Amazon and the Decline of the E-Reader

It’s no surprise traditional black and white eReaders like the Amazon Kindle are starting to take a serious hit as the popularity of full function tablets rise. Amazon’s Kindle application runs on all these tables and the price gap between a full tablet and eReader is now minimal. Even Amazon themselves have realized this shift and have been producing the Kindle Fire which is closer to a full function tablet, although itself still slightly more limited than say a Nexus 7 from Google. The Fire gets better with each revision, but Amazon will still survive the eventual death of their original Kindle mostly because of their dominating position in content.

Amazon is by far the leader in sales of electronic books and they have a strong positon in other digital content like TV shows and movies. Amazon makes their own hardware now because they want to create a customized, controlled Amazon experience. The Kindle Fire is designed to be the ultimate Amazon digital consumption machine. I get it, but Amazon is not going to be able to make a better tablet than Apple, Google or Samsung. I think Amazon would be better served creating a better experience on these other tablet leaders and focusing on content. Of course Apple and Google have their own digital stores, so again, I understand the conflicts, but Amazon has been at the digital goods business longer than anyone and they have a very dedicated customers base.

The latest rumor is of Amazon producing a cell phone which I think is insane. Why in the world would anyone be motivated to buy a phone from Amazon? It’s as crazy as the talk of a Facebook phone. For both Amazon and Facebook, the strength is in running their software on multiple platforms, not creating hardware which neither is truly equipped to do. Facebook finally realized this and created Facebook Home, a software layer on top of the Android OS instead of an actual phone. The reason the Kindle worked in the first place was because there was no such device and Amazon wanted to push the eBook concept which they did brilliantly. They then smartly moved quickly to put the Kindle reader on every platform they could find which gave Kindle books the highest utility. The leverage and power for Amazon is in the store and the Kindle application. The hardware is fairly meaningless at this point.