Amazon Vies for Piece of Apple's Digital Content Pie

With the introduction of its Kindle ebook reader, music and video services, Amazon’s (AMZN) Jeff Bezos is stepping further into the magic kingdom of Steve Jobs’ Apple (AAPL). In fact, Bezos and Jobs seem to be on a collision course.

Apple doesn’t have an ebook reader, but it’s not difficult to imagine Apple adding digital books and other content from the print world to the music and video content available via iTunes.

Brian Caufield of Forbes suggests that material from Google’s Book Search project could be funneled into iPods. “Mix Apple’s iTunes content distribution smarts with Google’s vast storehouse of content, and you’ll have an instant competitor to Kindle — one with a touch interface and the ability to play movies and music, too,” he wrote.

An “instant competitor” to Kindle is an overstatement. You can stuff free books into iTunes and a wireless iPod today but it’s not an ideal reading device and lacks the commercial library Amazon has assembled.

Apple must be cooking up a larger touch screen, ultra mobile device that runs the Mac OS and could compete more directly with Amazon’s Kindle. Getting book, magazine and newspaper publishers on board will not be a problem, now that Amazon has shown the way.

However, the $399 price point for Kindle will be an initial stumbling block to mass adoption. And a Steve Jobs blessed ultra mobile device for book lovers would be beautiful (Kindle has been called “ugly,” which may have pleased Jobs but not Bezos) but not cheap.

Amazon has busy moving into Apple’s digital store territory this year. The company launched a music service with more than 2 million DRM-free songs to compete with iTunes. Amazon also introduced Unbox, a video download service for renting and purchasing movies and TV shows, all neatly tied into the Amazon personalized service and recommendation engine. It seems logical that Amazon would amplify the social layer of its services, going beyond recommendations to create more of a social network among its large user base as another way to create more loyalty to the brand.

With the iPod Apple took a page from Amazon’s playbook, creating retail distribution services, Web store fronts and back end services to sell digital goods and own the customer relationship. Amazon began its existence as an online retailer, focusing its efforts on building the front and back end services and developing a strong bond with its users via personalization features and customer service, such as free shipping.

With Kindle, Amazon is taking a page from Apple’s playbook, hoping to stimulate sales of digital content and to make money on the hardware and software.

Over time Apple, Amazon, and others will have similar collections of digital content and pricing parity. Loyalty to a particular brand and user experience will be the crucial success factor.

At this point, Apple with its iPod is the clear leader in music downloads and trying to duplicate that success with video, amidst a bevy of capable competitors, including Amazon. Books is just the latest category to go digital, but the culture of reading is giving way to browsing, listening and watching. Books, newspapers, etc. will be a smaller piece of the digital content pie.

For now, Apple is banking on continued iTunes success. Amazon is seeking to build momentum with music, video and now books, weaving them into its commerce and personalization fabric. Kindle will gain some attention for Amazon, but it’s not a game changer.

Perhaps Amazon and Apple aren’t on a digital content collision course after all. The tectonic plate shifting in technology and the business of books, music and film brought on by the Internet may result is some unanticipated pairings. There is the speculative scenario, or fantasy, in which Apple and Amazon merge, creating Applezon, the Web and the planet’s biggest retailer, social commerce network and coolest mobile device maker.

Comments

[Kontra]

While “the iPod of …” has become a cliché to describe any product with a semblance of distilled design sensibilities emanating from Cupertino, there is one fundamental strategic reason why Kindle won’t be like the iPod: content. The iPod had it, Kindle doesn't. Read why here:

"Why is the new Kindle eBook reader from Amazon and not Apple?"
counternotions.com/200.../

[Lar]

The iPod already may be competitor to Kindle. With magazines on the way, can books be far behind? Check out:
img.zinio.com/iphone/i.../