The Kindle Fire Hurts Apple, Microsoft and Helps Google

Published on Author Eli Fennell

I’m frequently amazed by the decline of tech journalism.  Amazon’s Kindle Fire may be the finest, or most infamous, example.  Lauded by the media, site unseen, as an “iPad killer”, it was sold by media-driven hysteria to millions of users, told it was the finest tablet since the iPad.  Now that the Fire is here we know it was a lie, that it isn’t the finest tablet even among Androids, and in truth, it isn’t even a tablet.

What is the Kindle Fire?  An appliance.  The Kindle Fire is a deviously effective Amazon content portal, nothing more, with tablet-like capabilities, dirt cheap hardware, and a buggy, forked version of Android for smartphones with nothing good added and valuable components stripped out such as location services.  To call it a tablet is either generous to the Kindle Fire, an insult to tablets, or both.

It’s hard to imagine Amazon, neither a software nor hardware company, can maintain runner-up status in tablets (if in fact they are runners-up, and a lack of solid sales figures leaves the matter in doubt), and even harder to imagine that they will find much traction in smartphones.  The Fire should be viewed more like a Ninetendo Wii: a successful appliance, but not something with long-term staying power against major technology firms like Microsoft, Apple, and Google.

Some have argued that the Kindle Fire does the most damage to Google, but this is based on a narrow and short-sighted understanding of the major players and market dynamics. Their argument goes like this: the Kindle Fire runs a forked version of Android for smartphones.  Unlike stock Android, Amazon’s heavily skinned Android runs the Amazon App Store, Amazon Music, etc…  Google is cut out of the revenue.  Put aside that there are hackers installing Android Market (or Google’s Android itself) on the Fire, and many Google products are available on the web or will be available as Fire apps.

Even if Google never got its Market or even its apps on Amazon, Kindle development will inspire Android development because of the common programming language, making it easy to port apps between the two.  The fact is that won’t help Apple or Microsoft.  For Google, Amazon’s success may not be good in itself, but it’s a win compared with unchallenged success for the iPad or Windows 8.

Amazon is just a retail company, and Google would likely rather compete with them, especially given the lesser shock of switching between Android devices.  An army of Android tablet partners will line up against Amazon and Apple trying to unseat them.  Patent infringement issues will fly left and right and Amazon, without a substantial patent portfolio, will be forced to defend itself.

Apple could strike a blow to Amazon by releasing their own smaller and more affordable iPad (though I doubt it).  And Android tablet makers will sell even more affordable tablets than the Fire, without absorbing a loss as Amazon already does, and Apple would have to do, to reach the very low-end of the market.  The Chinese company Ainol, for example, sells a $99 Android 4.0 7-inch tablet, the Novo7 Paladin, in China, with better software and hardware to the Fire.

The Novo7 Paladin is already in high demand, and they won’t be the last to reach the fabled hundred-dollar-or-less range.  Android tablet makers, like Google, would likely rather compete with Amazon, and so would Apple, precisely because Amazon can’t keep up with pace of development or the price point.  Google’s big cash cows are their web offerings, including Search, Advertising, YouTube, and more.

Android is a means to an end of evolving into a platform that dominates smartphones, and outpaces most of the competition in the tablet market.  Millions of Google Android tablets have been sold, even if not as many as iPads or Kindles (though the latter, as we said, remains an open question).

If one or two companies came to dominate the new markets, Googke would risk having their entire product line shut out.  If, however, Apple and Microsoft are kept from dominating the market, then they will have to compete with Google’s innovations, or worse, borrow or license them.  In smartphones Google’s Android was the dark horse, and in tablets Amazon’s version will be that, for now.

There will be new stars of the hour: iPad 3, iPhone 5, the Novo7 Paladin (or other $99-or-less Android tablets), maybe the Facebook Phone, maybe a new Sony tablet.  Some will be rebanded Androids; in fact rebranded Androids will be like branded credit cards, so common that they divide consumers up by brand loyalty and according to price, features, special benefits, maybe even frequent flier miles.  Stock Android is likely to benefit from the confusion, leaving Google the King of Android.

No one in their right minds believes Amazon will have staying power as a dominant purveyor of tablets or become dominant in smartphones.  They’re a retailer!  However you spin it that’s all they are, not a technology firm.  Their Fire is an upgraded Kindle Color, a retail appliance for consuming Amazon content.  There’s a market for that, but not a market-dominating position.

Apple makes the bulk of their money off the sale of Apple devices (mostly iPhones), depending upon this revenue in a way that neither Microsoft nor Google does.  Each Kindle represents a possible loss of an iPad or Windows 8 tablet sale.  This makes it harder for the two to gain a duopoly and is good for Google.

This buys breathing room for Android tablets to grow market share, especially at the low-end, and leaves Google to build their web superiority without challenge, while their rivals are occupied.  Android didn’t topple the iPhone overnight, either, it took time and halo products like the Motorola Droid.  Google is confident they’ll have no trouble winning in the long run.

Why shouldn’t they be?  What is Amazon’s answer to Google TV, Google Majel, Facial Unlock, Chromebooks, wearable smart devices like Google Goggles or Android wristwatches, driverless cars?  Amazon built a cheap and dirty tablet, whose highest praise is that it’s good enough for the cost.  Amazon will always be playing catch-up at best. Consumption is and will be their focus.

With the cross-seeding of the Android markets, and Google’s web-based revenue stream, the Kindle Fire may not directly benefit Google, but it doesn’t entirely hurt and doesn’t mortally wound them.  Indeed it helps them because Google makes money from all mobile web use, ultimately; they’re almost everywhere on the web!  It buys them time to win the tablet market, and other markets, with a global strategy of numbers and innovation.  If Android failed to gain traction during the holiday season their days in tablets were numbered.

Thanks to Amazon, B&N, Sony, Asus, Ainol, Samsung, and others, the holiday season is set to witness the sale of millions of Android tablets, and millions more over the coming year.  Even if one device does not dominate, the strength in numbers approach ultimately prevails as it once did for Microsoft.  Google may well thank Amazon in the end because the Fire keeps Android alive on tablets. It also convinces Android partners to stick with Android, proving that it can succeed.

In essence Google may win as long as Microsoft and Apple don’t, and Amazon may be an important part of ensuring that neither can win, in the end.  This is good for Amazon for now, and they might always be able to ride the Android coattails for a time, but in the end, they only sell or make changes to what others have done.  They aren’t a technology firm, and never will be, and can never win the mobile war.  Fragmentation may, ironically, be the key to victory for Google’s Android, the ultimate divide-and-conquer strategy.

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