CLOUD COMPUTING

Why Amazon Is So Successful With the Kindle

J. Gerry Purdy | Date: 10-20-11 | Comments

There is one word that defines why Kindles are such a success: content. And it's extremely easy to get access to that content.

You have to hand it to Amazon. Its line of Kindle eReaders has done well because they are well-designed and offer instant access to the Amazon electronic book store that holds more books than anyone else.

Recently, Amazon announced three new models of the Kindle and the new Kindle Fire, Amazon�s first foray into fully functional tablets which will have them competing head-on with the Apple iPad 2 and the Samsung TAB.

The Amazon Kindle Fire offers access to books, magazines, songs, movies, and other content, as well as web browsing capabilities.

There is one word that defines why Kindles are such a success: content and the easy way in which Amazon enables users to get access to it. Amazon has 18 million eBooks, songs, movies and TV shows, as well as access to Android applications that will help it compete with the Apple iPad and Barnes & Noble Nook.

The Kindle Fire runs on Google�s Android mobile OS with a custom user interface. This is actually quite important to Amazon. The Fire uses a 1GHz dual-core processor and 8GB of memory. This initial rendition of the Fire is WiFi only and doesn�t have a camera. It is priced aggressively at $199, primarily due to the Fire having a 7� display, which costs much less to produce than the iPad�s larger 10� display.

Amazon Fire�s mobile Web browser is called Silk. It runs in the cloud and loads Web pages faster by shifting some of the work onto Amazon�s cloud computing engine (EC2). Because the Silk browser operates in the cloud, Amazon will know every Web page that users visit. That has implications for both privacy as well as eCommerce (think �You just visited Barnes & Noble, use Amazon right now and save an extra 20 percent on your book purchase�).

Amazon also announced new versions of the Kindle eReader with a basic model WiFi-only model priced at $79 and two new touch-screen versions called the Kindle Touch, starting at $99 (WiFi) and a second 3G model for $199.

The Kindle Fire has access to a magazine newsstand that includes content from Wired, Vanity Fair, Cosmopolitan and many more publications. Amazon said it�s in talks to greatly increase the magazine offerings over the coming months. The price of magazine subscriptions on the Fire is higher than what readers would pay for the same print version of the magazine. For example, Cond� Nast, publisher of magazines like GQ, Vanity Fair and Glamour, is selling most of its magazines for $20 a year which is nearly twice what it charges in print. And The New Yorker is priced at be $60 a year on the Fire. They can charge this premium because this is currently the only way for subscribers to get this content digitally. I suspect that as the magazine distribution expands, there will be promotions that bring the price point down to levels similar to what print is today. It certainly costs publishers far less to produce a digital version.

Amazon gives customers a special premium service called Amazon Prime which is priced at $79 per year. This provides the Prime customer access to video and music streaming and no charge on shipping other items.

The one surprising thing about the Kindle Fire is what�s not in it: The first incarnation is WiFi only without any of the embedded wide area wireless that is included in the other, lower priced Kindles. This seems like a fundamental mistake because Kindles have become synonymous with being able to access a book wirelessly from just about anywhere without having to manage the wireless connection. That advantage requires a wireless wide area network (WWAN) not just WiFi.

Sure, Kindle Fire will work just fine and deliver any book you select as long as you�re in range of a WiFi network. But, WiFi isn�t available everywhere, so this actually makes the Kindle Fire less functional than the other, lower priced Kindles.

I suspect that Amazon will announce a Kindle with cellular wireless similar to the other Kindle units soon. Amazon may have simply required more time to get the 3G version available and didn�t want to wait any longer to launch. They have a big selling season with the holidays approaching. I know many people who are planning on purchasing a Kindle for a family member for Christmas so Amazon had to announce the Kindle in late September. Look for the Kindle Fire 3G soon.

Also, there are rumors that Amazon might acquire webOS from HP. Because Amazon has put a custom user interface on top of Android, it shouldn�t cause much change in the user experience.

Jon Rubinstein, formerly head of Palm, became a board member at the retailer last year. Rubinstein is currently head of product innovation in HP's Personal Systems Group, which the firm is considering spinning off or selling. Perhaps he�ll join Amazon and head up mobile products.

However, because Amazon is serious about playing in the tablet space, they could use webOS to power their entire line of eReaders and tablets and offer uniquely different renditions to the market, e.g., develop integrated Web services for their platform to provide additional cloud based services. They most certainly would greatly expand the webOS apps store.

These are good times for Amazon. As they continue to focus on providing excellent content, watch their sales continue to rise. This is a lesson for other tablet manufacturers: It�s the content & services that win customers -- not the hardware.

J. Gerry Purdy, Ph.D., Principal Analyst at MobileTrax LLC, is a leading authority on mobile and wireless. Each week, he shares his views on the market in his �Inside Mobile� column.