The Kindle has been a misfit since the beginning, albeit a beguiling and ultimately paradigm-shifting one. Amazon’s entry into hardware always seemed a bit awkward and unlikely. After all, Amazon’s story has been about creating an electronic storefront more than anything else, and I’ve always felt that launching the Kindle was just a way to extend their electronic storefront in a forward-looking manner, even if it meant taking a loss on the cellular and hardware.
Now, with the build-up mounting to the seemingly inevitable Apple e-reading device, speculation abounds that two recent moves from Amazon — increasing author royalties from 30% to 70% for e-content and launching a software development kit (SDK) and app store for the Kindle — signal that Amazon is transitioning the Kindle in a manner that suggests that Amazaon is giving up on the Kindle and conceding the hardware battle to a company much better-suited for it, namely Apple.
By creating an SDK, Amazon is hoping developers create applications for the Kindle, making its transition to an Apple environment more robust, to Amazon’s benefit. And by increasing royalties, Amazon is solidifying loyalty and lock-in to its storefront.
It’s the business moves of Google and Barnes & Noble that have been cutting off Amazon’s options. By moving in a non-proprietary manner, Google and B&N have make ubiquity a strength, transforming Amazon’s proprietary approach into a weakness. And while ArsTechnica’s excellent analysis of this mentions that Apple may lock Amazon out, it’s unlikely. Amazon’s Kindle app is already on the iPhone and iTouch, so even if Apple contemplated it, such a move may already be too late.
Display technology has also advanced more quickly than anticipated, making e-ink readers much less interesting than they were initially. Apple’s much-rumored iSlate is supposed to be very thin, full-color, and touch-sensitive. With crisp, high-resolution text on a carefully calibrated user interface, it will probably make e-ink look frumpy and old-fashioned.
I haven’t been following this blow-by-blow, I have to admit. I recently left my Kindle behind as part of changing jobs, and am waiting for Apple’s announcement before making another foray into the e-reader market. It strikes my intuition that there’s a sea change about to take place, somehow, someway. This market is too hot for it to stay this stable for this long.
What’s interested me more is how this area has heated up so precipitously in the past year, going from a geeky backwater to an area of huge investment, major plays, and fevered speculation.
Who knew content could be so sexy?
9 Thoughts on "Amazon’s Latest Moves: Is Bezos Conceding the e-Reader Space to Apple?"
I think you’re right: Amazon will decide to leave the hardware and OS to other companies, and that was probably always the plan. Amazon wanted to become a leader in the business of selling e-books, and because the existing technology for consuming them didn’t exist or wasn’t good enough at the time, they filled the gap with their own solution. Time to return their focus to core competency.
Indeed, when Amazon released Kindle for iPhone many months ago, that was the beginning.
This post reminds me of one you made about one year ago (http://scholarlykitchen.sspnet.org/2009/01/07/will-the-iphone-kill-the-kindle), and it’s a good follow-up to it (intentional or not).
BTW, I’m shocked to hear you left your Kindle behind!
It was hard to leave the Kindle behind, but it went to a good family. I have to admit, I miss it. I’ve had to return to buying books, and now the stack on the nightstand is teetering again. Dangerous. But I’m going to see how long I can hold out. I have been lingering over the Kindle ads again, but with Apple’s announcement pending, I think I’ll wait and see.
I think this column by the always entertaining Macalope best summed up the current state of Amazon’s Kindle plans:
All this was designed to send one clear, concise message to the industry:
AAAAAGH! WE’RE FREAKING OUT!
I’m sure plenty of Amazon’s moves lately are about reacting to the competition. There has certainly been a huge amount of activity with all kinds of innovative new products and services arriving amidst rapidly falling hardware prices. All of this is, of course, the sign of a healthy and growing market, one that a lot of companies (including Apple) want to get in on.
But I guess I don’t find the Amazon panic meme very convincing nor this notion that the forthcoming Apple Jesus tablet will rescue the old media industries as it vanquishes all opponents. There is certainly no evidence that Amazon is giving up on the Kindle hardware.
