Amazon, Apple and the Process of Evolution

New technology is often associated with disruption that changes the status quo. Sometimes the change is lethal for established industries, other times it plays the role of resurrection.

Apple disrupted RIM and Nokia by building and marketing products that work and look good. They figured out that they don’t just sell iPhones, they sell experience. This is why they build stores. They realized that they don’t just sell iPads, they sell distribution channels. Apple gets a cut of everything sold through its devices. Smart.

Some can make the argument that Amazon is putting out of business brick and mortar retailers. Amazon is not the reason. The reason is in the stores themselves. Provide the experience and the sexy products that Apple offers and people will come. Amazon is merely the reason for cheaper commercial real estate, which hurts REITS and homebuilders, but also provides better rates for smart retailers.

In the meantime, new technology is actually saving old industries.

E-tailing and Amazon are saving the paper industry. Just when we thought that paper has become a thing of the distant past, people adopted new habits of buying online and the demand for packaging paper skyrocketed. E-tailling is helping the distribution and logistics business too, but this was expected.

Social media, in the face of Twitter, Facebook and now Google+ has offered second life to newspapers and magazines by providing new distribution channels for the consumption of their products. People read more and watch more videos in new, more convenient ways. More views equal higher advertising revenue.

Netflix, Hulu, Amazon Video Store, Apple and Google TV are saving the video content providers. Look at the charts of $CBS and $DIS. There has always been a demand for great content. The new media, the new technology has just offered an alternative way to consume it.

It is said that the best companies build their own industries. $AAPL and $AMZN are two typical examples. Both went from zeros to heroes in 12 short years, disrupting everything and everyone. Both are trading at new all-time highs after blowing off the estimates in their most recent earnings reports. Often there is a difference between a great company and a great stock. $AAPL and $AMZN have been the exception, so far.