Tag Archives: Amazon

Disruption: Technology or Business Model? Definitively, not Laws

Kindle books have now overtaken paperback books as the most popular format on Amazon.com, according to the quarterly results just released.

  • For every 100 paperback sold, Amazon sold 115 Kindle books
  • For every 100 hardcover sold, Amazon sold 300 Kindle books
  • The Kindle store has over 810,000 ebooks
  • 670,000 ebooks are priced at $9.99 or less

In just 3 years, Amazon has taken the eBook from nothing to mainstream. Amazon has managed to take the book transition to digital without suffering the pain the music labels went through with mp3. How did they do it? First, with a great device, the iPod of the ebooks. Second, no fear to cannibalize their own business. Third, force publishers to accept the $9.99 price policy. Same recipe as the iTunes “take it or leave it” $0.99 a song.

Amazon and Apple set the example of companies taking advantage of technology to drive new business models that are changing industries. The Netflix $7.99 a month all-you-can-stream is another bold proposition for consumers, that is shaking the Pay-TV industry.

The right offer for digital content at the right price is not only changing industries in US. It is also driving piracy down. Meantime countries like France, UK and Spain struggle with nonsense laws that not only are useless against piracy, but that are also stopping the development of a legal digital content market.

Legislators in Europe should stop making laws to preserve the status quo. Else US companies will have total domination of digital media by the time old Europe reacts.



Bezos on Amazon Web Services

Om Malik got an interesting interview with Jeff Bezos, Amazon CEO.

Bezos explains how they worked tough at Amazon to develop a hard interface between their network engineering group and their applications programmers group. Once they had architected a set of APIs for their platform, Amazon thought why not make it available to others and create a business out of it. And so Amazon Web Services was born. Amazon is already a web-scale application, so they have the expertise to run a powerful robust platform.

But Wall Street does not like companies diversifying in businesses too different from their Core. And Amazon business, by the books, is retailing. The stock market has accepted well all line extensions from selling books, to music, to DVDs, to electronics, to watches, and basically to anything that can be retailed. Amazon is a huge retailer for almost anything that can be sold on-line. Their knowledge of their customers, the ease of use, their powerful recommendations and the greatest buying experience you can get on-line are Amazon’s core assets, from a Business academic standpoint.

But the truth is technology and innovation are also Amazon’s Core Competencies, and Amazon would have never been the biggest retailer on Earth without excelling at creating such a great on-line experience through great software and a high-performing web platform. All this technology was developed by Amazon and was vital in achieving differentiation from Barnes&Noble and others. So making this unique expertise in web platforms a new business by itself is just another way to monetize one of Amazon’s competencies.

Wall Street will still argue that retailing is a low margin business, while selling software and services is a high margin one. Wall Street would surely prefer an spin-off of AWS. With the hype on Cloud Computing, it could even allow Amazon to cash-in on the buzz by floating a small percentage of their Web Services unit.

Knowing Bezos, he might prefer to go his own way regardless analysts, and demonstrate with hard facts that he was right to bet on Web Services new business.

Internet TV or IPTV? Who will win the battle?

While Internet TV enjoys the hype, the reality is that Telco’s IPTV is growing steady, while Apple and Amazon keep mum on their movie download service numbers.

Every week we have news of players entering Internet TV or existing players reinforcing their offers. This week ReadWriteWeb reports news fron Netflix with additional set-top-box support, Hollywood studios creating a JV for VOD, Sony preparing a PS3 video download service and Motorola planning a mobile movie download service.

IPTV makes less headlines, but still AT&T U-verse, Verizon FIOS TV, Telefonica’s Imagenio, Free Telecom or PCCW keep adding subscribers (and new features) to their Pay-TV services. While revenues from IPTV telcos are far bigger than those of Internet TV, it is also true that Telco’s IPTV investment is huge compared to that of Internet TV.

Internet TV main advantages are global reach and the immense choice of a very Long Tail of semi-pros and amateur content creators . YouTube, MySpace and others, together with social networks/blogs provide a distribution power that enables these creators to reach the mass. See BarelyPolitical.com as an example.

Big Media companies content rights are usually negotiated by country, as this maximizes the return for content owners. While telcos do not enjoy the global reach of Internet TV, they are very strong players on a country basis, so Media companies find in telcos a strong distribution channel. That is why iTunes and Amazon Unbox started their service available only in US, to be extended to other countries as rights get negotiated.

