Will Amazon add Google Play Store to Kindle Fire?

B&N has really shaken things up by adding Google Play to Nook HD and HD+. Have been reading comments on articles and forums. It’s interesting to see the number of people who –

  1. Now think Nook HD is the best pure Android Tablet. This includes some big tech bloggers like the one at Verge who ‘wanted to make sweet love to iPhone 5’ (Yes, he actually wrote that).
  2. Have now added Nook HD and HD+ to their list of ‘options to consider for their next tablet’.
  3. Have decided to add a HD or HD+ to their set of Tablets and/or devices.

A LOT of people suddenly are claiming that they will buy and/or consider buying a Nook HD.

Of course, all these data points come with a giant question mark. The people most likely to appreciate Google Play Store on a Nook HD, also happen to be the ones most likely to read tech blogs and comment on them.

It is, however, not out of the realm of possibility that B&N has expanded its market by 50% to 100% with one move. If there are a bunch of tech journalists (and we do use the word journalist lightly) now applauding Nook HD as the ‘Best Android Tablet’ then that will translate into sales sooner or later.

All of this presents quite a big problem for Amazon.

The Tablet Decision Earlier Versus the Tablet Decision Now

Before B&N added Play Store, the Tablet Buying Decision was (think Holiday Season 2012) –

  1. iPad or Something Else. 50% to 60% chose the iPad.
  2. If Something Else, then Google Nexus 7 or Kindle Fire or Samsung or Nook.
  3. If Google Play is a factor, then Nexus 7 or Samsung. Neither of which are super impressive (You have to factor out the ‘OMG it’s pure Google’ factor which makes a lot of people assume Nexus 7 is better than it is). That left two impressive and impressively cheap Tablets – Kindle Fire HD and Nook HD.
  4. Kindle Fire HD had a much better ecosystem than Nook HD. This meant it became the BEST Android based tablet for anyone who didn’t absolutely have to have Google Play Store. It became a strong #1 choice overall because NONE of the Android Based Tablets with Google Play Store were as good as Kindle Fire (Nexus 7 does not really compare with Kindle Fire HD).
  5. All of this meant that Kindle Fire HD was the ‘Best non-iPad Tablet’ for enough people. This led to great sales for Kindle Fire HD.

Now that B&N has added the Play Store to Nook HD and Nook HD+, the Tablet Buying Decision becomes –

  1. iPad or Something Else. 45% to 50% will choose iPad.
  2. If Something Else, then Nexus 7 or Nook or Kindle Fire or Samsung.
  3. If Google Play is a factor, then Nook HD is now the BEST Android Tablet with Google Play. If you detach any personal feelings you might have about the companies, it’s a very clear decision.
  4. If Google Play is not a factor, then Nook HD compares very favorably to Kindle Fire HD because it has fixed its ecosystem disadvantage. You get Nook Store, Google Play Store, and apps for Kindle and Kobo. Nook HD’s Ecosystem is now a major strength instead of a major weakness.
  5. This means that Nook HD is now ‘Best non-iPad Tablet’ often enough to lead to solid, solid sales. It also means that Kindle Fire is no longer the most frequent choice for ‘Best non-iPad Tablet’.

Think of it as – The automatic #2 choice in the Tablet Market is now Nook HD and not Kindle Fire HD. For the majority of people.

Will this really impact Kindle Fire HD and Amazon


Firstly, just a 45% to 60% share of the Tablet pie is available for Android Tablets. Rest goes to iPad.

Secondly, that non-iPad Tablet share of the pie is split between LOTS of Tablets. It’s also being eaten into by Windows 8 Tablets.

Thirdly, only the #1 and #2 Android Tablets (#2 and #3 overall Tablets) are going to do well enough to lead to future profits and developer mind share and a consistent stream of apps.

Kindle Fire was the best Android Tablet because of three main reasons – Solid device, Amazon brand and trust, Solid ecosystem.

Nook HD was losing to Kindle Fire because of – Weak Software, Weak Ecosystem, no ‘Nook Tablet’ brand or association.

By adding Google Play, it fixes two things – Firstly, it has a Very Strong Ecosystem now. Secondly, the Press love it and will create a ‘Nook is the best Android Tablet’ narrative.

