Apple and Amazon's Open Embrace

On Wednesday, Amazon (AMZN) released a Kindle format reader for the iPhone and iPod Touch (AAPL). The move was widely praised by key tech pundits in the Washington Post, New York Times and Wall Street Journal as showing Amazon sees itself as a content distributor rather than a hardware platform company.

Several commentators have pointed out a few less obvious nuances. On the one hand, this gives Amazon multiple form factors that can display its 240,000 downloadable book titles. On the other hand, it could cannibalize sales of its $360 device.

Another is the implicit endorsement by providing access to its App Store. It isn’t interested in helping Amazon provide its users with music and video, but its cooperation implicitly endorsed Amazon as the book content provider — suggesting that books are not strategic. In fact, Gartner analyst Van Baker (quoted by ComputerWorld) cited the skepticism of Steve Jobs in 2008 about the Kindle and the e-book business:

“It doesn’t matter how good or bad the product is, the fact is that people don’t read anymore,” he said. “Forty percent of the people in the U.S. read one book or less last year. The whole conception is flawed at the top because people don’t read anymore.”

Several weeks ago, I’d wanted to respond to Tim O’Reilly’s claim that Amazon

must embrace open e-book standards. But as Rob Pegoraro notes,

But the arrival of this one program doesn't make the Kindle any sort of open system: You're still limited to reading your not-quite property on the devices that Amazon permits, not the ones you might want.

As I noted earlier, Amazon embraced “open” MP3 standards when it was a challenger to iTunes, but on the Kindle is using a proprietary approach.

However, I want to quarrel with one premise of O’Reilly and Pegoraro. There is no “open” and “closed”: openness is always a matter of degree.

One key metric of openness — in terms of industry structure, consumer choice, competition and switching costs — is when a standard is multivendor. If buyers can choose from multiple implementations, certainly that’s more open than buying products from a single vendor. (This also reduced but not eliminates the angry orphan problem).

By this standard, Apple was told be be more open (like Microsoft (MSFT)) — don’t just provide its platform with its own hardware but license its operating system to competing hardware makers. Now Amazon is doing just that, allowing for multiple sellers of reader hardware; I would presume that the next stop will be either Nokia (NOK) or BlackBerry (RIMM) smartphones.

Somewhat more open is how Apple now sells DRM-free music on iTunes Store — in response to Amazon’s DRM-free service. Amazon uses MP3 (with patent royalties), Apple uses AAC (without content royalties): both are easily implemented and available on most computers, music players and phones.

However, the Kindle native format is still DRM encoded (“infested”). Jeff Bezos could claim (as Steve Jobs once did) that the content owners made him do it. But DRM has been around in the book industry for a decade, and absent a Kindle challenger, I don’t see it going away any time soon. (As long as DRM is used, will that restrict availability on the Linux-based Android? I can’t say.)

As many have noted, DRM prevents me from selling or giving away used books. In the 19th century, this would have been a big deal. Perhaps if Steve Jobs is right, books won’t matter in the 21st century. Certainly if the Kindle ends up selling snippets and chapters, people will be less motivated to resell a $.25 snippet than a $30 hardback.

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Comments

[gspet:]

Your article makes a variety of points. I want to address just one, cannibalization. There was no chance I was ever going to buy a Kindle. However, I did download the app to my Touch and bought one book. Even if I never buy another, that's one book that Amazon sold that they wouldn't have. Btw, it's easy to read the ebook on the touch.

Mar 07 10:22 PM

[User 323857:]

What if AAPL releases a Tablet - wouldn't the Kindle interface work even better there? Is Amazon looking ahead to that time?

Mar 08 03:13 AM

[uncleralph:]

I think AMZN is looking toward selling ebooks as their model and not being a hardware company. They will continue to develop the Kindle and may meet limited success, but I see their larger mission of selling ebooks to as all various devices...

Mar 08 08:54 AM

[mollytjm:]

i've downloaded several books to my iPhone BEFORE the Kindle/Amazon deal. And i've downloaded audiobooks (99 cents) to the iPhone.. it all works great and the audiobooks have a setting that also scroll, so you can follow it or just turn off the audio and read it. People do listen to audiobooks..it's a great thing to take on an hour's walk or a long drive.
the iPhone screen is beautiful and the fonts adjustable. i had thought, before i got the iPhone, of buying a Kindle...but there's no need for one if you have an iPhone or iTouch and maybe Amazon also realized this.

