NYT: Jeff Bezos: Kindle Books and Readers Are Separate Businesses

[JSWolf]

We will only see Amazon's Kindle eBooks seperate from the Kindle when there is a way to read them using a computer running Windows. Until then, they are still tied to the Amazon and the Kindle or the Kindle app for the iPhone/Touch. If Amazon really wanted the Kindle and the eBooks to be seperate, then not coming up with a new DRM scheme would have been the way to do it since they already own Mobipocket. So IMHO, yes, Jeff Bezos just lied to us.

[Gideon]

Bah... I think there's a bit too much conspiracy theory going on here.

I imagine we'll see Kindle content on a lot of devices sooner than we think. Amazon is an enormous company and they're going to do what will make them the most money, and maybe they originally planned on an exclusive distribution via the Kindle but they also may have seen an enormous uptick in sales on the iPhone and followed where the money led. Who knows?

We'll have to see. I don't think calling someone a liar is fair at this juncture.

[Tuna]

No conspiracy, it's fairly straightforward business as far as I can see. Bezos has said something about how they want to expand their supply chain and people here are reading into that what they wish for.

Having bought up a company that understands DRM, and created something that gives them exclusive control over the chain from publisher to customer, Amazon are unlikely to give that up. By all accounts, the kindle has very successfully found some of Amazon's most regular customers and, by locking them in, guaranteed that they will remain loyal to the company. Why do anything to loose that?

The reasoning against licensing Kindle reader software on a competing e-reader is that the customer can then move freely to other book formats, and hence other stores. Why let your loyal customers buy a Sony if they can then buy ePub books from Waterstones, Borders or whoever? The one off license fee per device (say $10 for the purposes of argument) is not worth the loss of say $4 per book that you make selling them content through your own store.

EBooks are actually quite a threat to Amazon. As a distributor of physical objects, it has set up a supply chain that is worldwide, efficient and cost effective. It's almost impossible for anyone to compete with that as the cost of setting up such an infrastructure from scratch is enormous. However, the infrastructure to supply ebooks worldwide is tiny - a few servers and a rack of hard disks. You can even rent the sort of equipment you need. So a competitor can set up shop with a budget of thousands, not millions of dollars, and if they find that magic 'google factor' that has people coming to their website first, Amazon will find their market eroded. At the moment, Amazon are protected by the slow uptake of ebooks and the relatively few e-readers available. They can see that changing, and the Kindle is a play to ensure that Amazon customers remain Amazon customers.

It's not a conspiracy, just business 101. If your money comes from selling razor blades, you want to ensure that people will only buy your razor blades - so you come up with a handle that only fits the blades that you sell. Amazon aren't doing anything evil by trying to protect their business, but neither are they acting in any way charitably to their customers. They care about making money, not about distributing great literature to a wide audience. There is no philanthropy or social contract here - they are a business.

As I said earlier, if they can put Kindle reader software on non-competing devices - say an exclusive deal with a Netbook manufacturer, or on more Apple devices - then they will do so. However, they wouldn't want to put that software on anything that gives the owner a 'no brainer' way to buy through other ebook stores. So, don't expect a deal with Sony or Cybook or anything else that has competing e-reader software pre-installed.

[Gideon]

I think Amazon is hedging its bets. It didn't get huge by being stupid regarding trends - the market is moving towards digital media, and Amazon has been hopping on that train pretty aggressively. They sell music, video and ebooks now. Amazon is diversifying and solidifying its edge in a new market.

Just because something is digital in no way means that the old systems of 'the big store' no longer works. iTunes proves this - Amazon almost always has cheaper prices and almost a good a selection, and for a long time sold higher quality MP3's without DRM - and iTunes was STILL beating them. Being the first big merchant is an enormous economic advantage and I think Bezos sees where the wind is blowing and wants to make sure Amazon gets in on the ground floor.

As to razors/razorblades there are different marketing strategies to be had here. Just because we're used to this model doesn't mean it is what Amazon is pursuing. Amazon might not be terribly interested in the hardware market, when they can make a lot of money with simply the ebooks. You can make razors for one brand, but what if you're the biggest seller of razor blades for ever razor?

I think Amazon's playing a long game, and there's no reason to call Bezos a liar. Not because Amazon or Bezos is necessarily virtuous but because there are a number of routes to take.

And it might not be on any eInk devices simply because eInk devices might not be around for a terribly long time as a relevant market. But we'll have to see. I think there is space to imagine Bezos isn't lying and yet is still making sound business decisions.

[kikar]

It would seem not just any device. Accoding to PC MAG......

