When it comes to web services and logistics, Amazon is a rock star. Not only did they figure out how to make hundreds of small applications work a across their networks (the Amazon home page is connecting to hundreds of different servers providing hundreds of various applications), they sell this infrastructure as a service. They aggregate 3rd party sellers. They build widgets for affiliate sales. They popularized recommendations engines.
But the core of what they do is selling and shipping packaged goods. So, it is no wonder that they want to leverage the content of their packaged, scare goods (books) to sell non-scarce goods (ebooks). They are using Sprints Wispernet along with their own web services; an analogy to their logistics infrastructure interfacing with UPS/FedEx/USPS. Apple’s core business was not in content delivery when iTMS was introduced. With the Kindle, Amazon is betting on content sales and delivery as the key strategy. They don’t want cannibalize their traditional sales channel because that is what made them successful, it is how they make most of their money. But that is only partially true. It was also their internally developed web services that helped them to beat out brick-and-mortar competitors.
Tim Lee points out, Kindle does not let users kick ass with the product the way the iPod does. Apple has raised the bar for anyone playing in a similar area (great gadget UI). You can load your iPod with podcasts at no charge, even using iTMS as the aggregator for no additional charge. You can rip CDs and then put them on the iPod without having to pay a service. But you can’t use Kindle to subscribe to any blog you want to (there are a select few only), and not for free, and not while using a delivery network other than Sprints Wispernet. The iPod is so cool becuase of the iPod + iTMS + iTunes experience. Sprints Wispernet is elegant solution (although it is not free). The reason they need this elegant solution is because their web services and logistics is elegant, and that is how they earned their position as the best e-commerce experience. But Apple shows that connecting to the computer once a day (or even through WiFi) would have been good enough. But that is not what Amazon wants you to think. Amazon will use tactics that got them where they are today. They are not Apple so, that cannot learn Apple’s lesson of successes as well as an outsider to Amazon or someone with no past strategies to defend.
To innovate, Amazon should get people hooked to their platform at no cost. They are not really selling gadgets, they are selling ebooks and a delivery platform. When the iPod launched, it wasn’t until several years later that iTMS launched. Amazon is launching the device, the platform, and the content all at the same time. With Apple, people fell in love with the iPod’s user interface. Everyone says Kindle is ugly because Apple has raised the bar so high for user interface.
So, to get people hooked on the platform, they should give away public domain books and allow free subscription to any blog. Next, they should license their DRM (I hate DRM but the luddite publishing industry will not have it any other way for now) to multiple 3rd party gadget makers who specialize in kick-ass user interfaces. Next, they should roll out their store and delivery network.
I would not be surprised if Apple decided to answer this with a larger version of the iPod Touch as Rex Hammock recommends, and then cut a deal with Amazon to sell and distribute content via AT&T and/or WiFi and/or Whispernet.
I think another one of Jeff Bezos’s strategic mistakes is trying to appeal to the mainstream and not to people passionate about gadgets who could have evangelized the platform/device/delivery network assuming it was good. The iPods took about three years with multiple products at multiple price points to go mainstream.
Scoble has a great review of the Kindle after using it for a week, reading two books on it.
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