Monday, March 03, 2008

An Amazon Trojan Horse

Macworld's "25 native iPhone apps we hope to see" is a good read, even if you don't have an iPhone (maybe "especially if," if like me, you're hoping for extra functionality while you run out the clock on your Verizon contract). But number 25 (right on top) is particularly worth noting:

Amazon’s Kindle e-book reader is half brilliant and half failure. The brilliant part is Amazon’s Internet system, which allows you to easily search for and buy electronic books or periodicals and download them directly to the company’s reader hardware. The failure part is the reader hardware itself, so poorly designed that it practically cries out for Apple to redesign it. Since Apple’s not in the business of doing Amazon’s work for it, how about this instead: Amazon takes the part of Kindle that’s brilliant—its Internet and payment services—and sticks them on a piece of hardware with a design that’s approximately 1 billion percent better than what Amazon’s selling. Will people really buy and read books, magazines, and newspapers on their iPhones? If you’re Amazon, it’s worth a try.

This all depends on whether Amazon's best opportunity is to build the market for e-books, build the market for the Kindle, or build a closed/interdependent ecosystem.

I'm more inclined to believe that Amazon's skills and infrastructure is best built to sell e-books on a wide variety of devices, and that the Kindle is a high-profile (if not exactly awesome-in-itself) means to that end. You could say that the Kindle is Amazon's e-book product for people who prefer an experience closer to that of reading a book, while the Kindle store sans Kindle is for people who like e-books, but prefer the reading experience of a different device -- a laptop or iPhone or Nintendo DS, whatever.

The wrinkle is that Amazon and Apple are competitors, especially for music and movie downloads. So here, too, Amazon has a couple of different strategies to take. It could freeze Apple out, either by sticking with the Kindle or (perhaps) by encouraging a range of other developers to create Kindle-compatible devices -- just not iPhones or iPods. Or, the bigger gamble -- by marketing eBooks and the Amazon store to iPhone users, you try to wedge some of the traffic away from the iTunes store and towards your own ecosystem -- where, by the way, you happen to sell DRM-free music downloads and digital movies.

When the e-book reader market was anemic and iPhones and iPods were closed, Amazon didn't have much choice. It had to create a reader worth buying (and talking about) if it wanted to sell e-books. But now the landscape has changed. Amazon can continue to make and sell the Kindle -- as a hobby, like Apple TV 1.0, until e-readers take off for real -- while it sells e-books to anybody and everybody who wants one, wherever they want one. After all, the real money isn't in the razors, even when the razors cost $400. It's in the blades -- especially if you're the only one seriously selling them for everything resembling a razor on the market.

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