"Bezos said Amazon was open to licensing its content to other e-book manufacturers, provided they provide the type of customer experience dictated by Amazon.

Any competing device selling Amazon books, for example, must include the Whispersync technology, which lets users return to the page they were reading, whether on the Kindle or the iPhone."

http://www.pcmag.com/article2/0,2817,2348798,00.asp

[Gideon]

I wonder if that means a cellular device is necessary or if wifi would be acceptable. Wifi will be much easier to pull off.

[kikar]

I would have to say that wifi is acceptable since the iPod Touch is wifi only and runs the Kindle software.

[Shaggy]

Originally Posted by Tuna

Having bought up a company that understands DRM, and created something that gives them exclusive control over the chain from publisher to customer, Amazon are unlikely to give that up.

Yep. They already owned Mobipocket. The only difference between an AZW file and a MOBI file is control. I believe they're even the same identical format, except that Amazon are the only ones who can make DRM keys for AZW. If Amazon didn't want complete control, then they would just sell MOBI books.

[olis]

Originally Posted by Shaggy

If Amazon didn't want complete control, then they would just sell MOBI books.

If amazon didn't want complete control, they would just sell books on ipods touch/iphones.... wait a moment they did that.

[Tuna]

In what way is putting Kindle software on the iphone giving up control? You still have to go to Amazon for books and it's not exactly competition for the Kindle itself is it?

[Ankh]

Originally Posted by Gideon

I think Amazon is hedging its bets.

Right on the money.

Kindles today, we will see how the wind blows tomorrow. It is never late to open up the store to the rest of the pack.

[olis]

Originally Posted by Tuna

In what way is putting Kindle software on the iphone giving up control?

Very simple, you are giving the possibility to millions of iphone/touch users of not being tied to a kindle purchase. If amazon really didn't want to give up control they would have continued to sell their books exclusively on the kindle, like Apple has done with its drmed materials.

Originally Posted by Tuna

You still have to go to Amazon for books and it's not exactly competition for the Kindle itself is it?

The iphone, as an ebook reader, may not be a direct kindle competitor, nonetheless considering the huge number of iphones out there, I might argue that amazon move of "going Apple" could negatively affect kindle sales.

[Tuna]

Originally Posted by olis

Very simple, you are giving the possibility to millions of iphone/touch users of not being tied to a kindle purchase.

Oh, I see what you mean, but I think you're missing the point here. They don't care if they sell you Kindle hardware or Kindle software, you're still tied into the Amazon sales chain.

Having installed the software on your iPhone you're much more likely to go back to Amazon for your next book and much less likely to install a competing e-reader app(*). Having bought an ebook from Amazon, you can only read it through their software or on a Kindle. Chances are that as soon as you have a few books, you'll decide the iphone screen is a bit small and buy a Kindle as well. Either way, you'll be buying books from Amazon and they'll make far more money from customers coming back than they do on a one-off hardware purchase.

(*) Of course, you can install a competing e-reader app on the iphone, there's nothing Amazon can to stop you. However they aren't actually giving you more freedom by providing the Kindle app on a platform that isn't in direct competition with the Kindle hardware.

[Abecedary]

Originally Posted by olis

The iphone, as an ebook reader, may not be a direct kindle competitor, nonetheless considering the huge number of iphones out there, I might argue that amazon move of "going Apple" could negatively affect kindle sales.

I disagree with this. A cow-orker of mine just purchased an iPod Touch a few days ago, partly with the intent to use it as a portable reading device (but he mostly wanted a small web-browsing device). He plans to purchase a book or two with the Kindle app and give that a shot. He has a fairly long commute, and I know he's expressed interest in a larger E Ink-based device. In the not-too-distant future when he decides to get an E Ink reader (which he will, trust me), which one do you think he's naturally going to gravitate towards? I can almost guarantee that he'll end up with a Kindle, despite the downside of being locked into Amazon's store. I view Amazon "opening up" the store to more portable devices (but none that directly compete with the Kindle) as a move to push more people towards purchasing the Kindle. No, not everyone will follow that path, but a good majority will. Which ultimately equals a win for Amazon.

[olis]

Originally Posted by Tuna

However they aren't actually giving you more freedom by providing the Kindle app on a platform that isn't in direct competition with the Kindle hardware.

I can't understand what's your point. If amazon gives you the option to read its books on the iphone then it is giving you more freedom than leaving you stuck with the kindle option only.

Originally Posted by Tuna

Chances are that as soon as you have a few books, you'll decide the iphone screen is a bit small and buy a Kindle as well.

Or maybe chances are that you will be perfectly comfortable with reading on the iphone and having the possibility to buy amazon books you'll feel no need to buy a kindle.