Amazon’s Kindle Strategy & the Mobile/Wireless Market
By Ian Fogg (bio, recent research)
Updated Tuesday, February 10 – Apologies to readers for a draft post ending up live on the site. The version below is now the correct, finished, version. Because of the publishing problem that hit me yesterday here, I posted this entry on my personal blog first. You may wish to subscribe to that blog as well although it normally has a different focus.
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.
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.