A couple of pieces of news (well, OK, rumours perhaps) that indicate that Amazon is thinking of competing with both Apple and Google. In the latter case, perhaps twice. Quite how well it will do we don't know but if they do do well then they might make quite a dent in the business models of both firms.
Amazon made a splash during October’s Advertising Week while previewing its advertising business, but that was merely a ripple compared to the waves the e-commerce behemoth has coming for 2013 and beyond.
Over the past year, Amazon has built a proprietary real-time bidding platform that plugs into exchanges and supply-side platforms, including Google’s AdX and PubMatic. This platform lets the company retarget its users across the Web based on their browsing and purchase habits on Amazon’s owned-and-operated properties. That could be a game changer. Given Amazon's recommendation engine and general deal-closing prowess, the company's data should have advertisers drooling.
The point here being that we've got to think about Google as it actually is, not as we perceive it to be. The perception is of course that it's a great search engine, cool cars without drivers, all those maps, the Android software and so on. The truth is that it's and advertising company. That's where the money, that cash which is the lifeblood of every business, comes from.
Someone else moving into that online advertising space has the possibility of doing more damage to Google than anyone else. And more than any move into any other segment of Google's business might provide. Will Amazon be successful? Who knows: but they're not known for giving up on a project. Nor do they seem to worry about margin much while they establish a new business area.
The other little story out there is about a rumoured Amazon phone:
Rumors about an Amazon smartphone heated up this summer, and the latest whispers -- from Taiwan Economic News -- say the e-retailer is turning to Foxconn to construct its handset. Amazon is said to have put in a five-million-unit order with the company,
Here the competition is only marginally with Google. In the same way that the Kindle Fire competes with the Nexus 7 for example. For it'll be running a version of Android sure enough. But there's an implication for Apple's business model here too. The rumoured price range is $100-$200. Which isn't far off the build cost of a high end phone: something competitive with Apple's offerings (although without the iOS ecosystem of course). And we also know that Amazon doiesn't really worry about hardware margins. Those Kindles are sold at something around build cost for example.
Apple, as we know, makes quite wonderful hardware margins: having a big player, someone like Amazon, coming out with the intention of selling hardware at no or minimal mark up is going to be a strong challenge to that business model.
It's going to be interesting to see how this all works out.
