Kindle India – Amazon lays groundwork to sell Kindle Fire HD, Kindle Phone in India

We’ve talked a lot about the importance of China and India for Amazon. Both Kindle Fire HD and Kindle Phone will live or die based on how well Amazon can tap into emerging markets like China and India.

Kindle Phone, Kindle Fire HD, and other Kindle devices must target emerging markets like China and India to have any real chance of competing with the Apples, Samsungs, and Microsofts of the world.

Amazon expanded its App Store to China just a few weeks ago. Just last week it started selling Kindle Fire HD International to 170 countries, including China and India. Now, we get news from Times of India that Amazon India has opened as an online marketplace.

What do we know about Amazon India?

Actually, quite a bit.

  1. It’s an online marketplace for the moment. Third party sellers can list their products and sell them to customers.
  2. Currently, it sells only Books and Movies & TV Shows. Amazon India offers 7 million local and imported books. Amazon India offers 12,000 movie titles and shows.
  3. It’s expanding to Phones and Cameras and Electronics soon.
  4. India’s online market is still very small – $800 million in revenue from 13 million online shoppers in 2012. Note: This is in a country of more than 1 billion people.
  5. Internet penetration is just 8% so lots of room to grow.
  6. India has a few players already in this space – FlipKart (India’s largest online retailer) and Infibeam have both set up similar marketplaces.
  7. Indian regulations don’t allow Amazon India to sell its own products. So Kindle Fire HD and Kindle can’t be sold via Amazon India. This is a bit strange -

    Amazon will not stock and sell its own products because India’s FDI regulations do not allow online multibrand retailers to sell their own products.

This is the most interesting part from the Times of India article -

The country’s internet penetration stands at about 8% with 137 million users, of which roughly 20 million are shoppers including the online travel agency market.

This reflects China’s online market back in 2005. China now has 538 million internet users and 227 million online shoppers.

It is quite possible that in the next 8 to 12 years India gets to where China is now. If that happens, Amazon would be glad it started building Amazon India now.

Kindle Fire HD India – How can Amazon sell Kindle Fire HD and Kindle Phone in India?

If what Times of India writes i.e.

Amazon will not stock and sell its own products because India’s FDI regulations do not allow online multibrand retailers to sell their own products.

is true, then Amazon is in a real quandary.

To sell Kindle Fire HD and Kindle Phone, Amazon would have to sell via other retailers. It couldn’t sell them via Amazon India.

Perhaps Amazon views Amazon India as a foundational step to build its brand and customer base. It can always figure out workarounds later. Who knows what legal changes India will see in the next 5 to 10 years. In Canada, Amazon worked out some complicated agreement in 2012 that allows it to set up further warehouses and expand. Eventually, Amazon should be able to set up shop properly in India and sell Kindles and Kindle Phones and Kindle TVs and Kindle Fire HDs.

For the moment, we just have a complicated situation where Amazon has set up Amazon India but can’t sell its own products like Kindle and Kindle Fire HD through it.

Kindle Fire & Kindle Odds & Ends

A mixed bag of Kindle Fire and Kindle items today.

Qualcomm showing off 2560 by 1440 Mirasol Display (reflects ambient light)

Qualcomm’s Mirasol Display was supposed to be used in a Color Kindle way back in 2011. Well, there was no Color Kindle so there was no Mirasol color eReader eInk. The last we heard was that Mirasol had gotten a $2 billion investment to set up a manufacturing facility. No news after that.

Now, it seems Qualcomm is trying other things. Engadget covers Qualcomm Mirasol 2,560 by 1,440 displays demoed at SID Display Week (They have a video).

  1. It’s a 5.1″ smartphone display.
  2. The resolution is 2560 by 1440. That gives an effective pixel density of 577 pixels per inch. For reference, 27″ displays with 2560 by 1440 resolution are considered QuadHD. I’m not sure what to think about a 5.1″ display that has 2560 by 1440 screen resolution.
  3. This is the same magical Mirasol Display which reflects nearby ambient light. It’s great for devices that want to use less power and/or for eReaders.
  4. The actual technology is still a few years away from being ready for market. Qualcomm, that does not surprise anyone. You seem masters of demoing technology that is ‘still a few years away from being ready for market’.
  5. Qualcomm also demo’ed a 1.5″ screen used in an always-on smartwatch. That actually sounds more interesting.

