Kindle: The Device vs. Kindle: The Platform
Quite frankly, I never expected this will ever come true, especially so soon after the release of Kindle 2. At this point, Kindle 2 is just barely hot off the press, shipping to those early adopters, and already it's being replaced by a software platform strategy. You have to wonder about Amazon's claim of Kindle success. For as long as Amazon has tauted Kindle being a hot selling, successful consumer electronic product, the company has been more than reluctant to release any sort of sales figure. During the Kindle shortage throughout the holiday season, Amazon would not divulge any production schedule or data.
Every consumer product company, regardless of industry, understands the important in marketings its own success. McDonald's with their millions of burgers served, Pepsi with their "4 out of 5 people prefers the taste of Pepsi over Coke", Apple with their millions of iPhones shipped. Publishing these numbers breeds consumer confidence, and leads to increasing momentum for the popularity of your product. So why isn't Amazon more forthcoming? Is Kindle really as much of a success as Amazon want the outside world to believe?
Kindle on iPhone's User Interface
To be fair, although Kindle for iPhone is a free app, iPhone itself is a rather expensive device. If you were to compare them purely by the book reading experience, I'm sure more than a few people will prefer the experience of the Kindle hardware rather than just the software alone.
- The e-paper display has a much longer battery life, you don't have to worry about running out of juice in middle of reading.
- The display is larger and more comfortable than iPhone.
- Backlit LCD screen is more tiring on your eyes over time.
However, iPhone does so much more than the Kindle: You can check email, browse the web, watch videos, download apps, and of course, make phone calls. On top of all that, iPhone actually starts at a lower price range for the base model than Kindle 2. Sure, you have to factor in phone bills as part of that cost of ownership, but those are phone bills that you would probably be paying regardless if you were using the iPhone or any other smartphone/cellular phone devices. From that point of view, Kindle 2 becomes an "unnecessary cost" while iPhone is just another piece of existing cost (cellphones in general) that people can't live without.
So why would Amazon do this to themselves?
When the Kindle was first released, a lot of people thought that Amazon was aiming to create the same vertical market that Apple had with iPod and iTunes Music Store. The reason Apple was so successful with their strategy, is that they were able to dominate in all fronts of their vertical integration: Hardware, software and content. If Apple had given up that exclusivity at any point and allowed other devices to interact with their software and content, chances are iPod would not be as dominant as they are today.
For Apple, they realized that although content is the "reason" for consumers to purchase iPods, it is the iPod, not the content, that is the primary source of income for Apple. It is increasingly apparent that Amazon's strategy is very different, they're in the business of selling content, not hardware. The act of making Kindle available as a software platform on other devices, also makes their own hardware less appealing. It's not just the iPhone. What if I can get Kindle on my desktop computer, my laptop computer? If you really look at the pricing structure of the Kindle hardware, I can get a Netbook for about or less than the cost of Kindle 2, and I have a fully functional computing device with a full color screen.
Clearly, this is the first step for Amazon to step away from the hardware business. No one knows exactly how much Amazon is paying to subsidize for the cost of not only the hardware itself, but also the wireless service that goes along with the Kindle hardware. If Kindle becomes nothing more than just a software platform, then it's not much different than MobiPocket, which has been selling eBooks on mobile devices since the year 2000, whom Amazon had also acquired.
The problem with losing this competitive edge, is that without a hardware platform to tie yourself into, you lose the distinction against any upstart that can take over with better value propositions and tools. Perhaps Amazon should've learned the lesson from their own MP3 store, which were granted DRM-free music licenses a year before iTunes Music Store. Despite the fact that Amazon had technical advantages with better music file format (higher bitrate and DRM-free), cheaper pricing, they still couldn't topple iTMS, simply because the synergy of that hardware+software+content platform is too strong to overcome. Amazon MP3 store ended up doing nothing to thwart iTMS sales, although it did manage to pick up and expand its own fan base.
Without the Kindle hardware, Kindle books are just any eBook. If I can get the same eBook that's better looking or cheaper from any other third party publisher with the same content, I will. Amazon still has the force of being the 500lb. gorilla in the world of book selling, but it just made itself a lot more vunerable if eBook is truly to be the future.