Keep in mind that a lot of Android Tablet promotion is tied to the ‘open, do no evil, sharing is caring’ party line. Android people just LOVE the magical ‘openness’ of Android. B&N becoming ‘open’ means Nook HD is suddenly in line with the aspirations and dreams and identity of Android people.

It’s a pretty big deal. You can read the posts and see that people are so happy that B&N has ‘seen the light of openness’. It’s not just in the comments. Lots of the articles themselves have this rather interesting ‘finally, you have seen the light, my dear lost B&N’ quality about them.

People love someone who has ‘seen the light’ more than those who never strayed from the path of righteousness

Google Nexus 7 now becomes boring. Where’s the story and magic in a device that was always open?

On the other hand, Nook HD and HD+ present the press and Android people with the perfect opportunity – Look, it really does help to be open and good and do no evil. B&N Nook was closed and was dying. It then embraced openness and it prospered.

The Press are absolutely going to pump up Nook HD and HD+. Android people are 100% going to buy Nook devices.

Nook HD and HD+ succeeding now becomes part of the Android Dream.

What does that mean?

Android loving press and people will put their weight behind Nook HD and HD+.

Nook sales will increase at least 50% just from Android People and from gushing Press Coverage. Instead of talking about the ‘sluggish software’ (which is only an issue on closed tablets), the Press will talk about the Strong and Open Ecosystem.

Sales might even double. Plus the normal every day user will hear ‘Nook HD is Best Android Tablet’ so often, that sales to everyday users might increase too.

There wasn’t really a beautiful hardware Android Tablet. Nexus 7 was good but not beautiful. Now there is. And it’s OPEN.

B&N’s Nook HD and HD+ now have 710,000 Apps Versus Kindle Fire’s 50,000 to 60,000 Apps

Here’s the actual break up (assumptions) –

  1. Tablet optimized Apps – 10K from Nook Store and 20K from Play Store. That’s 30K for Nook HD. Kindle Fire HD – 15K out of the 50K apps are tablet optimized.
  2. ‘Work somewhat decently on Tablets’ Apps – 10K from Nook Store and 50K from Play Store. That’s 60K for Nook HD. Kindle Fire HD – 25K out of the 50K.
  3. Total Apps (whether or not they work) – 710,000 for Nook HD. 60,000 for Kindle Fire HD.

Guess which comparison the Press will fixate on?

Keep in mind that Nook HD is now the prodigal son who has returned home. The Press will magically forget to mention that only 30,000 out of those 710,000 Apps are actually optimized to work well on Android Tablets.

How long will it take Kindle Fire Store to get from 60,000 total Apps to 710,000 total Apps. Well, it might never happen. There might never be 710,000 apps in the Kindle Fire HD store. If Kindle Fire HD Store actually hits 710,000 total apps it might take 3 to 4 years. Android Store will have 2 million Apps by then. It’s really, really hard for Amazon to catch up.

Amazon has well and truly lost the ‘We have more Apps that will never work on your Tablet’ battle. The Press will never mention that it’s actually 15,000 Tablet optimized Apps on Kindle Fire HD Versus 30,000 Tablet Optimized Apps on Nook HD. It’ll always be 50,000 Versus 710,000.

Anyone who wants Play Store, or for whom Apps are a big deal – Nook HD wins almost every time over Kindle Fire HD.

Amazon’s Kindle Fire HD is in a LOT of trouble

Notice all the Kindle Fire HD 8.9″ sales? Notice the price drop of the Kindle Fire HD? Notice how Amazon is, for the first time ever, discounting Kindle devices within 3-4 months of launch?

Take a look – Amazing Shrinking Price of Kindle Fire HD 8.9″.

That suggests Kindle Fire HD and Kindle Fire HD 8.9″ sales were already under pressure from iPad Mini (and to an extent from Nexus 7).

Nook HD just went from ‘beautiful device with buggy software and tiny ecosystem’ to ‘beautiful device with massive ecosystem and buggy software’. It’s become very compelling.

There will now be three devices cutting into Kindle sales – iPad Mini, Nook HD, Nexus 7. It’s also worth nothing that Nook HD has WAY more retail distribution than any other Android Tablet. It’s also sold in WalMart and Target while Kindle Fire HD is not.

