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What would Bezos do? Amazon, Wii, TV and the future

17/09/2012

Does the tablet-Entertainment-mobile arms race force Amazon to acquire RIM? Does it also force it to buy Nintendo? These are very serious questions and while there’s been swirling rumors for the phone aspect of it, the notion of why not both is something to look at.

Why would Amazon feel the need to buy? The answer comes from how you perceive their competition to look like. Obviously, Amazon doesn’t sell phones or electronics, well they do but that’s not their real business. Their real business is the business of providing a market for commerce and from that vantage point things look different. Who competes with them in this market? Google, Apple and Microsoft.

Buying into phones, and even more so into home entertainment, is nearly a must. Amazon has put considerable investment into the online delivery of media, and not just books. They are one of the largest players in mp3 sales and they even have their own app store. With Apple and Microsoft closing the loop on media delivery and the devices to use it on, it must be scary for Amazon. What position would they be in if they end up being an app on someone else’s system? Things don’t even look that safe from the Android world, what with Google having Play, expanding YouTube and dabbling in music sales.

Much like Microsoft, the win for Amazon is not selling a phone, it’s guaranteeing the capability to solely sell content through it’s own devices as well as the opportunity to sit at the big table for at least another 5 more years on customer experience lock-in.

The purchase of RIM is tantalizing for a number of reasons. Firstly, they get a large (but crumbling) user base. Mature (perhaps too mature) technology, supply chain and branding to build on are all features that make this a great move for Amazon. These details alone makes it an easy decision over building from scratch. RIM is also looking to get its groove back and what better than to have the full capability of Amazon’s vast media offerings coursing through it’s circuits?

The phone makes sense, sure, but why Nintendo? The answer is pretty close to the same. The Wii gets them on the TV. TV is a vast market that hasn’t been executed properly…yet. Streaming Movies right from the Amazon store to your TV guarantees longevity. The customer base for the Wii is also more similar to the Amazon cloud than Sony’s Playstation, as well.

The ultimate play to maintain relevancy in this competition is to get on the TV—which means in the living room—and get mobile. Obviously, there are some other plays that would get them close to this scenario – and probably cheaper at that. First is to look at another handset maker. It would be hard to steal Nokia away from Microsoft, but HTC would be a nice buy. They’ve had some good successes and have got a nice presence on carriers and in stores, but not having the capability to close compatibility to just Amazon’s system might be less than palatable and that holds for the rest of it’s Android kin.

It gets a little more interesting with the TV play. There’s an army of set top boxes that would be ripe for purchase, TiVo has been ailing for a while, and Roku would look good as well. All Amazon needs is a device that plugs into the TV that can stream media and be capable of running apps. Even more useful is established consumer buy-in and sell-through. I am unconvinced that any of these boxes’ cheapness would offset the brand power the Wii has. Then again, with games pushing mobile, that support might be crumbling as well.

Whatever the choice is, grabbing both device platforms would put Amazon nearly on the same turf as Microsoft or Apple and bests Google because the power is in the synergy of the components. This is the same awesomeness that Apple enjoys with the iTunes-iPad-iPhone and soon to be Apple TV as well as Microsoft will enjoy with their Windows 8 phone, tablet and Xbox triumvirate.

All of a sudden, that Amazon Cloud-thing could make a lot of sense, huh?

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