product choice at lower prices to consumers is an unequivocal good. While seems likely to me that this is true, I don't quite get the conflation in popular culture between "consumers" and the public good. I recently picked up a Nexus 7 and I was a bit stunned at the level of technology I could get for $200. If the margin is getting squeezed, that means entities on the other side of the transaction are too, including labor. At what cost to humans (and the environment) is this rock bottom technology being created? Is there a connection between ultra competition and increasing income inequality in the US, if not the world. It seems at least intuitively plausible.

beloch 14y ago

The Engadget piece seems to argue that Amazon and Google are engaging in predatory pricing when it really boils down to the fact that Apple and Google are trying to fight the iPad's market incumbency. Let's look back a decade for a moment. i.e. The iPod. Apple made the iPod good. Then they made the iPod cheap. Nobody could compete. Could companies like Diamond or iRiver have made better devices if they didn't have to compete with cheap iPod's? Almost certainly. Once Apple diversified the iPod line into the extremophile niches other mp3 player manufacturers were clinging to it was game over. Complete and utter dominance. Now almost nobody buys iPod's because everybody's phone can do the same job. Apple knew that the key to maintaining dominance was to drive down prices faster than the competition without compromising quality. By offering premium devices at prices that are just barely above that of inferior devices Apple made the iPod a no-brainer purchase for consumers. They did this so well that it was only Apple themselves who finally obsoleted the iPod with the iPhone. They've tried to do the same thing with the tablet and have arguably built up some degree of incumbency with the iPad. Low-margin pricing on the Nexus 7 and Kindle's can be seen as attempts by Google and Amazon to fight Apple's tablet incumbency before they're locked out of the market completely. Let's face it, if Amazon or Google tried to sell their tablets at the same price as Apple's offerings they'd never catch up. Even if they were of exactly equal quality, Apple's is the proven product because it's been around longer. If Google and Amazon made poorer quality tablets and sold them cheap, but with decent profit margins, they'd wind up like Diamond and iRiver. Only their ability to sell at low-margin and profit from ads/media sales gives Google and Amazon the edge they need to compete with Apple and have any hope of catching up. The end result of this is a three-way battle for tablet superiority where there would have only been one choice: the iPad. Oh, and now Microsoft is throwing their hat into the ring too... Quite frankly, I think the next few years are going to be very kind to tablet-fans, and that's partly in thanks to "predatory" pricing.

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