The Amazon Tablet — An Ecosystem Move

Posted on 07 September 2011 By Ben Lang


 

On Friday (isn’t that when all big tech news comes out these days?), TechCrunch’s MG Siegler detailed the now long-rumored Amazon tablet that is due to launch this fall. Despite it being a Friday afternoon leak on a three-day weekend, many of the tech media streams picked it up, including James Kendrick, founder of jkontherun and now a blogger for ZDnet, who compared his own earlier predictions with MG’s “leak”. My own personal take-away is that this is an ecosystem move by Amazon, and could therefore have less of a direct impact on the tablet market-proper as many of us may think of it. If the Amazon tablet takes off, it may be another case, much like the iPad, where a new vertical market is created where there is a demand for the Kindle Tablet, but not necessarily increased demand for tablets in general.

Amazon will have some obvious apps pre-installed on the device, and, when looked at holistically, they pretty much cover most basic functions that I would think most tablet users want/need:

  • A version of the Kindle App for reading ebooks
  • The Amazon Cloud Player for music and other audio content playback
  • Amazon Instant Video for video content
  • Amazon’s Android Appstore for apps

For content, these four apps cover everything that Google includes as part of the Android base-install for content consumption. Despite the fact that Damian has found a tablet useful as a productivity outlet, and the fact that I insist that any tablet I own be used for some productivity applications, the fact is that the average user applies a tablet for media consumption. Amazon is planning on putting several hooks in place to encourage buyer’s of its Kindle Tablet (the popular name the media is applying to this device; not officially announced or endorsed by Amazon) to use the four apps mentioned above and others to consume their fair share or more.

MG claims that the device will come with free access to Amazon Prime. Which, to me, it is a lot like Playstation Plus; you subscribe, and for your trouble, you get some free perks, and several deals on a continuous, rolling basis. So will all of this work? Yes, and here are some pretty obvious possible reasons why:

  • I do not think that the average consumer “gets” tablets as a product category. Very few consider picking up a tablet from the productivity standpoint, increased connectivity and awareness, or leveraging the advantage of a third screen in their mobile/IT setup. For most, they decide that they want an “iPad”. Not “I want a tablet so which one should I get?”
  • My own link to Amazon does not take me to the homepage, so it is not that often that I get reminded of how the front-page can visually mug you with a Kindle assault. “Flagship device” is a term that does not do justice to what the Kindle represents to Amazon. At the expected pricing (supposedly to be $250), there will be a chunk of consumers in the market for the high-end Kindle 3G, currently selling for $189, who will see it making more sense to get the more capable device for $250
  • People like bundles. The average consumer may not be as technology averse to gadgets as they were 10 years ago, but the wall that keeps a lot of them from going over is the threat of having to monkey with a device to get the stuff on it that they are supposed to use it for. The concept of a device that basically has everything on it that they want to use it for, and a pre-configured means for getting more of it, will be a factor that brings a lot of the stay-aways over the wall
  • Why will Amazon’s bundling hook people who have not taken the iPad plunge yet? Because some of the stay-aways still see iOS devices as luxury items at their current price points. Also, despite the relative ease that most of “us” handle an iOS device or other tablet, a part of the non-techcentric consumer population of America still does not get the tablet paradigm.
  • Why will Amazon’s bundling be any more effective than Google’s that comes stock with Android? Because you have to be invested in the Android ecosystem already before you understand what is available. Google’s services are not a storefront. Unless you are already an Android user, you do not go to the Android Market website on your laptop or desktop to window-shop. You only get there because you already have a device and you are using a desktop environment to manage it. Ditto for iTunes and the AppStore; places you do not normally go unless you already have an iOS device. Even if you use iTunes, I do not think people go to the AppStore section just to see what might be available on an iPad if they had one already. But millions of people go to Amazon everyday, and the Kindle Tablet and its bundles services will be front and center.

There has been some discussion among the technoratti as to whether or not the Kindle Tablet will be a premium device that will compete with the iPad and other, higher-end tablets. But I also do not know how much that matters. The fact is that most people who have iPads do not need them. And when I say “need”, I am saying that from the perspective of someone who has already decided to buy a tablet and buys an iPad. I mean that if they are only using the tablet to surf the web, read email, and take in an occasional eBook, they could have purchased a less expensive device and been ok. But a lot of people are averse to devices that are not from a big-name brand, and do not market themselves based on simplicity. Most of the Android devices on the market are being marketed on the basis of their power, and the average consumer doesn’t have a good understanding of what a more ‘powerful’ device really means, or how it benefits them directly.