B&N has put its own ebook and movie revenues streams in danger. However, it has ensured good sales for Nook HD and HD+. At least until a markedly better Android Tablet comes along. It has also put Amazon’s Kindle Fire HD in a lot of trouble.

Will Amazon add Google Play Store to Kindle Fire?

Well, it doesn’t really have an option. It either adds Google Play Store to Kindle Fire or it loses a significant amount of market share.

  1. If Amazon doesn’t add Google Play Store then it’ll slowly and steadily lose market share. This might not seem like a big deal, at first. However, over time, this would mean less developers want to make apps for Kindle Fire (they would all flock to iPad and Windows and Android).
  2. We now have iPad which has the most and the best apps, Android which has the 2nd most apps (though not really very good ones), and Windows 8 which is adding apps at a ridiculously high pace (10K per month). After all of those, we have Kindle Fire which has a low number of apps and the quality isn’t as good as iPad. That means Kindle Fire becomes, in effect, the Tablet with the WORST choice of Apps. It doesn’t make up things in Quality either – because most of the apps are apps ported over from Android.
  3. Amazon will have to open up Kindle Fire HD to the Google Play Store. Sooner or later.

It can’t continue without Google Play Store unless it’s willing to lose market share. It could avoid Google Play Store while it had the best ecosystem out of the two non-iPad Tablets that were very good. But now B&N has that distinction.

Amazon will be very, very, very reluctant to give up its ecosystem and customers to Google. That means it’ll wait for one more Holiday Season. Which means it will suffer some market share losses. Depending on how aggressive Google is with Nexus 7 pricing, and depending on how aggressive B&N is with Nook HD pricing, Kindle Fire HD might lose a lot of market share.

What will Amazon do?

It’s hard to say. There are 4 major paths forward –

  1. Drop the prices of Kindle Fire HD and Kindle Fire HD 8.9″.
  2. Ignore lost customers and focus on customers loyal to Amazon.
  3. Add Google Play Store.
  4. Ramp up the rate at which Apps are added to its store.

The 2nd and 4th are very painful to do. That leaves just the 1st and 3rd.

Note: The 2nd would not be painful for Apple. For a company like Amazon that wants and needs large numbers of customers, it is very painful to lose potential ‘socks & sink buying’ customers.

My prediction: Amazon first tries a price drop and a ramp-up in the number of apps added. After 6-9 months it realizes the futility of it and adds Google Play Store. Which would mean that Google’s Android OS gets a really good shot at becoming the dominant Tablet OS and staying that way for a long time.

Kindle vs Ad Kindle vs Groupon Kindle

The recent release of Kindle with Special Offers seems to suggest Amazon is considering having a family of Kindles comprised of three distinct types of members –

  1. Kindles in a pure and unadulterated form.
  2. Groupon Kindles. The basic Kindles transformed into a means of offering deals on everything Amazon sells (and on lots of things it doesn’t).
  3. Ad Kindles (thanks to Mickery for the name AdKindle – it’s perfect). The basic Kindles transformed into an advertising vessel.

If you consider Amazon’s long-term approach to everything, it’s pretty obvious that Kindle with Special Offers isn’t where the journey ends – it’s just the first step.

Why would Amazon want to add deals and/or ads to the Kindle?

For lots of reasons –

  1. Amazon can cut down on price and increase sales. While the $114 AdKindle isn’t impressing too many people, a $99 version would have a big impact.
  2. There are people who want Groupon type offers. Tens of millions of people follow deal sites like SlickDeals and subscribe to Groupon and Living Social. Quite a few of them would want a deal delivering Kindle – even ones who don’t read very much.
  3. Rather than challenge other niches like phones and tablets head-on, it makes a lot of sense to expand the Kindle’s functionality and market gradually.
  4. Amazon is making a concerted push in advertising. It’s been showing ads on Amazon.com and it’s probably begun thinking of the Kindle as a means to add to the advertising push.
  5. Groupon and Living Social are threats to Amazon in the long term. They are the #1 and #2 destination for group buying deals on ‘events/experiences’ – they could easily expand into deals of all sorts. Imagine Groupon having deals on computers and books. It’s not very far-fetched.
  6. Google is bound to bring advertising to books. Perhaps Amazon wants to do it before Google does. Perhaps Amazon is just beefing up its advertising in books patent defence by introducing a product that uses ads to an extent.
  7. There might be a very big market for people who want to use Kindle as a shopping device for everything.
  8. Perhaps ebooks going to $1 (or even zero) is looking like a strong possibility. Amazon might need to figure out a way to make profits from the Kindle in other ways.
  9. Amazon might have hit a wall in its attempts to increase Kindle sales (or perhaps it expects to). If so, then the only way to further increase sales would be to expand what the Kindle can be used for.

