Amazon and Apple’s astonishing attempts to do everything and be everything

Reading the headlines today, and adding in various data points, leads to some remarkable inferences about what Amazon and Apple plan on doing.

A Big Day for Reading the Tea Leaves about Amazon and Apple’s plans

First, let’s start with the big news coming out today.

  1. Amazon is rumored to be in talks to buy Texas Instruments’ Smartphone and Tablet Chip Making Operations. Apparently, Amazon has decided that it might as well make the chips for its current Kindle Fires and for its future Kindle Phones. Note: Apple has also gotten into the business of designing its own chips in the last few years.
  2. Apple seems likely to cut off its ties with Samsung (Samsung makes the chips that go into iPhones). Apple has been designing its own chips the last few years and is now rumored to be moving manufacture of its chips to other chip manufacturers.
  3. Apple hired an ex-Amazon and ex-Altavista search technology executive to run Siri. Given that Apple recently ditched Google Maps, and given that Apple has bought some search technology in the last few years, it’s a safe bet to assume that Apple intends to build its own search engine.
  4. Apple’s iPad Mini is rumored to be priced between $250 and $650 (16 different models).
  5. Microsoft has launched a Xbox music streaming service.

Apparently, the new doctrine for big technology companies is to do everything and be everything to all people and sell everything to all people.

Control Everything, Sell Everything

Apple isn’t content to sell high-end phones and high-end Tablets. It also wants to sell low-end Tablets and make Map Software and build Search Engines.

Amazon isn’t content to sell books and CDs and DVDs. It wants to sell phones and make phones and make chips and produce movies and publish books.

Google isn’t content to be a search engine. It wants Android phones and Android Tablets and Google TV and Google Fiber and driverless Cars and Glasses you can wear to get RoboCop Vision.

Microsoft, even King of Software Microsoft, is suddenly in love with hardware and services. It wants to integrate software and hardware and move into selling services and ecosystems.

It’s really very strange. It’s as if the 5 companies live on the same street and are caught in a never-ending cycle of neighbor envy.

Or … perhaps … this is the new future for technology.

The Controlled Ecosystem as the New Internet

The Internet is amazing. Except that everyone is trained to spend nothing on the Internet. To expect everything for free. The problem is exacerbated by sites like YouTube and Facebook that focus almost completely on getting humongous amounts of low quality user-generated content.

And on top of all that is Google with its Search Engine. Making sure that all the value flows to it. That individual sites and content creators only get crumbs.

In fact, Google has gotten so good at hoodwinking people into -

  1. Thinking that all value is created by Google and not by the people who actually run and create sites and content.
  2. Thinking that it’s OK to share ALL your private information with a company just because it has ‘Do No Evil’ as its marketing logo.
  3. Thinking that all those YouTube and Google Site links showing up first in Google Search results are natural.

That the FTC is just about ready to launch an anti-trust investigation. Not to mention the EU is going to open a Privacy case.

Basically, Google has turned the Internet into a Toll Bridge. And it is slowly using its dominance in Search to promote and build up other businesses (albeit ones that earn little to no profits) – Android, YouTube, GMail, Chrome, Google Docs (the list goes on).

Google is a threat to Every Other Tech Company

Regardless of which big technology company you are, you have to be wary of what Google is doing -

  1. Apple has to worry about Android Phones and Android Tablets.
  2. Amazon has to worry about Google Shopping and Google’s Tolls.
  3. Microsoft has to worry about Chrome, Chrome OS, and Google’s Office competitor software.

In its drive to map out every human being’s synapses and predict how to make money from them, Google is devouring entire profitable industries. It is exchanging profits for information. Betting that that information will be move valuable in the long run. That it will be the key to unlock people’s wallets and minds. It’s willing to give away Android for free to protect search and increase the amount of user information it has. It’s willing to offer its Office Software for free to get more and more companies and people to share their data with it.

Google’s product is people and people’s intent to buy things.

If you’re a company like Microsoft or Apple or Amazon that sells hardware and/or software and/or physical products, then you have to be very worried by companies like Google (and to a lesser extent Facebook) that want to give away hardware and software in return for user information and a Matrix Link to the user.

It’s a completely different business model. To understand users. To get them in via free software and/or cheap products. Then to sell users and their wishes and aspirations to advertisers. Or to use them in other ways.

The only defence against Google is to build your SEPARATE Ecosystem

Apple and Amazon and Microsoft don’t have a choice.

Google has used its dominance in Search to start dominating other areas. It can pretty much shut out or slow down ANY product or technology or company.

Google is letting people have everything for free – news, music, software, everything. Even when it doesn’t own stuff it lets people pirate stuff (with the obligatory ‘report piracy and then we’ll turn it off, after 1 million people have stolen your content’ loophole).

