Amazon’s Kindle strategy & the mobile market
Today, Amazon announced a new Kindle, as the company continues its transformation from a retailer of physical goods to one that is a major digital content (music, books, video) and Internet service (e.g. S3) company.
Few notes:
Amazon’s strategy is extremely US-centric, unlike their traditional retail reach. By choosing to include a US-specific mobile phone radio under the bonnet — the so-called Whispernet that is used to download books without a PC — Amazon limit their global presence. If Amazon wished to create a foundation for a global strategy then Amazon, like Apple, should have used a GSM/UMTS mobile phone radio. Now, Amazon must release different hardware if they want to offer Kindle in Europe or most of Asia. For consumers, this decision decision hits the product’s convenience: Kindle will only download books in the US, and in the future perhaps a few select countries that happen to use the same mobile technology, such as South Korea and parts of South America.
Kindle demonstrates how mobile strategy is not just a telco thing. Mobile is like the Internet, every company should have a vision for where they are going and how to embrace, partner, or compete, with the mobile market and players.
Amazon has become a device company, and is no longer purely a content play. Kindle is a combined content / hardware business models. What Amazon is selling is content: The latest books, supplied for the relatively low cost of $9.99 for bestsellers. But to sell that content they have become a device company.
Surprisingly, Amazon have not leveraged other ebook companies that they own. Mobipocket supplies both free ebook software and sells ebooks protected by DRM. But to date, Kindle ebooks are not compatible with Mobipocket software. If Amazon does offer ebooks on mobile phones, which was reported on Friday before the Kindle announcement, then Mobipocket will be a core part of Amazon’s toolbox. Syncing reading position between multiple devices — Whispersync, announced today — will certainly help Amazon in offering a great complementary service, i.e. a consumer will be able to use both Kindle and a mobile phone in tandem. Additionally Amazon own Booksurge, which is a an electronic self-publishing company, and yet are not fully exploiting Booksurge via Kindle.
Amazon’s exclusive on a new Stephen King story will test the robustness of Kindle’s DRM content protection. As the content is only available on Kindle, if it suddenly appears online on one of the piracy websites then that DRM has been broken. It will only take one person to break the DRM for numerous people to download a pirated version.
Note – Originally this was going to be posted on the work blog, but for some reason I can’t get Typepad to work now, all it seems to want to do is let me create ‘drafts’….
Nice early review, Ian.
Do you think Amazon has made the wrong trade-off in targeting the US market exclusively with this product?
I think the US market is probably large enough for the product to be successful and profitable even before it begins to enter Europe in quantity.
The wireless radio, and the agreements required with geographically diverse carriers, is certainly the main reason they have adopted this approach. It would seem that both Apple and Amazon have reckoned that even if they have a global strategy for their wireless products, they need localized tactics to execute it.
David Schatsky
February 9, 2009 at 5:56 pm
Stephen King is popular enough I can imagine people OCRing it or just retyping it all.
Michael Stevens
February 9, 2009 at 6:43 pm
Add to the list of countries: Iraq, which got lumbered with a US-style mobile phone network on top of all its other problems.
Any word on how much the device price is subsidised to get people to jump into the razor blade model? (Contrast e.g. game consoles.)
Lots of books get OCR-ed alread, especially anything from a “name” author like King. I suspect that OCR using the Kindle screen and a scanner would be entirely possible.
The Mobipocket incompatibility is simply another example of why DRM is a Bad Idea. Everything can read plain text, and most things can read HTML, but start layering on “protection” and suddenly it stops working.
(I am told that most illicit book downloads are plain text, HTML or Microsoft .lit, which is basically wrapped HTML.)
RogerBW
February 10, 2009 at 9:28 am
David – Agree the US market is large enough to support Kindle.
The current economy makes a big launch in new countries hard. Amazon presumably plans to go international eventually and is assuming that there are sufficient barriers to make it hard for anyone else to take control of the eBook market outside the US in the meantime. I suspect they’re right. However, that’s not certain: Sony already have a nicer hardware design compared with Kindle. If they can put the rest of the business model and content in place then Amazon could be outflanked.
Then there is the other ebook approach – mobile phones. I’m a big fan of Stanza on iPhone and believe this could be the really important enabler for ebooks to go mainstream. Kindle is so expensive it will only appeal to frequent, heavy, readers. Stanza is bringing across casual readers.
Michael/Roger – If someone OCRs King’s book it will be pretty obvious as typos will be present initially: There will be multiple versions as people fix things. If someone breaks the Kindle DRM, then the pirated version will be letter perfect immediately. So, should be easy to tell what’s happened.
Ian Fogg
February 11, 2009 at 12:42 am