Portals 2.0

There’s an interesting piece in this month’s Wired about the launch of the Kindle Fire and the future of Amazon. It begins as an editorial and turns into an interview with Jeff Bezos. A chunk of it concerns what you might call the ‘positioning’ of the Fire and the devices that will come after it. As many have speculated, it seems that the Fire is not primarily intended as a general-purpose tablet; it’s designed more along the lines of its Kindle predecessors in that it’s a dedicated delivery-point for Amazon content. But unlike its predecessors, the Fire lets you consume not just books, but movies, music and apps - and it has an innovative full-service web browser built-in. It appears that Amazon would like to do to each of those new channels what they've already done to e-books.
Of course none of those capabilities really set the Fire apart from the iPad. The functionality is broadly similar; it’s the emphasis that’s very different. Which may in fact be another of way of saying the iPad will beat the Fire on everything but price.
Though, to be fair, there’s no clear indication yet of what you might and might not be allowed to do via the Fire’s installed apps. Nevertheless the intention is clearly that this tablet is a conduit for content, not a tiny PC without a keyboard.
When I reached the part where Jeff Bezos expounded a little on his future vision, what struck me was how much it echoed the interest (obsession?) with internet ‘portals’ that we saw in the late Nineties, in the heyday of the Dot Com Boom. Back then, when having a web presence of any sort was still a bit of a novelty for many firms, there was a vogue for 'thinking big' and approaching the web ‘strategically'. The idea was that if you could get customers not just to visit your website, but to choose it as their home page, then you could be the gateway through with they reached the online world. You could be their tour guide, their chaperone and their personal shopper - and the world would need to come to you when it wanted access to ‘your’ customers.
This idea began (and to some extent ended) with AOL and CompuServe who offered the ‘walled garden’ internet experience even before there was an internet. And the fact that those early, highly-successful experiments ultimately went into decline did nothing to dissuade others from following in their footsteps.
The closest anyone got was Google, who really did become the home page for a high percentage of the world’s web browsers. But they did so, in a sense, by resisting the venal temptations of portalhood. You could reach any and every part of the web via Google. You weren’t restricted to just Google’s ‘strategic business partners’. And Google’s doggedly minimalist interface remained the unobtrusive antithesis of other would-be portals. We allowed them to become our gateway to the web because they never abused the position or tried to profit from it in a way that made our lives more difficult. Most importantly, they offered a genuine functional advantage over their competitors.
But the dream of ‘locking in’ your customers and owning the toll road (complete with shopping mall) by which they reached the web has never gone away. And to read Jeff Bezos’s words it sounds as though he considers the time to be right for another attempt at the prize. The Fire will make it easy - perhaps ridiculously, even seductively easy to consume Amazon’s content in preference to anyone else’s. The flip side might - and this is pure speculation on my part - turn out to be a lack of support for competing content. Will the Fire have a Kobo and an iBooks reader app? Will it have video players and music players which work with iTunes content? Will you be able to stream content from NetFlix? There are at least indications that the Fire will play music from outside sources - but then that ship has already sailed; they simply couldn’t get away with denying users access to their established music libraries. I’d be less sanguine about the non-Amazonian video playback options.
Even the Fire’s innovative web browser has some unique quirks which could, conceivably - and perhaps only subtly - corral customers, making it less likely that they stray too far from the fold. Amazon have given over a segment of their formidable computing power to act as a sort of ‘proxy’ for Fire web browsers. When a Fire user fetches a web page, it is first fetched by Amazon’s mighty servers, assembled and compressed, and then passed to the Fire’s browser ‘pre-digested’. The system is called ’Silk’ and it will apparently make the loading of web pages much more responsive. But part of me wonders why we need that extra responsiveness. Given that this is a device intended for streaming large - or even huge - files, like music and movies, over an internet connection, isn’t browsing the humble old web the least of its concerns? On the other hand, the idea that every byte and pixel of your web browsing experiences is routed via Amazon’s servers cannot help but feel slightly suspicious. They’ll know everything they want to know about your web behaviour and - if they so wished - they’d be in a position to make some of that behaviour easier and some of it a little more difficult.
To some extent Amazon are already well on their way to building a portal for e-books. The Kindle Store dominates the e-book realm and while existing Kindle devices will, grudgingly, do one or two other things, they’re really only happy when serving Amazon content. You can e-mail them non-Kindle books, but it’s not well-publicised and they won’t ‘WhisperSync’ between devices. To me, this seems like a preview of how Amazon versus non-Amazon content will work in the music, video and app arenas.