There are actually a lot of very good reasons for adding in Groupon style deals and iAds style advertisements.

It’s very interesting that Amazon is going about it in such an incremental fashion – All it is, is a minor software upgrade.

Economies of Scale

Amazon has brought the Kindle price down to $139 (for the Kindle WiFi). The next big milestone is $99.

How does it hit $99 quicker? One option is Kindle with Special Offers.

What does it do after hitting $99 (to expand further)? One option is a Groupon Kindle that offers deals in addition to ebooks.

To develop eInk and Kindle further Amazon needs money. To get money it needs lots of sales. To get sales it needs to offer lots of value for money and low prices. To lower prices and increase value for money Amazon needs a better Kindle. It’s a bit of a cyclical problem. One way out is to sell AdKindles and Groupon Kindles.

Amazon is stuck – It needs to compete against devices like phones and tablets that are evolving very quickly. It doesn’t yet have the economies of scale to do so – So, it has to figure out a way to get similar economies of scale. Increasing Kindle sales is the only option.

Why would Amazon want to create a Groupon Kindle?

Because it sells everything.

Amazon always talks about how people buy a lot more books from Amazon once they own a Kindle. It never mentions another possibility – That Kindle owners buy more ‘things that are not books or ebooks’ from Amazon than they used to.

The last thing it wants is for WalMart and brick and mortar retailers to know that it’s found the next big magical step in customer loyalty and increased sales.

It probably has.

Kindle with Special Offers is a tentative step. Trying to get one step closer without anyone realizing what this is really about. Once Amazon has gotten a Kindle into a customer’s hands, and gotten that customer onto Amazon Prime, it’s game over – other companies can’t touch that customer 90% of the time.

Its enemies are probably using lobbyists to attack Amazon via the sales tax movement (just conjecture). Meanwhile, Amazon is building up two channels/advantages (Kindle and Prime) that will more than make up for the lost sales tax advantage.

Why would Amazon want to create an AdKindle?

The signs are clear that ebooks are migrating towards very low prices. Water for Elephants is at #1 and it’s priced at $4.17. There are lots of $1 indie author novels, and quite a few sub-$5 published author novels, in the Top 100. In just a few years we’ve gone from $5 books being considered deals to $1 books being deals.

All along, the premise has been that low-priced Kindles don’t make much profit but ebooks do. What happens if ebooks drop in price to $1 and $3?

Perhaps an AdKindle is a hedge. A device for a world where eReaders are $99 and ebooks are $0.99. It might not be a very far-fetched scenario given the speed with which ebooks are spreading and the rate at which ebook prices are dropping.

The other possibility is that Amazon knows, and it should be pretty obvious, that Google will burn up yet another market to protect search. Google could care less whether ebooks are $0 or $1 or $10 – As long as it owns one more source of content and can channel those readers into Google search and show them ads. The Book Settlement was struck down so one of the two golden pillars is gone – the other is ads in ebooks.

Amazon can’t fight ad-sponsored books with purity – because there will always be a non-trivial number of readers willing to bear ads for a 50% discount. Amazon has to be prepared to sell actual ebooks with ads. Which means that AdKindle and Kindle with Special Offers are necessary releases – a pre-emptive defence against the Destroyer of Profitable Markets.

Where does that leave us readers?

In an unsettling place. Amazon might not have very much choice. In the end it will have no option but to offer –

  1. Regular Books for $9.99 and $4.99.
  2. Ad-sponsored Books for $4.99 and $1.99.

AdKindles and Groupon Kindles are a given. AdKindles to preserve Amazon’s place in selling books and Groupon Kindles to preserve Amazon’s place in retail.