Go back to when Amazon first expanded its Kindle ebook universe with the iPhone app last year. As the NYT reported at the time:
In the future, Amazon.com’s Kindle e-book reader will display more book formats beyond its own. And you should also expect to see Kindle books on a lot more devices…“The device team has the job of making the most remarkable purpose-built reading device in the world,” Mr. Bezos said. “We are going to give the device team competition. We will make Kindle books, at the same $9.99 price points, available on the iPhone, and other mobile devices and other computing devices.”
The latest Kindle model has better support for Adobe’s PDF file format, and he said that in the future, Kindle readers would support other formats as well.
Reacting to competitors’ moves isn’t a sign of panic, particularly when it’s in line with the previously articulated strategy. It’s smart business. Apple originally prohibited third-party apps on the iPhone but changed course and now advertises those apps as one of the major attractions of the device.
The NYT article (which is here http://bits.blogs.nytimes.com/2009/06/15/jeff-bezos-kindle-books-and-readers-are-separate-businesses/) also explains why Amazon does not subsidize the cost of the Kindle or its wireless service. They are not losing money on Kindle hardware. Releasing an SDK implies they want to stay in the hardware competition race by matching some of Apple’s features. And increasing royalties on a subset of ebooks (self-published titles priced under $10) seems to be a reaction to terms they expect Apple to offer. They are trying to continue attracting good content while pressuring authors to keep prices low.
All of this is part of the beneficial give and take that benefits consumers in healthy competitive markets. If Apple’s next iPhone OS update copies some of the best features of Google’s Nexus One, will that be a sign they are abandoning the market or that they plan to compete even harder? And what to make of Google’s open app store model versus Apple’s highly-successful but closed/proprietary model?
As to the future of Apple’s tablet, if Apple continues to allow Kindle, Barnes & Noble and other ereading apps in its app store, I’m not sure how disruptive it’s going to be in the ebook market. According to all the reports, Apple is siding with big book publishers against Amazon (and against consumers) in terms of pricing. Not sure why a reader is going to opt for Apple’s much-higher-priced fare. Don’t forget that Apple gave a huge promotional push to Scrollmotion’s publishing industry-backed ereader app (with its high prices) a year ago and the app has gone nowhere.
I used to think it was impossible that Apple would boot out popular apps but their behavior in the case of Google Voice gives me pause. With federal regulators looking into that case, it’s probably less likely they would boot the other ereaders, but who knows.
Finally, we’ve heard before that Apple was going to change everything in media. Go back and re-read some of the comments around the introduction of TV and movies to the iTunes store or the arrival of AppleTV. Not much impact so far.
I think what’s leading people to speculate that Amazon’s ceding ground combines the latest moves with the definitely incremental nature of its Kindle improvements over the past couple of years. But you’re correct, it could all be normal competition. I certainly could see it all through that lens. And when it comes to being a savvy businessman, Jeff Bezos’ degree of giddiness on the outside only offsets what I think is a business mind of the highest order. Jobs and Apple may be the high-end of any market they enter (MP3, smartphone, computer, and e-reader), leaving Amazon to enjoy more mainstream success.
Panic may be an overstatement, but the timing of these releases from Amazon are certainly telling. Apple may not be forcing them out of the e-book or e-reader business, but they (along with other competitors, Google in particular) are forcing them down a particular path.
When Amazon first launched the Kindle, they kept their options open. If the device caught fire like the iPod, their restrictive DRM would allow them to control the entire ecosystem, dominating both hardware sales and content sales. While the Kindle does appear to be the market leader, it hasn’t reached those monopoly levels giving Amazon absolute control.
Now as competition is coming fast and furious, they seem more likely to focus on the content-selling side of the business, with Kindle software available on a variety of devices. That’s a less lucrative path than hardware/content, but one that may still serve Amazon well. If they remain in the hardware business, it will be as a niche player (I’m assuming dedicated devices will lag behind multi-use devices). I’m very curious to see if the SDK gets any traction at all, given the limitations of the device and the less than favorable terms Amazon has built in.
Oh come on, Kent, “Who knew content could be so sexy?”
The content didn’t get sexy, the delivery method is sexy. The service is sexy, the convenience is sexy.
Copies of 1984, Moby Dick or Patterson’s latest novel didn’t get more sexy. The service and convenience of the ereader is what got sexy.