Amazon’s Fire Phone is Mainly for Amazon’s Customers

June 18, 2014

Several journalists took a small segue today in their coverage of the launch of the Amazon Fire Phone to note that Amazon’s Kindle Fire has been extinguished. Or nearly so. Based on IDC’s May report, the Kindle Fire has only 1.9% of worldwide tablet shipments, down 47% year-to-year.

However Amazon doesn’t make mobile devices to capture hardware marketshare. It wants to form a tighter bond with its customers, one that bonds them to shopping Amazon. “The most important thing that we’ve done over the last 20 years is earn trust with customers,” Amazon CEO Jeff Bezos said at the launch today. This led logically to a straightforward explanation of Amazon’s planning for the phone. Bezos said that Amazon executives simply asked themselves, “Can we build a better phone for our most engaged customers?”

Over at Mobiquity, Gene Signorini pointed out that the Kindle Fire Phone is “not about devices sold per se, but rather about the sale of content and merchandise and the overall value per Prime subscriber.” Amazon need only convince some 10% of (an estimated 20 million) Prime subscribers to buy the new smartphone to sell two million devices. “However,” he notes, “this would only represent about 1% of total US smartphone market share” in a six-month window.

Jeremy Greenfield at Digital Book World asked me for comments earlier today, in particular how the device might affect ebook sales. He printed a couple of my remarks in his Forbes report on the Amazon launch. Here is my full analysis of its likely impact on publishing:

Amazon Fire Phone

The phone is….do we call it “sexy”…with new (or recent) features like the 3D cameras, Firefly, Mayday and gesture controls.

The Firefly feature, which quickly recognizes products and gives you the option to buy them on Amazon, is bound to increase showrooming, including buying books from Amazon. But in the case of showrooming, the total number of books bought doesn’t change much, and shifting more book buying to Amazon apparently decreases publisher margins and clearly dimishes the power of book retailers.

The 4.7-inch display is better for reading than the iPhone 5′s 4 inches. Bezos did highlight that it will be “a great phone for reading.” In the research I’ve been doing for the report “Mobile Strategies for Digital Publishing” (to be published next month by Digital Book World) it’s very clear that reading is not a significant use for mobile phones today. Though with all of Amazon’s reading-friendly features this will be the best-yet phone for bibliophiles.

The downside is that not only is the mobile experience not optimal for reading, it is optimal for other purposes. Mobile is mainly about social media, texting, gaming and video. Each of these is more compelling on mobile than reading — you don’t buy a phone to read a book.

Also Amazon’s decision to go it alone on the OS — cannibalizing but not fully supporting Android — means that none of the top Google apps — Gmail, Maps, and Chrome — are available on Amazon mobile devices. Amazon’s substitute apps pale by comparison.

I’m sure the phone will take a share of the market, but with aggressive competitors like Apple, Samsung and Microsoft, that share won’t be easily gained. It’s good news for readers, but probably won’t much move the needle in terms of overall ebook sales.

But I wrote that before I read Bezos’s remark that the phone targets Amazon’s “most engaged customers,” and not, apparently, the much broader base of mobile phone users. Amazon Prime is the conduit helping consumers to get a better deal from Amazon, if they plan to spend lots of money with the company. The Amazon Fire Phone is another input device helping Prime users to fulfill their task.

June 19, 2014: Jeff Bezos, interviewed in the New York Times, says: “The phone will make Prime memberships better, and Prime looks great on this phone. It’s not that there’s no interaction between these elements. But to say that’s the primary purpose is too simplistic.” Farhad Manjoo comments in a related article “Though the device is called the Fire phone, Amazon’s new gadget is less a phone than a pocketable cash register hooked directly into the retailer’s intelligent warehouses.”

June 20, 2014: Christopher Caldwell in the Financial Times: “(The Fire phone) has more to do with connecting Amazon’s customers to merchandise via credit card than it does with connecting them to other people via conversation.”

June 22, 2014: @BenedictEvans provides the best analysis thusfar of the Amazon Fire Phone with an emphasis on Amazon’s “fork” of Android — are they solving a user problem or their own business problem?

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How Amazon Destroyed the Publishing Ecosystem

March 12, 2014

Everyone takes a shot at Amazon, and it’s not difficult to see why. Founder/CEO Jeff Bezos is blamed for just about every corporate crime imaginable, from pricing that destroys competition to suffocating warehouse employees on hot summer days (apparently no longer a problem).

My criticism of Amazon is about an issue perhaps more subtle, but, in my view far more serious. Amazon has destroyed the publishing industry by destroying its well-honed ecosystem. Sure, all of the other issues and criticisms stay on the table. This issue is for me the heart of darkness of our beleaguered industry. (more…)

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BOOKISHNESS: What Makes a Book a Book?

April 22, 2013

In our madcap rush to digitize the book we’ve been all too willing to attempt both to replicate the physical book experience in the digital realm and to just as quickly discard any feature of physical books that proved too challenging to emulate online. (more…)

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Maundy Thursday Special: Goodreads Betrays Both Writers and Readers

March 28, 2013

What impeccable timing from Goodreads, on a day observed by many because of a far more potent betrayal.

The Goodreads’ folks always struck me as decent people who genuinely care about writers and readers. I am surprised and disappointed. Perhaps even saddened.

I would imagine that Goodreads’ 30 pieces of silver are many, many millions. I think that they must have been well paid for this betrayal; the decision cannot have been easy.

Amazon  Press Release Goodreads

 

 

 

 

 

 

Thad McIlroy on Goodreads

 

 

 

 

 

 

 

 

Remove your data from Goodreads

 

 

 

 

 

 

Goodreads export

 

 

 

 

 

 

March 29: All Things Digital reports that Amazon paid a base of $150 million, most cash (not that Amazon’s shares aren’t a solid currency) and may pay up to $200 million “if certain performance metrics are met.” It’s admittedly between difficult and impossible to say no to that kind of cash, especially if you can convince yourself that Amazon is keen on “continuing to grow (y)our vision as an independent entity, under the Goodreads brand and with (y)our unique culture. ” Hey it’s the same thing as Zappos, right?

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Running the Numbers on Barnes & Noble

April 13, 2012

In the wake of media speculation of the impact of the Department of Justice lawsuit against Apple, Macmillan and Penguin and the secondary speculation of the impact on Barnes & Noble I thought I’d run a few numbers and see what story they might reveal. (more…)

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