Hopefully, there will always be pure Kindles and pure books available.

Is Google building an eReader? Readying ad-supported books?

The Kindle might be getting a brand new eReader rival.

It seems that Google has bought out a company called eBook Technologies Incorporated. The acquisition is notable for a few reasons –

  1. ETI has two LCD based eReaders and 1 eInk based eReader – the latter looked surprisingly like the BeBook. This might mean that Google is looking at building an eReader. It makes sense to build on one of ETI’s eReaders, instead of starting from scratch.
  2. ETI has 8 very important eReader patents including ones covering advertising in books and secure ebook delivery. These were mostly granted on December 16th, 2010. This might mean that Google already has an eReader ready, and just wants to protect itself from patent lawsuits. Given that Amazon and B&N already have several patents, and that companies like Discovery Communications also have eReader related patents, it makes sense to buy a portfolio of patents that would keep a Google eReader safe from patent lawsuits.
  3. ETI has technology for an eBook platform which includes an ebook publishing and distribution system. This is something Google would definitely need if it were to get into eReaders. In fact, it would need this even if it sticks with just ebooks.

Here are some links of interest –

  1. Cache site for the ETI-Proto – ETI’s 6″ eInk eReader
  2. Cache site for ETI Product Overview – ETI’s eReaders, Online Bookshelf, eBookstore, and Tools
  3. TechCrunch’s Coverage – Some intelligent comments on a rather amateurish post.

However, the real question is – Why did Google buy eBook Technologies Incorporated?

Is Google Building an eReader? Will it build on top of ETI-Proto?

The first possibility is that Google decided that instead of spending $1 billion on B&N’s Nook division, or Sony’s Sony Reader division, it makes more sense to spend $50 million on a smaller company like ETI or Cool-er.

Then it could take the devices ETI has, pick one or more, and build a Google eReader using the technology. As a nice bonus, it gets a bunch of eReader patents that ensure it can release the new Google Reader without any problems.

Will Google go with an eInk eReader or a LCD eReader?

Here are the three ETI eReaders Google could build on (please note that most of this information is from 2007, and is thus pretty outdated) –

  1. ETI-Proto. It has a 6″ eInk screen, a single button, and seems to be a BeBook clone.
  2. ETI-1. It has a back-lit, 8.2 inch, 16 bit color LCD touchscreen with VGA resolution. It has brightness and contrast controls. It also has an internal 56K modem, an ethernet port,  a memory card slot, a Motorola processor, and a stylus.
  3. ETI-2. It has a back-lit, 5.5 inch, 4-bit grayscale LCD touch screen with half-VGA resolution. It has page turn buttons on the front left side. It has an internal 33.6K modem, a USB slot, a stylus, and a Cirrus Logic processor.

It seems ETI had an entire range of eReaders – eInk, grayscale LCD, color LCD. The eReaders also seem pretty decent given these specifications are from 2007.

Given that it’s Google, it’s likely that it will use this technology to build a reading tablet, and not an eReader.

How likely is it that Google is building an eReader or a Reading Tablet?

Very likely.

Google built a phone secretly. Then it built a netbook/laptop secretly. There’s little doubt it’ll build an eReader sooner or later. It has search traffic, it has books, it has public domain books, it has an ebook store, it has cloud infrastructure – the only thing missing is an eReader.

In fact, it’s quite possible that Google has an eReader almost ready – that it’s buying ETI simply for eReader patents.

Is Google buying patents to protect an almost-ready Google eReader? To sell advertising supported books ?

Let’s take a look at the impressive eReader patents ETI has. Thanks to Dave at TechCrunch for the clues.

Patent for advertising in Books

[Advertising in Books] System and Method for providing Sub-Publication Content in an Electronic Device – A patent about showing ‘master content’ and then showing sub-content that might be a book review, news, sports news, classifieds, book-related, and so forth. It includes advertisements as sub-content. This might be the BIG patent. Amazon has a patent for in-book advertising. Now Google just got a patent for in-book advertising.

You can also read the entire eReader patent.

Patent for Secure eBook delivery and offline eBook shopping

From the Management page at ETI’s website we get this –

 John is co-inventor and patent holder of a system to provide secure electronic book delivery. He is also a co-inventor of a patent-pending system to provide offline catalog shopping on an electronic book.