The Kindle Tablet will reportedly run a forked and skinned version of Android 2.2. And that is skinned to the point where the average user will not be aware that they are running Android, and therefore may potentially not get turned off to the device on that factor. Most consumers will likely buy this because it is an Amazon tablet, not because it is an Android device. The presentation layer will be in-your-face Amazon, and its services will be the hub around which the user-experience revolves.

Who will not want this device? Those of us who want/need the other Google Services (Gmail, the Android Market, Gcal) that will not be natively on the Kindle Tablet. Also those of us who want the stock Android GUI, or an ability to load our own chosen launchers, as the Kindle Tablet will only run the Amazon Appstore. Of course, I am sure someone will hack the device eventually, but we are talking about the device running its stock install.

The point is, whether or not the Amazon Tablet is a premium device may not matter. I am not convinced that there is a defined tablet market for strata of devices based on price anyway. My own feeling is that there is an iPad market and a very limited premium Android market. I am saying that there are not strata within the market in North America because there is not a lot of consumption of budget-Android devices here. People are either buying an iPad or an Android device that is in the $499 MSRP range (sometimes as low as $349 with some of the recent sales).

The current tablets are being positioned as an alternative to the laptop with a minimum comparative savings for increased portability. In other words the strategy is “You don’t need a laptop, you can use a tablet that will accomplish most of what you need and comes in a little cheaper than a capable laptop”. I am simplifying this part of the assessment in order to not get entangled in the minutia (the value of cheap laptops at less than $499  in comparison to their capability compared to laptops that are only a skosh more and their reduced portability in comparison to a tablet).

The Amazon approach is positioning the tablet has an outgrowth of the eReader. The “in other words” here is “For a skosh more than our 3G eReader, you can get this device that does a ton more, comes with a free Amazon Prime account, and, incidentally, does everything that eReader you were going to buy does anyway”. I think this is a story that the average consumer is more likely to buy into, and will start pulling buyers away from the iPad potential buyer population. When Amazon presents a device that costs half-as much, does everything that most potential iPad buyers want to do, and will be supported by an ecosystem that is manageable from a desktop browser and that many of them are familiar with, it will be clear that Amazon does not need to deploy a premium device to compete with the iPad. If the Kindle Tablet goes over well, we will have an example where the value of the service infrastructure that a tablet product plugs into might be more than important than the tablet hardware itself.

Amazon is also attempting to put deals in place similar to the 3G service that is available on their high-end eReaders now. If Amazon locks this in, and if, while seemingly impossible, they are able to lock this service in as either part of the Amazon Prime subscription, or at a very reduced rate and the buyer never has to interface with a carrier — that could be the factor that allows the Kindle Tablet to eat every other tablets’ lunch.

Right now, the Kindle Tablet will reportedly only launch with a WiFi version, so the 3G advantage may not come into play until later. Linked below is to the original TechCrunch article. Join the conversation below, as I am sure there are plenty of opposing views to the ones I voiced here. As always, this assessment is just my own opinion based on my own experiences. Feel free to present a differing perspective; that is kind of the whole point in us posting this stuff anyway!

TechCrunch

12 Responses to “The Amazon Tablet — An Ecosystem Move”

  1. aftermath says:

    All of this pretensions yammering from bloggers (not you) and analysts (not you) which try to highlight “ecosystem” as the key to success in the hand held computing space is ignorant and confused. In America, we call this kind of correlative post hoc analysis being a “Monday Morning Quarterback”. The people behind Amazon aren’t stupid enough to think that such a device’s launch or its success would be about its “ecosystem” (I know they’re not this stupid because I actually know many of them.) Success, at least on the consumer side of the equation, is about BRAND or PRICE. Amazon, unlike almost any other company, can deliver both. Good luck to anybody who clings onto the “ecosystem” way of “thinking”, especially those who forget whether or not the iPhone launched with an “app store” as part of its draw to consumers.

    • zeo says:

      It’s a serious mistake underestimating the effect and need for a product ecosystem. Many a device may have brand recognition, and/or they may be priced to sell, but unless the product is good and has a ecosystem to back them up then the public will quickly lose interest.

      Many of the failures to date had price and a few had brand name to back them but the reason they failed was because the product either sucked and/or didn’t provide a proper ecosystem for their device.

      Really, it’s the ecosystem that makes these products truly useful and without it then they are really then nothing but toys and quickly discarded for the next shiny new thing.