I also wonder whether Amazon need to be selling a TV too. If they want to stream video rather than let you download it (and that is clearly what the Fire is geared towards) then won’t they need to give you a few more options for where you can watch? Will we spend a lot of money on content which only works on one tablet device?
Perhaps their pricing tariffs will provide the answer. Following on from what I’ve been saying about Amazon’s fondness for selling below cost in order to get you hooked, Amazon Prime customers will apparently be given access to all sorts of ‘free’ video content (“12,000 and counting movies and TV shows”). Maybe we’ll feel happier about spending money on what might be a closed (and limited) platform if we’re renting access to a huge library rather than purchasing individual titles.
It might seem strange to offer this content to Amazon Prime customers, because Prime is all about paying a fixed fee for free high-speed delivery of packages - not on the face of it anything to do with video. But of course anyone who already has a Prime account will have a good incentive to buy a Fire. And anyone with a Fire who takes out Prime membership for the video library will have a strong incentive to buy more physical product. It’s all about cross-selling and multi-channel bundling: clever, but also just the sort of thing companies like Microsoft got in trouble for when it started to really deliver results.

I’m not entirely sure why, but personally I can’t see it working. It’s a decade too late to lock anyone in when it comes to music and a couple of years too late to lock in a lot of video consumers. Not to detract from their hard work, but Amazon have been lucky with e-books in that they haven’t encountered any serious opponents yet. Their e-book format is dominant as are their e-reader devices, and both reinforce the other’s proprietary hold. But Amazon will encounter more than just fledgling start-ups and slow-witted dinosaurs when they make their push into other forms of content - and despite what this article says about Apple being a hardware company and Amazon being content-sellers* there’s a lot of overlap when it comes to the Fire. There are over 40 million iPads out there already and restrictive though Apple often are, it looks like Amazon have an even more tightly controlled service in mind. That’s going to be a tough sell from a standing start with a product which is unlikely to wow anyone who’s used an iPad.
* Check out that chart where Wired invent a lot of nonsense reasons why Jeff is right. I mean, suggesting that Apple aren't 'cloud-centric' a couple of weeks after they wired up everything in their product line to iCloud is ridiculous.
Comments: 2
Great post - you cannot see it working, and I hope you are right…it will spell out some tricky negotiations for our industry if it does work. The only thing I would question in the wired analysis is they state Amazon as considering content king not hardware - I think Amazon have recognized that the two are intensely interdependent and that market share in the one will be difficult/impossible to maintain without the other. Look at acquisitions Amazon has made in the last 12 months - very content distribution focused, but in parallel and ongoing hardware focus and release of multiple devices approaching both broad and niche user needs. I think that Amazon is a very slick strategic machine at the moment – clear vision and direction. Impressive, but intimidating, they need a little internal unrest to push them off course, perhaps they will bite off more than they can chew?
Back to the point about market share, this article formulates more eloquently what I previously posted. Happy reading.
http://www.digitaltrends.com/apple/opinion-amazon-burns-up-apples-ipad-model-with-the-kindle-fire/
Posted by: Caroline on November 15, 2011 09:25 AM
Caroline: interesting thoughts and an interesting article too. Thanks. I suppose I've just seen this too many times: the dollar signs in the eyes and the rubbing of hands as someone dreams of locking in their customers. But the world never holds still for that and so it usually fails.
If Amazon provide the best walled garden, Apple can always loosen the strings on iOS and make it the more open choice: finally fix the way devices sync and let you get content - anyone's content - on and off them more easily. And once generic commodity hardware reaches the 'good enough' level, a third-party can give us the budget iPad clone but without Amazon's lock-in. I can't see how Amazon are going to get a firm enough grip on the market this way.
If they want to be in with a real chance then I think 'lock in' must be a secondary aim. The primary aim has to be to offer something truly amazing and superior. And I don't see that with the Fire. The iPad has an iPlayer app, a Hulu app, a NetFlix app. It has Spotify and Pandora and the immense iTunes store. Is the Fire offering anything extra or anything better or are they just competing on price? Because 'lower price' is not going to change the world at this point. The Fire needs to beat the iPad at something, not just undercut it, if Amazon's avaricious fantasies are going to become reality.
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Just noticed an unboxing video here with some more info: link
Posted by: Rob on November 15, 2011 10:06 AM