War against Amazon Part 2: Google

Kindle Fire vs. Nexus7

Nexus7 vs. Kindle Fire

 

Wait wut? What does Amazon have to do with Google? Google is a search engine, Amazon is a online retailer, what in the world do these two companies have in common? Well, Google makes money for itself a bunch of different ways, one way is by selling content. Amazon also makes money from content, just think of all the ebooks it sells, the kindle, right? Doesn’t seem all that bad for Google, when you think of eBooks there are only two players really, Amazon and Barnes and Noble. So who cares, how can Amazon really affect Google in a quantifiable way?

Next to the iPad the kindle fire is best selling tablet and for good reason; its cheap. Amazon can sell the Fire super cheap  because it is betting on turning a profit by selling content from the device. See, just as Google has its PlayStore, Amazon has its own market to buy eBooks, apps, music and all other sorts. This is where Amazon stuck it to Google, Goog spent and spends who knows how much to developing the Android platform, all in hopes of gaining another profitable medium. They make money from Android by displaying adverts and operating the Play Store. This is one of many reasons they “open sourced” it, the more companies that use the platform, the more devices that get into consumers hands, the more people use the Play store, the more money Google can make and everyone is happy. Brilliant.

So what Amazon effectively did with its Kindle Fire was take the Android platform and spiced it up with its own UI. Amazon then  forces people to buy eBooks, apps, media etc from their very own store instead of the Play Store, completely sidestepping why Google developed Android in the first place. I think of it like this, you work very hard to pay the bills while your spouse does next to nothing, your spouse then takes your hard earned cash to take weekend getaways with someone he or she is cheating with… You get the point, its dirty. It was a bold move from Amazon and if I were Google, I would be super pissed and I think they are.

It gets worse, there is this thing called the open handset alliance (OHA), this is a consortium of companies that develop open standards for mobile devices. You may or may not know, but Google  just purchased Motorola Mobility for its patent portfolio. It cost them $13billion dollars, all for protecting the Android platform and hardware manufacturers of android devices. The Kindle Fire is the second best selling tablet and they are not even a member of the OHA. So effectively while the 84 companies within the OHA work hard and spend billions upon billions to protect and develop open standards, Amazon is taking the free ride without even considering helping anyone else but themselves. How much would it take to get some folks hired to work specifically with the OHA Amazon? You made $10.8 billion dollars in the last 12 months Amazon, i’m sure it would be less than one drop in one giant bucket.

Take what you can, give nothing back. Cute in the movies, pretty mean in real life.

 

Enter the Nexus7. This is Google’s response to the Kindle Fire and Goog got it right on so many levels. Other than the Nexus 7 being a superior device Goog has more than a few advantages here. First thing is that Google has lots of services that lots of people use. Just to name a few, Gmail, YouTube, docs, Picasa, Calander, search, maps and one of my new favorites, Google+. Convergence is the name of the game now of days and Google is one of the few leading the pack.  Another thing that Google is doing right is they are selling their devices straight from the Play Store, you know what that means? Its actually quite simple, Google is getting you familiar with purchasing things from their store of course. Also, to start you off, when you buy the tablet, Google is even going to give you a $25 credit to the PlayStore. Super awesome but I am pretty sure before you can use that $25 Google is going to want a card on file for future purchases, and why not? They have great content and their prices and damn good. People will use the $25 to purchase and download that eBook, that app, that hot new indie album and when the $25 bucks runs out, I’m sure people will be much more comfortable and willing to make purchases with real dough . They got me last Christmas with the 10cent apps, and now I purchase things all the time from the PlayStore without second thought. The whole 10cent app deal was a brilliant move, just like this one.

The next gen Kindle Fire should be out by Christmas and there is even rumors about Amazon making their own phone, but I think Google has not to worry as they have good cards in their hands. Above everything, Android is best in its purest form(stock), without all the bloat and custom UI’s. Put it like this, the Galaxy Nexus on Verizon; people were pissed because of the minimal bloat (Verizon’s contact backup app) on what was supposed to be a pure Android experience from Google. I’m sure Verizon pulled a fast one just before the device launched to get the phone shipped branded with the Verizon logo and with crappy redundant apps no one ever uses; and lets not get into the whole Google Wallet fiasco. The point is that anyone should/would pick up a Nexus device over something with bloat and a custom UI because its a commonly accepted fact that bloat and custom UI’s suck.

Googles response is to destroy the Kindle Fire with the Nexus7, take back what was taken and not let it happen again. The plan is going to work, period.

So this is my opinion. The Kindle Fire and rumored Kindle phone have to be subsidized even greater or even free to consumers, without any sort of contract, if Amazon wishes to remain in the game. If not they either need to break even or take the loss on developing the Fire. I will tell you one thing, the only thing that will completely beat Google’s tablet and its manufacturer is the iPad mini at $250 or less. The iPad mini at 300 bucks will be competition and anything over that will be saved for the fanboys and girls. At this price point,any other attempt from anyone else will be futile because no one else has the marketplace they can lean on to subsidize a device.

So Amazon, I think your plans in the mobile markets days are numbered. What you did was dirty, and I am sure when those ODM tablets start breaking real manufactures are going to be there to pick up your customers even after you’ve already tried to lock them into your market ecosystem. Your not making any friends just like Apple, but guess what, your not Apple. I hope you have one hell of a plan. Here’s to your 85 P/E in the next couple years.

Cheers.

Jerm

About Jerm

Jeremiah Johnson is the tall, dark, handsome Co-Owner of IcerTechnologies, an I.T. Hardware and Software company. A stock trader and technology enthusiast, Jeremiah is always digging deep into industries to see what the future holds. ThingsMicro.com is his personal blog where he writes about anything he finds interesting in life. Readers beware of poor, unedited grammars. His opinions are his own. (I like Turtles)