Mar 08 10:07 AM

[constantnormal:]

If we had ubiquitous wifi availability, then one could look at the Kindle as an "always-on" portal to written content -- there are more things written than just hardback books, like magazines, newspapers, comics (color will eventually come to the Kindle).

But there is a dearth of open access wifi in this nation, and in most parts of it, of wifi access of any sort. The Kindle is going to have a long runway before it takes off and threatens the magazine rack.

It must come down in price -- A LOT -- and improve in capability (color, for instance, is a requirement before comics and a lot of magazine content is practical) before it really goes mainstream, and there must be widespread access to open wifi.

Until that happens, it will remain a toy for rich folks who spend a lotta time in airports/airplanes and would like to have a lightweight library to accompany them.

Mar 08 10:22 AM

[HTHTFH:]

True enough, and even then how many people fit that category? Have you noticed the utter lack of people reading books in airports these days, especially young people? Anyone under the age of 25 was nursed on the teat of a hand held game controller, back seat DVD players and bottles of ritalin. Couple that with a public school system that doesn't challenge them with concepts like summer reading lists, or even homework, and you can see what we've been producing. I'm not letting foreign kids off the hook either - kids from Asia who do better in school still rarely read books in their spare time. Kindle will therefore be a small niche filler.



On Mar 08 10:22 AM constantnormal wrote:

> If we had ubiquitous wifi availability, then one could look at the
> Kindle as an "always-on" portal to written content -- there are more
> things written than just hardback books, like magazines, newspapers,
> comics (color will eventually come to the Kindle).
>
> But there is a dearth of open access wifi in this nation, and in
> most parts of it, of wifi access of any sort. The Kindle is going
> to have a long runway before it takes off and threatens the magazine
> rack.
>
> It must come down in price -- A LOT -- and improve in capability
> (color, for instance, is a requirement before comics and a lot of
> magazine content is practical) before it really goes mainstream,
> and there must be widespread access to open wifi.
>
> Until that happens, it will remain a toy for rich folks who spend
> a lotta time in airports/airplanes and would like to have a lightweight
> library to accompany them.

Mar 08 01:49 PM

[Martin Hill:]

One small correction - Apple did not introduce DRM-free music in response to Amazon. Apple had introduced the iTunes Plus DRM-free format for all their EMI content well before Amazon launched.

The delay in the rest of the iTunes music library going DRM-free was due to Universal, Sony and Warner trying to slow the iTunes juggernaut and give challengers like Amazon a leg up.

Needless to say, they failed and in the end only reinforced Apple's grip on the digital music and MP3-player markets.

As far as DRM-free eBooks are concerned, I have been a very happy customer of Baen's DRM-free library of SciFi and Fantasy books for quite a number of years. It is a shame they are in the minority amongst eBook publishers in this area.

-Mart

Mar 08 09:14 PM

[rd4sndk:]

As far as content distributor, its not amazon. How ever controls the hardware will control content. Just look at the mp3 market. A book saler will soon by past amazon and go directly to itunes. A middle man is not required. Amazon however is doing best they can by providing there content on as many platforms as possible. In the end, itunes will win out. Its a matter of time.

Mar 09 06:32 AM

[KenC:]

I also thought about buying a Kindle, but realized that my iPhone had approximately the same page width. How?

Kindle 6" screen can be used in portrait, 600 pixels wide. Only 520 pixels are used for text, at 167ppi, that's 3.1 inches of text width.

iPhone or iPod touch 3.5" screen can be used in landscape, 480 pixels wide. All 480 pixels can be used for text, at 163ppi, that's 3 inches of text width.

The fact is, the iPhone and touch are only 8% narrower in width, when used in landscape. In various readers like Stanza and eReader, etc., you can choose font, font size, margin, line spacing, text color, page color, etc. It's all adjustable.

While I considered a Kindle, there wasn't enough of a difference to get me to fork $360 over for a 1-trick pony, whose trick needs another revision or two.

Mar 09 09:18 PM