Eletronista also has some coverage and Qualcomm Mirasol photos.

Kindle Worlds – Amazon starts a Fan Fiction initiative

Amazon has stumbled upon what is either a brilliant idea or a disastrous one – let people make money from fan fiction, officially.

Geekwire has some details on Amazon’s Kindle Worlds initiative. You can write fan fiction about established books and series. You get a cut. The royalty owner gets a cut. Amazon gets a cut.

Some Warner Brothers properties like Pretty Little Liars are already available to fan fictionize.

Here’s what Amazon says -

You will own the copyright to the original, copyrightable elements (such as characters, scenes, and events) that you create and include in your work, and the World Licensor will retain the copyright to all the original elements of the World. When you submit your story in a World, you are granting Amazon Publishing an exclusive license to the story and all the original elements you include in that story. This means that your story and all the new elements must stay within the applicable World. We will allow Kindle Worlds authors to build on each other’s ideas and elements. We will also give the World Licensor a license to use your new elements and incorporate them into other works without further compensation to you.

If I’m reading this correctly, it would have meant that Stepahnie Meyer could start writing 50 Shades of Grey titles without having to pay the 50 Shades of Grey author anything.

Amazon says it will pay a royalty of 35 percent of revenue for accepted fan fiction of at least 10,000 words. Shorter pieces (5,000 to 10,000 words) will receive a 20 percent royalty. The company says it expects most of the “Kindle Worlds” fan fiction titles to sell for 99 cents to $3.99.

As it’s Amazon, an ‘exclusivity’ clause is also included.

Jealous, overprotective girlfriend/boyfriend on steroids.

Did we forget controlling?

Amazon Publishing will set the price.

Overall, it’s a very interesting move.

Amazon seems very focused on a few elements when it comes to books and content – creating new content sources that it owns, maintaining control over pricing, creating exclusive agreements.

It’s interesting. It’s almost as if Amazon thinks it can control a market into existence. A perfect market where customers behave perfectly and everything goes according to plan. You know what they say about plans – If you want God to laugh, show him your plans.

Penguin Pays Up $75 million for Agency Model Case, Only Apple left standing now

Penguin’s settlement with the DOJ means Penguin has to pay $75 million. This leaves Apple as the last company standing out of the Agency Model Cartel.

It’s quite interesting that -

  1. None of the Publishers are left.
  2. Apple still refuses to settle.
  3. DOJ is painting Apple as the instigator of the Agency Model.

Apple is also under fire for its elaborate tax avoidance schemes (avoidance = legal; evasion  = illegal). This includes gems like – paying less in taxes than it reports as ‘Taxes’ in its annual reports, a cash routing scheme so elaborate that economists are calling it ‘unbelievable chutzpah’, no one being sure of how Apple pays just 2% tax in Ireland when the official rate is an already low 13%.

At some level, it seems Apple has become so big and successful that everyone is going after it. Whether it’s Microsoft in the past or Apple now, you have to wonder – Are they being punished for their actual misdeeds, or just because they got too good and too successful.

The Tax Avoidance case is just avoidance and completely legal. The only cost will be some amount of PR. Until the law changes companies like Apple and Google and pretty much every big company will keep on ‘avoiding’ taxes.

The Agency Model case would perhaps be a few hundred million dollars. That’s less than Apple makes in profits in a day.

Amazon stops selling Kindle Keyboard

Thanks to a blog reader for pointing this out. I forget who (remind me if you’d like a mention).

Kindle Paperwhite and Kindle WiFi (just Kindle) are the only eInk Kindles available to buy now.

Kindle 3 was the favorite Kindle for a lot of people. Hopefully it’s only been removed to be replaced by something else.

Kindle 3 really was the best eReader ever made. It’s sad to see it gone.

Why are so many companies investing in Nook Media (B&N’s Nook spin-off)?

The news that Pearson just invested $89.5 million in Nook Media, giving Nook Media a $1.8 billion valuation (more than B&N itself), means that we now have -

  1. Microsoft having invested $300 million for a 18% stake in Nook Media. It has also promised $300 million more.
  2. Pearson having invested $89.5 million for a 5% stake in Nook Media.

Here is Pearson’s official announcement of its investment in Nook Media. An interesting snippet -

Pearson will invest $89.5 million in cash in NOOK Media, gaining a five per cent equity stake. Following the transaction, Barnes & Noble will own approximately 78.2 percent of NOOK Media and Microsoft will own approximately 16.8 percent. Subject to certain conditions, Pearson will earn the option to purchase up to an additional five percent ownership in NOOK Media.

