Apple should buy Amazon. Here’s why!

Well, not the whole, but their entire technology division – including cloud and hardware.

‘Apple is a great hardware company, but are clueless when it comes to software’ – is an opinion that is shared across the industry and has almost become a cliché. This may not be really true as they were the ones who figured out how to adapt Unix for desktop usage.

However, when it comes to building data-driven products and services, their capabilities seem to be woefully inadequate. Even their cloud engineering prowessseem to be still lacking.

OTOH, Amazon is almost a monopoly when it comes to IaaS and PaaS. Also, their technologies are now deemed standard, with rival efforts like OpenStack copying their API, heuristics, etc. But, Amazon seems to be hitting quite a few blockers when it comes to consumer hardware. Though Kindle is by far their most popular hardware, the other devices haven’t captured consumers imagination like it has for Apple’s products. Amazon’s efforts at replicating Google’s services like Play, Store, etc have been pathetic with very few takers.

Amazon’s cloud services are the first choice for developers and start-ups when it comes to the cloud/backend services. Apple’s iOS platform is the first choice for developers when it comes to building apps and MacOS is increasingly the personal OS of choice for both developers and casual users.

Technical synergies aside, Amazon has been having quite a lot of problemsincreasing their profit margins. While most of their costs are attributed to the investments being sunk into developing new products, their retail operations seem to be making quite some money.

As on date, Apple(AAPL)’s market cap is around USD 640B and had cash reserves of about USD 160B last summer. In comparison, the entirety of Amazon (AMZN)’s market cap is around USD 142B. Though nobody knows the valuation of their technology business, some estimates say it might be around USD 50B by 2015. So Apple can easily afford to buy Amazon’s technology division and still have cash to burn.

Jeff Bezos could use some other muse. Not that he is short of them already!

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