Apple vs. Amazon: Who Is Really Fixing E-Book Prices?
In the mid-1990s, I ran across what looked like an incredible story: A teenager, dubbed the Whiz Kid, was selling a ton of computers from his parents' home. Newspapers told the story complete with images of the teenager talking on his cell phone—which, at the time, was a big deal.
So I called the teenager and spoke to him and his dad. Turns out, his dad had set up a business to buy computers via a distributor and sell them directly to companies at cost. That's right, no margin. The dad and his son moved lots of computers because they were undercutting everyone's price.
The business wasn't about making money, rather just a publicity stunt for the teenager. While companies could get computers on the cheap, business models with a hidden agenda and no margins aren't good for anyone down the road. The Whiz Kid story came to mind as I thought about the drama going on with Amazon, Apple, book publishers and the Department of Justice over alleged price fixing of e-books.