Pearson’s strategic investment in NOOK Media will help accelerate customer access to digital content by pairing the company’s leading expertise in online learning with NOOK Media’s expertise in online distribution and customer service.

There are two very interesting things here:

  1. Microsoft and Pearson have both invested in Nook Media at a very high valuation. They have both added in provisions to invest more.
  2. Nook Media gets $389.5 million now and another $300 million from Microsoft in future (surely, there must be conditions) and some undisclosed sum from Pearson in future if Pearson decides to get another 5% stake.

Suddenly Nook Media is a $1.8 billion valued company with $389.5 million cash. That’s stunning if you consider that -

  1. ALL of Barnes and Noble currently has a market valuation of $883 million.
  2. B&N just announced that Nook Holiday Sales have been below par and it’s not going to meet its projections for Nook Sales for 2012.

It all makes you wonder.

Why are so many companies investing in Nook Media?

There are a few reasons -

  1. Amazon. Amazon looms over all of books as a very, very dangerous adversary. Sooner or later we are going to see Publishers start to team up against it much more obviously. First, they used Apple and the Agency Model. Now, it’s going to be Nook and some new strategy.
  2. Nook Media actually has a good chance of doing well. It’s almost like a recurring revenue business with high up-front costs and relatively lower costs down the line. Customers that B&N has on Nook are going to stay with B&N until and unless something markedly better comes up.
  3. Transition. The Dinosaurs are figuring out that they have to transition. How do they transition? First, they invest in companies that will let them invest. Second, they start making their own companies. Third, they figure out which works better.
  4. B&N customer base. This might come as a surprise to some people – B&N customers will pick Nook if all other things are equal or close. Time after time we see Amazon customers and B&N customers disregard lots of flaws in the devices and in the closed garden. Why? Because there is trust and a relationship built over years (sometimes over decades).
  5. Nooks are very good devices in physical device terms. B&N tends to ship devices before the software is polished. This time, with Nook HD and Nook HD+, it really stretched things to an extreme – amazing hardware, alpha-level software. If B&N figures out how to make great software for Nooks right from launch (and it’s a big IF) then Nook Media has a bright future.
  6. B&N is still a player in the Tablet Market and it’s still a strong player in the Reading Tablet market.
  7. What other option do companies like Microsoft and Pearson have? Will Apple take an investment? Will Amazon take an investment? Will Google take an investment? What’s left?
  8. B&N Stores. B&N has very good retail footprint. It’s safe to assume Nook Media will enjoy a special relationship with the 700+ B&N Retail Stores and the 660+ B&N College Bookstores.

We are going to see a LOT more of this.

We have the Big Six Publishers merging with each other. We have Publishers and Companies investing in Nook and colluding with Apple.

It might be 4 years too late. But Publishers are finally waking up to the fact that Amazon wants the ENTIRE cake for itself. Perhaps it’s not too late. Perhaps there’s still time to prevent the New Gatekeeper from destroying the Old Gatekeepers.

Quidditch World Cup – District 12 vs. Hogwarts

On Friday, Amazon.com announced that the Hunger Games trilogy has eclipsed the Harry Potter books, taking into consideration print and Kindle book sales combined, to become the best selling series at their online store.

The Boy Who Lived vs. The Girl Who Volunteered

Kate Sullivan from the NY Daily News stated in her article that “the numbers include print and eBook sales, making this achievement all the more notable, as it has taken [Suzanne] Collins’ series only four years and three books to achieve land in the first spot for Amazon, as opposed to fifteen years and seven books for Rowling’s the Boy Who Lived.”

“Since debuting in 2008, Katniss Everdeen and the Hunger Games have taken the world by storm, much as Harry Potter did a decade before,” said Sara Nelson, the editorial director of books and Kindle at Amazon, which is the largest bookseller in the United States.

“Interestingly, this series is only three books versus Harry Potter’s seven, and to achieve this result in just four years is a great testament to both the popularity of the work and, we think, the growth in reading digitally during that time,” she said.

