Amazon is No Apple

Published on Author Eli Fennell

I could be wrong, and history would judge me harshly for it, but I’m going to say it:  Jeff Bezos is no Steve Jobs and never will be.  The success of the Kindle Fire is leading to speculation that Amazon is the new gang buster in tablet town, a viable opponent to Apple, Google, and Microsoft.

No one will deny the phenomenal marketing success of the Kindle Fire.  And that is what it was, marketing success, akin to running down the street shouting, “$200 iPads!  $200 iPads!”  Consider the success of fire sale HP and Blackberry tablets  The crowd came running.  Millions of Kindle Fires are expected to sell.  I tip my hat to Amazon.

But let’s be realistic: it was nothing like how Apple stormed the tablet market, nothing.  Apple made a device that users feel was more than worth the cost; Amazon made a device that its users are more likely to feel is good enough for the price, or more than worth it but not by much.

Amazon made a device with all the functionality of a 7-inch iPod Touch.  Its hardware was a recycled Blackberry Playbook, its software a mutilated Android operating system for smartphones; its app offerings are laughable, it lacks basic location functionality normal to nearly all mobile devices, and can’t even be used to video chat, which in my own experience is one of the best things about a tablet.

Put aside all the bugs and shortcoming, as I’m sure Amazon will commit to fixing them when possible.  They say they are committing to the fastest iteration cycle, though to be fair the obstacles inherent to building a tablet operating system out of a smartphone operating system basically will require them to do so just to keep up.  Android Gingerbread will never be a tablet operating system, no matter how much they iterate, and will always fall short of taking full advantage of what a tablet can do.

So let’s go back to that Apple comparison: Apple built an operating system for a tablet, combined it with cutting edge hardware, and stormed the market with a highly stable device with a rich ecosystem.  Amazon mutilated a smartphone operating system made by another company and slapped it onto recycled hardware that is, at best analysis, at least as as good as the original iPad and comparable in some ways to the iPad 2.  But, they did have the rich ecosystem to match.

I’m not seeing anything remotely Apple in what Amazon did, in fact it perfectly fits their retail model.  Amazon doesn’t really make most of the stuff they sell, they just slap a layer on top of it and call it their own.  Steve Jobs accused Android of being a rip-off of iOS, but the Kindle Fire takes it to a new level.

Because of the need for platform consistency, they are expected to run the same operating system, or something almost identical, on their anticipated smartphone, the (Kindle?) Blaze.  It’s hard to see that the Blaze will have the same effect on the smartphone market, where Android dominance is already far advanced, Android halo devices like the Nexus and Galaxy series are established brands, and content consumption isn’t as much of a selling point for various reasons (Amazon music is available on other smartphones, a smartphone isn’t ideal for video consumption or book reading, etc…).  Existing Kindle Fire customers are the most obvious targets.

Amazon already has an app store for competing Androids established, and Gingerbread is a suitable operating system, and we might expect it to be better than the Fire.  Leaked specs also suggest the Blaze will be trying to be a high-end smartphone at a low cost, and Amazon can promote it even more on their website  It may become one of the best selling smartphones on the market.  Getting carrier enthusiasm will be more of a problem, however.

Amazon competes with carrier stores for smartphone sales and can sell at low margins or at a loss, especially with their own products.  It’s hard to imagine carriers will be wildly enthusiastic for yet another walled garden smartphone, from a company that would likely use their own device to sell other devices through their own website.  How will they feel if an Amazon smartphone offers consumers discounts to avoid the carrier stores?  Apple has stores but they only sell Apple, while Amazon sells other devices, and inevitably exposes customers to competing products not found in carrier stores.

Someone will surely carry it, but they won’t be rooting for it to be the new Android, that much is certain.  The Kindle Android is Open Source, and yet no one seems the least bit interested in carrying it on their own devices, and there are very good reasons why.  At any rate, cost will be less of a selling point when plenty of smartphones are cheap or free as it is.

