And now, they're coming for your Social Security money - they want your fucking retirement money - they want it back - so they can give it to their criminal friends on Wall Street. And you know something? They'll get it. They'll get it all from you sooner or later. Because they own this fucking place. It's a Big Club: and you're not in it.
Predictably thoughtful take from John Gruber on the broader tablet strategy that Amazon is taking up in light of the new Kindle/Kindle Fire product line. You should read the whole thing, but a couple of points really stand out. First:
Apple’s primary business is selling devices for a healthy profit, and they back that up with a side business of selling digital content for those devices. Amazon’s primary business is as a retailer, including as a retailer of digital content. They back that up with a side business of low-cost digital devices that are optimized for on-the-fly purchasing of anything and everything Amazon sells.
This is exactly right. I’d extend the idea all the way out to its limit: Amazon should buy Qwikster from Netflix.
While this move would, to Netflix, be akin to selling Babe Ruth to your direct competitor for a few grand and a bag of balls, what other company out there understands shipping better than Amazon, has a built-in pipe for selling overstocked used discs of yesterday’s blockbuster movie, could seamlessly merge the “this isn’t available to stream, shall we ship it to you right now” experience, and, most importantly, has the leverage with the content owners to actually, you know, offer a lot of content from their streaming service? Clearly the answer ain’t Netflix. It’s Amazon, who can go to content-owners and say: “Do you really want Apple to dominate your pipeline to the consumer? We have the customers, data about those customers, and the access to them. Use us a leverage against Apple and we’ll give you a marginally richer cut in exchange.” Even in an era of increasing disintermediation, the Apple model shows quite strongly that if you pile up enough content that people want, it’s ultimately easier to sell from those fewer, larger silos. Nobody wants to search ten sites to figure out which has Transformers 18: This Time It’s Personal available to stream this week only to have said stream expire mid-movie because you had to pause it at an inopportune moment. In that model, T18:TTIP pirated torrents become king. And yet this is fairly precisely the situation we consumers and our content-overlords increasingly find ourselves in. The future is most definitely not 35 separate “Apps for that,” each of which has to be painstakingly consulted on movie night. There’s room for two, maybe three, giant content aggregators. As of today, I’d say one of them is pretty obviously Apple. The other sure seems likely to be Amazon; even more likely once they’ve sold a few million Kindle Fires. Hell, since Netflix likely won’t sell a direct competitor the keys to Quikster, Bezos should just buy bothQuikster and Netflix, re-brand the sexily named “Amazon Instant Video” service Netflix and milk the Quikster “physical media” approach for as long as it makes sense to do so (as part of a broader package ultimately tied to Amazon Prime membership…which, of course, is mostly a deal-sweetening mechanism designed to drive unrelated sales for Amazon as a whole). As always: fewer choices for the consumer means more money for the provider; you draw them in with the enticing product or service, then completely empty their pockets on all the other stuff they hadn’t previously even thought of buying. It’s precisely Apple’s strategy, but attacked from the perspective of the content instead of the device.
Interesting point two:
Amazon is a data-driven company. I’ll bet the $40 premium [for a Kindle that never serves you “offers”] is based on how much money they expect to make from the ads they sell and products they promote via the special offers. Last year the special offer Kindle was only $25 less; the data must show that the special offers are worth more than $25 per Kindle to Amazon.
Taken together with the previous point, it’s clear that there’s potentially much, much more value in that premium. With Silk, Amazon will quickly have a huge dataset covering the browsing habits of their users. They already have a huge dataset on the buying habits of those users. In the user’s hand at the moment of the “offer” is a device purpose-built to grease the skids of said content purchase; just as easy to grease the skids for any kind of purchase once you know what the user wants or is looking for outside of the “content” world. And Amazon just so happens to sell that stuff, and will drop it on your doorstep quicker than seems possible with your annual Prime membership…which, oh yeah, you need because of all the content! Worth something to Amazon to be sure, but worth even more to the content owners and other potential advertisers who will presumably pay handsomely to get targeted sales…and Amazon will be able to show them exactly how well the campaign worked.
It’s simply not possible to do ad-word jiggery-pokery when an actual purchase (as opposed to a view) is the outcome metric. So I’d say it’s crystal clear that it’s in Amazon’s interest to gradually raise the heat on “offer-free” Kindles until, at some point Kindle purchases more closely resemble contract and contract-free purchases of mobile phones. That, I suppose, is when the ads start to intrude on the reading. But that’s a whole other post.