The Truth, The Whole Truth and Nothing But the Truth – Or So I Think

To be fair, the Harry Potter series has only been available as e-books for the last 5 months. Amazon’s assessment should have been based on sales excluding e-book sales. Especially when you consider that Amazon doesn’t even sell the Potter e-books. To acquire them you are redirected to Pottermore, JK Rowling’s website, to purchase the e-books. The exclusion of e-book sales would have provided a more effective evaluation on the comparative sales and placement of these two series.

What Do You Mean You Haven’t Read Them?

Both series are wonderful, exciting and suspenseful. If you haven’t read these, you really should. If you really don’t want too, consider gifting them to someone you love. A friend of mine gifted me with the Harry Potter series and I will be forever grateful to her.

The Hunger Games Trilogy by Suzanne Collins. Price: $18.99.

The Complete Harry Potter Collection by J.K. Rowling. Price: $57.54.

Resources:
Amazon Press Release
NYDailyNews.com

Kindle Phone? Amazon Developing Kindle Smartphone

Reports that originally surfaced last year are starting to take shape regarding Amazon’s development of a smartphone (Kindle Phone perhaps? Bonfire? Firecracker? Glowworm?) that will be offered to the public this coming November — just in time for Christmas sales. Amazon is reportedly working with Foxconn International, a Chinese mobile phone producer, to develop this Kindle phone. Rumors suggest that Kindle Phone will, in all probability, use Amazon’s own version of the Android OS.

Kindle Phone and Patents

Amazon needs to obtain the correct patents covering wireless technology to build a defensible device. They also need to avoid both time-consuming and costly lawsuits alleging illegal use of technology. To do this, Amazon recently hired Matt Gordon, the former senior director of acquisitions at Intellectual Ventures Management LLC. A quick look at Matt Gordon’s Linked In profile shows his current position as “General Manager, Patent Acquisitions and Investments at Amazon”.

While it might seem to be a big jump (going from Kindle e-readers to Kindle smartphones), closer inspection shows that the gap isn’t as wide as one would think. Amazon already has the foundations in place to make money from a smartphone. It has its own re-skinned version of the Android OS, an app store and marketplaces brimming with content.

Most importantly, it has brand loyalty amongst its consumers. Amazon customers trust Amazon.

Kindle Phone is part of a gradual shift to Amazon devices

Amazon is fairly new to the world of devices, starting with the release of the first Kindle in 2007 and building up to the Kindle Fire last year. Its success (moderate, but success nonetheless) in the tablet market has been the result of it getting in early and keeping prices low. The revenue Amazon expects to generate from content sales, including eBooks and movies and music, allows it to price Kindle Fire and Kindle lower than it otherwise would/could. Add on the sales Kindle owners and Kindle Fire owners make at Amazon.com (kitchen sink, meet big screen television) and we have quite a good setup for Amazon.

Of course, with a Kindle smartphone Amazon would be dealing with beasts of an entirely different kind. Wireless Carriers. While Amazon has been selling smartphones through the Amazon Wireless site, actually dealing with wireless carriers and getting them to push its own Kindle Phone will be an entirely different proposition.

The question is – Will Amazon go the traditional route? Will it perhaps become a Carrier itself? Will it purchase wireless service from the major carriers and bundle it with Kindle Phones like it currently does with the eInk Kindles?

Kindle Phone will arrive in a very saturated market

The market is already saturated with successful smartphone competitors. In the first quarter of 2012, Samsung and Apple together shipped out 77.3 million smartphones worldwide, according to the research firm International Data Corporation (IDC). Predictions from IDC last month revealed that cell phone shipments will reach 1.8 billion this year.

Is there room for Amazon? It seems like David taking on Goliath. David seems to be prepared — but it’s one heck of a battle.

While IDC says that smartphone growth will continue at a substantial rate for the next 5 years, they also see that 2012 will be the year that begins a major shift away from the Android and iOS and towards Microsoft‘s up and coming Windows Phone platform.

It will be interesting to watch the unveiling of the new Amazon Kindle Smartphone. I am also very curious as to what they will call the Kindle phone. Perhaps the Amazonian?

End note: Drew Herdener, a spokesman for Amazon, was asked about the Kindle Phone. He got visibly upset, gestured to the heavens, and claimed that no such thing existed. Then his phone rang, he pulled out his 4.7″ Kindle Phone, and he told his wife he’d be home for dinner as soon as these reporters stop asking him crazy questions.

Sources:
CNN on Kindle Phone Rumors

Bloomberr on Kindle Phone

BGR on Phone Sales Projections

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