Amazon Tablets and the War for the Digital Consumer

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So lets talk about Amazon for a few minutes. The launch of the Amazon Android Appstore has reinvigorated speculation that Amazon is working on some kind of Android device of its own. We've talked about it here at ITworld, in fact. Anecdotal evidence tells me that the Appstore is at least a short-term hit; I've been hearing friends talking about buying apps from Amazon and the purchasing process is so easy (assuming you're an already an Amazon customer) that I expect to be checking Amazon first for my paid apps (and I really wasn't sold on the idea of an Amazon Appstore before it launched). Now something new like this always draws a crowd; we'll see if Amazon can maintain interest, but I think it'll be able to.

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A lot of the speculation about an Amazon Tablet focuses on Amazon's fight with Apple. I don't disagree that this battle exists, but I think it's just one battle in a broader war that Amazon is waging with just about everyone. Sure an Amazon Android Tablet would be a thorn in Apple's side: Amazon has digital music, movies, books and apps ready to be loaded onto such a device, same as Apple. But an Amazon Tablet would also strike out at Barnes & Noble as well. The NookCOLOR did well over this past holiday season and a Kindle Color (based on Android) would take away one of B&N's few advantages over Amazon.

But let's look farther afield. We know about Amazon's free-with-Prime streaming service, clearly aimed at both iTunes and Netflix, though for now the service is just kind of idling along. An Amazon Tablet would support Amazon Video-on-Demand (including free streaming) and up-selling Kindle owners to a Kindle Tablet that can play this content could really get the customer base excited about Amazon's VOD offerings.

Regular readers know I'm a gamer. These days I buy most of my Windows games from digital distribution systems like Steam, Impulse or Direct2Drive. I knew Amazon offered casual Windows games for download, but yesterday I was made aware that they'd expanded to AAA full-price Windows titles from companies like Electronic Arts. I bought The Sims: Medieval, a game that just launched Tuesday of this week, digitally from Amazon. The download was quite fast (the game is about a 6 GB download and took 30-40 minutes to download...less time than it'd take me to drive to the store, buy a physical copy and get back home) . And since this is Amazon we're talking about, I got a perk: $15 off my next video game purchase. That's what swayed me to buy from Amazon rather than from one of my usual sources. And again, it was a one click purchase. Almost too easy. Clearly Amazon sees Steam and the others as another battle to be won.

Amazon isn't in the business of building e-readers or tablets. They're in the business of selling digital content. The hardware they make (or will make) is just an aid to make it easier for us to buy from them. To use an ancient analogy, the hardware is the razor, the digital content is the razor blades. Because of this they can sell hardware for very thin margins if they choose to. The Kindle dropped rapidly in price when competition entered the market. I'd expect an Amazon Tablet to cost less than an iPad 2 or a Xoom; a good chunk less. As a consumer I hope Amazon has enough clout to provoke its competition into dropping their prices in response.

The best news for Amazon is that they've gotten as big as they are without being labeled as evil by too many people. Yes, there's a geek contingent who is concerned with how big and how much influence Amazon has, but for the most part consumers either are ambivalent about the company, or love it. Music, movies, books, games, software, apps...all delivered digitally from the same company. What else could we always-hungry-for-more consumers possibly want?

Peter Smith writes about personal technology for ITworld. Follow him on Twitter @pasmith.

This story, "Amazon Tablets and the War for the Digital Consumer" was originally published by ITworld.

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