This is the window of opportunity that telcos must take, before Apple, Amazon and even YouTube reach the mainstream with a better user experience than today, as bandwidth grows and new set-top-boxes connect Internet to the TV screens.

IPTV brings today QoS and exclusive content to the mainstream. Internet TV brings the nearly infinite choice and movie downloads (only in US) to a younger segment. IPTV has some advantage today. Will they be able to keep it? The battle is still open.

Cloud Computing: Welcome to Google’s Cloud

Google has just launched App Engine, the service to give developers access to Google Cloud, or in other words, to the same Google infrastructure that runs G-Mail, Google Apps or Google Earth.

App Engine provides a number of tools to develop Web applications that will run on Google data centers. The basic service will be free, and will provide for capacity to serve 5 millions pages per month, including 500MB storage and 10GB data transfer per day.

As you can see in the video above, Apps Engine is easy to use and supports applications in Python. Other languages will be supported later.

Amazon was already offering access to its Cloud with Amazon Web Services, claiming 330.000 developers, and Google will be a strong competitor. Start-up companies like Bungee Labs were already offering Platform-as-a-Service, and while these companies will be hit, Google service will create an awareness on Cloud computing, that will make them target for acquisition from other big Internet players not yet in the Cloud trend.

As GigaOm suggests, this service could be a base for other development platforms like OpenSocial for social networks and Android for mobile. Could Google fulfill the promise of Java, “build once, run on any platform”?

To learn more about Cloud Computing and its buzz, here is a good article from NYT: What Cloud Computing Really Means.

Kindle is to ebooks what iPod is to mp3

Amazon Kindle

Amazon, as usual, has got it right and Kindle is a great device. Once you get to know the detailed specs, you realize it is not just  another ebook reader. Kindle is to ebooks what iPod is to mp3.

Not only the official features are impressive. CNET blog Underexposed by Stephen Shankland unveils that, after some reverse-engineering,  Kindle hides a few surprising secrets, including a picture viewer, a minesweeper game, and most interesting, CDMA-based location technology!

TechCrunch reports this finding too: “Amazon’s Kindle knows where you are

Still the feature that impress the most is not hidden: did you know that Kindle brings EVDO Wireless Connectivity? did you know Amazon takes care of the EVDO charges to Operators. No EVDO subscription is required!

Thanks to EVDO free connectivity, you can download ebooks in a minute wherever you are. Not only that, you can also keep updated online on newspapers, magazines and blogs!

See the video from Jeff Bezos and others in this link. You will be amazed.

As blogger Guy Kawasaki says: ” this is a no brainer”.

Will e-books kill the bookstore stars?

It seems that finally Video did not actually kill the Radio star, but both co-existed as friends, and keep evolving in the Internet era.

That is not the same case for the Music industry. CD’s killed the vinyls and now CD’s are slowly but surely being exterminated by mp3, without mercy.

DVD death will come next, but likely a bit later, wiped out by Divx-MP4-WMV downloads, be it illegal P2P or legal IPTV, Internet TV or Internet VoD like Amazon Unbox, or iTunes.

But what about e-books? will they kill the Hardcover and Paperback brothers?

I would bet not. I think Books in its traditional format has still a very long way to go.
– First the user interface has not yet been improved by the electronic e-book readers. Most people still find more friendly the paper and the ink
Novels are read linearly, so no advantage for the digital form, except for reference Books or Encyclopedia, which anyway tend to be on-line for real-time updates. (Wikipedia has definitively killed the Encyclopedia stars)
– It is true that one of the advantages of electronics e-book readers is that you can carry hundreds of books in a pocket. But who is interesting in carrying with you more than the 1-2 books you are reading at the moment?

This week Amazon launched their e-book reader Amazon Kindle

And it already run out of stock only in a few days.

Kindle is a nice toy, although far from perfect, but I still believe Amazon has got it right.
Amazon strategic move, aims at creating a real market for e-books where they keep a central position, with a proprietary DRM (a la iPod/iTunes). To create this market, they introduce a device that was missing to provide a complete solution for those wanting to go for e-books. Similar to what Apple did with iPod for the music industry.

But will e-books ever kill the traditional book? If it ever happens, I believe my grand-children will be the ones to see that… and my son only is 7 months now…