So you can’t win on the Internet.

The only solution is to build your own Ecosystem. Build a safe little Ecosystem of Good Intent, populated by Customers of Good Intent, who don’t mind paying ‘creators’ for their creations. There’s no other solution. Because if Google (or other ‘sharing is caring’ technology companies) are given a free run – they’ll devalue everything to zero. Because their product is customers and if they can get the content they need to ‘procure’ customers for free, why wouldn’t they.

To truly control your ecosystem, you need to control the device too

That brings us to the device.

If you don’t own the device, there’s no effective way to build a safe, protected ecosystem. Google can come in and say – Here’s $100 million. Put us as the default search engine. Then it’s game over.

The Internet is already controlled by the established players like Google. You can’t compete against the Internet.

The only solution is to replace it with your own device and your own ecosystem.

If you need a device, you might as well make it yourself

Apple probably wants to make a device it can sell at a high premium and strengthen its brand value.

Microsoft probably wants to make a device that lets it feature Xbox and Office and Windows.

Amazon probably wants to make a device that is a shopping portal.

If you look at iPhone+iPad, and Microsoft Surface Tablets, and Kindle Fire – That is exactly what is happening.

These companies are making the EXACT PERFECT device that is suited to the type of ecosystems they need, and to the type of content they sell.

Astonishing & Audacious Attempts to Annex All

We’ve gone from a world where Intel made chips and Microsoft made software and HP made computers to a world where companies want to do EVERYTHING themselves.

What is Amazon building?

An ecosystem where a user fires up a Kindle Fire and a Kindle Phone, watches movies produced by Amazon, buys products from Amazon.com, reads books published by Amazon, and goes to sleep in Amazon branded pajamas.

What is Apple building?

An ecosystem where a user goes to a Starbucks and shows off his iPad and then goes to work and works on his iMac and then sits on the bus and plays on his iPhone and then sits in the living room and streams movies to his TV via his Apple TV. The cherry on top – He also buys all content and all his games and apps from iTunes.

What is Microsoft building?

An ecosystem where users use a PC at work and a Surface Pro Tablet at home and listen to music from Xbox music and watch Netflix on their HDTV via their Xbox and buy games on Xbox Live.

A Fragmented World with Multiple Ecosystems/Internets

Companies have a dual motivation -

  1. Get away from the Internet and the dangerous attempts by Google and Facebook and other Internet companies to keep all the value for themselves.
  2. Build their own ecosystems and keep users involved there and capture 100% of the profits from users.

It’s incredibly compelling.

Can you imagine the amount of frustration Amazon must feel when it has to pay Google to put up Ads for EVERY Amazon related search term?

User searches ‘buy book at Amazon’ and unless Amazon pays Google’s Toll, the benevolent Search Engine company will sell the #1 spot to Target or B&N. Please Note: There is a painfully non-obvious, tiny ‘Ad’ at the far right. That helps avoid legal implications. Because without that tiny ‘Ad’ at the top right it would be as obvious to curious humans as it is to Google’s optimization algorithms that most users don’t know the first few links are Ads.

Can you imagine the amount of money Amazon could make if it could get users to buy EVERYTHING from Amazon?

$1 Profit on a toothbrush, 35 cents on a $2 ebook, $27 on that new computer – It all adds up.

If Amazon relies on Google it has to pay $1 and 20 cents and $5 to get those sales (it must pay Google for clicks (i.e. traffic)). If, instead, Amazon builds cool, Tablet replicating, mini Amazon stores – Well, then it has to pay ZERO tolls to Google.

Fundamentally, there’s HUGE motivation for companies to CONTROL EVERYTHING, OWN EVERYTHING, SELL EVERYTHING THEMSELVES.

There’s huge risk, as we’ve seen with apple ditching Google Maps and with failed efforts like Amazon’s A9 search engines.

However, if Microsoft, Amazon and Apple don’t build up their closed ecosystems, then they are guaranteed to get eaten by Google’s ‘Free Lunch for Your Information’ strategy.

Crux

At least one and perhaps all three of Apple, Amazon, Microsoft are going to survive Google’s attempt to shift e-commerce from selling products to customers to selling customers to advertisers.

The only way they will survive is if they build their own Ecosystem. Free of the influence of companies like Google.

For the companies that manage to build their ecosystem, there is an immense benefit – they can gradually capture nearly all of the profits their ecosystem customers generate.

It’ll be interesting to see which of Amazon, Apple, and Microsoft win their race to build self-sufficient, profit-generating ecosystems. It’ll also be interesting to see whether Google’s attempts to use its Search dominance and Search profits to destroy the value in everything else will work.

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