      Even the iPad would have failed if Apple hadn’t quickly developed the App market for it.

      Besides, the iPhone also started with virtually no competition. So it really didn’t matter how weak they started, but that’s hardly the case these days and any new product has to meet much higher demands from consumers.

      So long as these devices use limited hardware with limited OS then they need things like a ecosystem even more to make them useful and to help them stand out from the competition.

      Anyway, it’s clear that Amazon will have quite a bit of leverage with what services and resources they can offer.

  2. apple says:

    Nook Color Android-based tablet/eReader from Barnes & Noble has been on the market for over a year and sold millions of units at $250. Gives Flash, apps, videos, color magazines and ebooks with video inserts, and the best anti-glare coated screen on the market. Technology “leader” Amazon is finally catching up with the book store company by copying their device.
    Kindle only supports eBooks in its proprietary AZW format. Nook, on the other hand, supports both DRM-protected and DRM-free ebooks in ePub format thus it supports ebooks from B&N store, from any other DRM-free source on the web, and from public libraries.
    If you walk in with the Nook to Barnes & Noble store, you’re allowed to read any available eBook for free while in the store via free provided in the store Wi-Fi.
    Nook Color has several apps that already come with the device (Pandora Internet radio, QuickOffice, etc.) and hundreds of other apps are available for download. Also, you can use the Social Settings screen to link your NOOK Color to your Facebook account and your Twitter account. You can also import all your contacts from your Google Gmail account. Once you have linked to Facebook and Twitter and set up email contacts, you can lend and borrow books, recommend books, and share favorite quotes with your friends.

  3. Joe says:

    apple

    Kindle supports many many formats. You saying that it only supports AZW seriously undermines your other statements.
    Many more Kindles have been sold than Nooks.
    One reason Kindle has been slow to go to color is its success with it’s grayscale. In fact the recently introduced “all new” Nook is gray scale at $139 and is a nice machine.

    Nook did have an advantage in that it could be used at the Public Library to borrow books. Kindle is supposed to be adding that capability.

    Now with all that said, Kindle is moving to color and Nook to it’s Color 2.
    I am interested in seeing which machine is better. I will buy the best one, but since I am already an Amazon Prime member, I get $79 off the $250 price. What will Barnes and Noble give me?

    • Ben says:

      Joe, where did you hear that you’ll get a discount for already being a prime member?

      • Sheila says:

        I would love an answer that that question also. With the discount I may buy the first gen 7″ tablet instead of waiting for the second gen 3g/g enabled 7″ tablet.

  4. Joe says:

    Several places. I will get back to you because I am on the run.

  5. rabs says:

    “You don’t need a laptop, you can use a tablet that will accomplish most of what you need and comes in a little cheaper than a capable laptop”

    I guess it’s more a choice over a cheaper netbook than a costlier laptop.

  6. Lee says:

    Some one will root the new kindle and then people can add the Google apps (including android market), it happens all the time :). I personally despise rooting/jailbreaking/etc all it takes is an accident or update and you’re bricked :p.

  7. frahse says:

    I just saw this.

    The ecosystem for the Kindle is the readers.

  8. Joke says:

    B&N is rumored to be coming out with Nook Color 2 shortly that will sure to have Netflix app among others. Kindle Fire is no more media tablet than even current Nook Color, most specs are the same, just a bit faster. Kindle Fire doesn’t have microSD slot that Nook Color has thus it is stuck with 6 GB usable internal storage unlike Nook Color that can get up to 32 GB card in.  Not to have the card slot is also a major issue for anyone who wants to “root” Kindle without destroying the original OS forever. Nook Color still has the best on the market anti-glare coated screen that is better for reading/viewing outside. Also, current e-Ink Nook Simpletouch is still better designed than even the new Kindle Touch with battery lasting two months with ONE hour reading a day with Wi-Fi off thus it’s still twice as long as new Kindle’s two months with HALF and hour a day with Wi-Fi off. It looks like Kindle didn’t get any battery  improvement in the new model.  More, Kindle Touch still flashes black on each page turn while Nook Touch reduces the flashing by 80%. If you walk in with the Nook to Barnes & Noble store, you’re allowed to read ANY available eBook for free while in the store via free provided in the store Wi-Fi. 
    Also, the prices that you hear around for the new Kindles are all for models that force you to look at advertisements. Normal units cost $30-50 more. For example, Kindle Touch goes for $139 that is the same as Nook Touch while Kindle Touch 3G goes for $189.