Monthly Archives: July 2010

Kindle application + e-bookstore = Advantage Amazon

One of the hottest territories in the technology industry today is the e-books market. New readers (or multi-purpose devices with reader functionality) are getting launched in quick succession and big players are entering the fray. With heavyweights like Amazon, Apple, Barnes & Noble, Google, Microsoft, Samsung, HP and Dell competing to sell the devices that can serve the purpose of an e-book reader, it’s too early to call who will stack on the top of the lot. The first mover advantage here is arguable, but “multi-device application” advantage is certainly not.

Amazon has adapted, what we can call, a “multi-device application” strategy which can work  big time in its favor. It has decoupled the Kindle application with the Kindle hardware, i.e. the software application that you use to read the books on Kindle e-book reader is available for a slew of other platforms including Windows, iPad and Android for free. So an e-book that you buy from Amazon can be read not only on Kindle, but on virtually any device you own.

This multi-device functionality together with other value propositions of Amazon has given it a big advantage. Amazon has got the biggest collection of books in its e-bookstore. Books is their forte. Book buying experience on Amazon is second to none. They have strong customer relationship and command unparalleled trust when it comes to books. And when you can buy a book from Amazon and read it on any device, the probability is really high for customers to use their store.

Amazon enjoys advantage, something similar to what Microsoft did with its Windows operating system back in its early days. Microsoft distributed Windows openly to run with different processors and computers made by all PC makers, making it the platform of choice for application developers and the end users. Similarly Amazon is distributing books to be read on any device, no matter who’s selling the device. This will likely give the Kindle maker an edge and could make it the e-bookstore of choice for the end users. There’s one catch, Amazon better make money selling e-books.

Apple, Samsung and the Emerging Markets

The one thing that really helped Microsoft capture the personal computer market was its strategy to focus on software that goes on computers made by any computer manufacturer from IBM to Dell. That’s been the company’s strategy which has proven great for it over the years. Windows became the platform of choice for application developers due to its great reach in turn making it irreplaceable for the PC users. Apple on the other hand made really great Macs by developing both the machine and the software that goes on it. A semi-closed ecosystem with a handful of application makers (like Microsoft Office) making software for it. Apple found its niche in the cool and trendy crowd consisting of students, designers and artists.

Bring in the mobile space. The very strategy that worked against Apple in computers playing field is now proving to be its most valued asset. Apple is a company that controls end-to-end development of its mobile phone. It controls all three key elements of the phone – hardware, software and the chip component. This gives Apple an unprecedented advantage in providing integrated user experience. Apple is able to remove any friction between hardware and software. Adding the chip development expertise to this provides Apple accuracy in estimating the processor performance and map it to feature development. The out of the box experience that FaceTime delivers is one of the first examples of how vertical integration is going to do wonders for Apple.

The only other company that has all three elements of mobile phone under its control is Samsung. Samsung, the world’s largest conglomerate, has great expertise in chip development and hardware manufacturing. Samsung manufactured phones running Windows Mobile software have been around for a while, but Samsung launched its bada platform for mobile devices in late 2009 to have complete end-to-end presence in the mobile world and Samsung Wave became the first bada based phone to enter the market a few months back. All the elements coming together positions Samsung perfectly to be a challenger in providing vertically integrated experience on the mobile platform.

Now moving on to talk about the emerging markets. Mobile phone market is growing at a tremendous pace in the developing countries. India and China each have more mobile phone users than the total population of United States. If at one end a smartphone costs more than the monthly income of many people in these countries, it is a wannabe gadget for the growing middle class. While iPhone fanaticism is catching up in these countries as well, no one can dispute the unparalleled hold Samsung’s got in the Asian markets. Samsung has one of the most efficient marketing machinery and brand presence in the electronics market out there. This positions it strongly against Apple et al to get smartphone market share in these countries.

There’s still a while to go before calling out the winner in the mobile devices world. Apple, with its genius design and development of iPhone and iPad, has captivated the imagination of everyone from consumers to competition. But it will be interesting to see how Samsung and others fare in there in the coming years and what role the emerging markets will play in deciding the fate of these companies.