Those are two very important patents. Can’t find the patent numbers. Please do leave a comment if you can find them.

Flexible Electronic Device

Update: This is actually Skiff.

Patent Application Number – 20100315399. This is a patent that covers a flexible electronic device and a method of manufacture. This patent specifically quotes the Kindle and Plastic Logic’s Que –

In many cases, electronic devices have replaced traditional, non-electronic devices.

For example, for many, electronic reading devices have replaced traditional paper books. An example of such a device is Amazon’s Kindle wireless reading device, which allows a user to download an electronic book, and then read that book using the device. Another example of a similar product is the Plastic Logic Reader. These devices, while providing functionality for the user, still resemble small, inflexible computers.

It’s interesting that Skiff has patents for a flexible eReader. Thought that News Corp had closed it down. This might be a pretty valuable patent. Skiff has at least two more eReader related patents –

  1. [This is Skiff] Electronic Display Controller – System for controlling an electronic display, such as an electrophoretic display.
  2. [This is Skiff] System and Method for Providing Spatial and Temporal Content in an Electronic Device. Includes Advertising which makes it a hugely important patent.

It’d be worth investigating what other patents Skiff has. Perhaps in a later post.

Additional Patents

ETI also holds a few additional patents –

  1. Electronic Paper Display Whitespace Utilization – A patent about how ePaper content formatting is presented. It literally talks about figuring out how best to display content on an eReader, and which content to display, given a certain amount of available space left. It’s a bit ridiculous there’s a patent for how words are shown on a page.
  2. System and Method for delivering Publication Content to Reader Devices using Mixed Mode Transmission – A patent that talks about multi-casting content to multiple eReaders. It also talks about using mixed mode transmission.

It’s interesting that nearly all of ETI’s patents mention devices using electronic paper displays. Why would it focus so much on eInk when it had just 1 eInk based eReader?

Is Google buying ETI’s Platform and Distribution Technology?

After looking at the patents ETI has, this possibility seems really unlikely. However, let’s see if there’s something worth acquiring.

ETI has a platform consisting of four parts –

  1. eReaders. Which we’ve looked at above.
  2. Online Bookshelf. This is ETI’s equivalent of WhisperNet/the Cloud. They talk about ‘the ability to purchase and access ebooks anywhere, and at any time’ – which sounds identical to the Kindle’s ‘Buy a Book Once. Read it Everywhere’ sales pitch.
  3. eBookstore. The equivalent of Kindle Store. ETI mentions relationships with over 24 major publishers. It also talks about accessing the store through an eReader, a browser, an offline catalog, or through an alternate web retailer.
  4. Content Conversion and Publication Tools. Apparently, ETI’s founders were founding members of the International Digital Publishing Forum, which created ePub. ETI has a tool, eBook Publisher, which converts books into ePub format. It can process text, ePub, OEBPS, Html, Word, and Powerpoint files. ETI also has a tool, Auto Publisher, which performs pagination, compression, and encryption of ebooks.

It’s clear that ETI’s platform, and its distribution technology and tools, might be pretty valuable too. ETI’s President is on the IPDF board and helps set direction for ePub – which definitely helps since ‘openness’ and ePub are going to be used as weapons in the eReader Wars.

Is Google buying itself an eReader Development Team?

ETI’s management team –

  1. John Rivlin, CEO, was the VP of Software Systems at Softbook Press. SoftBook Press released one of the first eReaders in 1998 – the SoftBook. This company was acquired by GemStar, and he was then responsible for design, development, and operations of the Gemstar eBook server platform.
  2. Garth Conboy, President, was the VP of Software Engineering at Softbook Press. At Gemstar he was the GM for the Gemstar eBook Group which was a combination of SoftBook Press and the company behind the RocketBook.

More details at the cached page for ETI’s Management Team.

By acquiring ETI Inc. Google instantly gets some of the people with the most experience in eReaders and eBooks.

Closing Thoughts

Google acquired – eReader technology, some extremely valuable patents, a distribution system and platform, two people who know an awful lot about eReaders. It’s a pretty good acquisition.

There are two very likely consequences – a Google eReader will arrive in 2011, Google will try advertising-supported books in 2011 or early 2012.