Someone will carry the Blaze, because it will be an exclusive selling point like the iPhone, but like iPhone carriers, they will be pushing alternative devices over which they can exert more influence, such as Android and possibly WebOS if it can make a comeback.  If Amazon gives in to the temptation to battle the carrier stores, this will further strain any relationship.

Amazon’s success is remarkable but, ultimately, unsustainable in terms of dominating an entire market.  There is only so much of a loss Amazon can sell for, and Android tablets are already starting to break the $100 range with even better devices.  Their influence on the smartphone market will probably hurt Apple, Microsoft, Blackberry, and other competitors more than Android, which already has a massive installed user base and penetration in countless markets.

In tablets they will hurt Apple and Microsoft, though I don’t doubt Apple will survive and outsell Amazon.  Whether they harm Android to the same degree depends on whether stock Android tablets gain greater traction in 2012, which seems likely because of their low cost and global market penetration.

More importantly, none of these three are going to be outdone.  While Amazon is busy slapping more smartphone software into more tablets, Apple and Google are building an integrated mobile platform with killer features like multiparty video chat, gesturing controls, and virtual assistants.  The notion that Amazon can beat Apple or Google in this market in the long run is absurd as things stand.

As a vertical platform they are nothing like Apple, which innovates where Amazon recycles.  As an open source platform they are unlikely to achieve widespread horizontal traction against Android, and would inherit issues endemic to an open source platform being installed on a variety of devices, without Google there to innovate solutions for them since they forked the operating system.

What about an ecosystem of devices?  An Amazon TV?  Perhaps, but will it have an integrated virtual assistant?  I don’t see Google licensing Google TV for Amazon to mutilate, and they’ll be licensing for free.  An Amazon car?  Stock Android is more adaptable to that market, and Google already owns one patent on driverless technology.  A Kindle wristwatch to compete with the wearable iOS and Android devices in the works?  Not fast enough, most likely, to avoid falling behind.

And I don’t think Amazon ever imagined they would become the dominant device maker.  They’ll continue to make entries in the market, and their focus will continue to be on making something good enough, at a good enough cost, with quality marketing, to catch many late adopters of new technologies.

Unless and until they can build their own software platform instead of using Android, they’ll never be Google or beat Google, and until they can also build hardware and innovate, they will never be Apple or beat them.  Microsoft, however, ought to be very concerned for the future of their tablet ambitions.  Android has the virtue that even if it takes time to gain traction, an army of Android makers will continue to churn out tablets and try to eat market share while Google innovates the software.  Microsoft can’t afford a similar failure.

It’s fine to admire Amazon for what they are, which is a brilliant retail company, but they are not and never will be the industry leaders as device makers unless and until they can truly engineer and innovate their own unique product line.  With retail as a core business this is unlikely for the foreseeable future, and their corporate environment isn’t exactly the most conducive to software or hardware engineers and developers.  If electronic retail becomes the core of their business in a way it isn’t yet, compared with physical retail, Amazon might be inclined to become a software and hardware company, or at least software.

In the meantime they will enjoy great commercial successes driven by pricing, and may even occasionally get out ahead, but will never remain an industry leader indefinitely, at least as long as their close walled ecosystem is left competing against the superior Apple ecosystem and the increasingly low cost of Android tablets running Android Ice Cream Sandwich.

Maybe stock Android will never gain traction on tablets, but their open source nature, success with smartphones, constant innovation, low cost (finally), and availability to a nearly limitless number of hardware partners will probably win out eventually.  The simple fact that competitors have no viable alternatives leads to the same almost inevitable conclusion as in other markets: the best viable alternative wins by sheer numbers, even if no single device sells as much as the competition.

Amazon would make a welcomed third player to bring more competition to the market.  But Amazon as king of the tablets and smartphones?  Doubtful at best.  Even if they overcame all the obstacles to this, it would put them square in the cross-hairs of regulators for the anti-competitive nature of using their vast retail force to price competition out of the market.  Then there are the patent infringement issues, and we’ll see if Amazon can get past those in a way stock Android has been unable.  Never say never, but don’t count on it.