Kindle Review – Kindle 2 Review, Books

Before we review the kindle 2 and kindle dx’s place in Amazon’s long-term strategy, let’s take a look at some recent Amazon developments -

1. Amazon expanded its in-house Pinzon Line to include cookware, tableware, etc. by Seattle Super-Chef Tom Douglas. They also have in-house brands for outdoor furniture (Strathwood), tools (Denali) and more.
2. As Big Companies talk up Cloud Computing, Amazon is quietly delivering . JMP analyst Patrick Walravens writes -
   

   We found that Amazon Web Services offers the most competitive pricing on a dollar per virtual machine basis. Large companies have noticed and are using its Web Services cloud computing platform to host their public websites

3. Maggie Savarino at Seattle Weekly notes that Amazon will partner with Napa’s New Vine Logistics and start selling wine to 44 states. She adds -
   

   If Amazon becomes a wine retailer, the company will have tremendous clout with wholesalers, able to buy wine at a discount in a quantity that makes the word “bulk” seem highly inadequate. Their selection will be unrivaled.

   In short, the plight of the independent bookseller is about to become the plight of the independent wine retailer.

Makes you wonder if Amazon is selling everything but the kitchen sink?

Actually, Amazon does sell kitchen sinks.

Everything But The .. wait a minute

Not only is Amazon selling everything, it’s doing a stellar job -

1. Henry Blodget points out that Amazon is growing much faster than ECommerce and Retail Sales are (one commenter even thinks this is due to the Kindle).
2. Beacon Assets Managers agree with Cowen & Co’s Jim Friedland that Amazon is a next generation WalMart, except it performs better.

Basically, Amazon is expanding faster than the Universe (to be precise the retail universe).

How do Kindle 2 and Kindle DX come into the picture? First, let’s look at Amazon’s Google Tax.

Search Google.com for ‘kindle’ and you find -

1. Ads by Sony and BeBook.
2. 3 links and 1 photo in the ‘News for kindle’ links before the Amazon Kindle pages.
3. 2 separate video results above the fold.
4. 4 image results above the fold.

In fact, there are 50+ different links on that SERP page of which only 2 go directly to Amazon. Its the same or worse for every product Amazon sells.

Online, Amazon has to pay a tax of sorts to Google - 

1. Amazon often has to pay for traffic and that takes away from customers’ savings and Amazon’s profits.
2. It often loses traffic to competitors or other sites.  
3. Add on the fact that Google is jumping into ebooks itself and has Google Books and Froogle.
4. Further add on Google’s pattern of attacking every big tech company it can find (today’s launch of the Google Chrome OS for example).

In mobile, and with Kindle, there is no Google Tax.

Any mobile device is new to the point that there is no Google Tax yet. The Kindle is even better as not only is it tax-free it can be kept google free.

Amazon’s strategy to ensure it becomes the New WalMart is to create tax-free channels on every mobile device -

1. Amazon recently indicated that the Amazon API isn’t supposed to be used in mobile or handheld devices without Amazon’s permission. 
2. The policy clearly indicates Amazon is very concerned about a 3rd party developer grabbing a large chunk of Amazon sales via the iPhone (or worse via the Kindle).
3. Kindle for iPhone users are redirected to the iPhone browser to make purchases (thereby bypassing Apple’s 30% tax).

Basically, Amazon realizes that it can’t serve customers (or itself) if it’s paying all sorts of ridiculous taxes – 30% to Apple, x% to Google, and so forth.

1. Amazon intends to be the New WalMart, and make 10 cents on every online and mobile dollar.
2. It has no desire to share half of that with Google or 30% of it with Apple.

Just as Google is trying to free itself of the huge shadow of Windows and Internet Explorer, Amazon is trying to free itself of the huge shadow of Google Search. 

Mobile devices in general, and the Kindle and the Kindle DX in particular, are Amazon’s solution to the Google Tax.