At Amazon’s launch of new Kindle reader and tablet models last week, founder Jeff Bezos made interesting remarks about the way in which the firm has opted to eat some upfront costs and subsidize its hardware in order to establish a long-term customer relationship.
According to Seattle’s, he said:
We don’t need you to be on the upgrade treadmill. If we made our money when people bought the device, we’d be rolling out programs left and right to try to get you to upgrade. In fact, we’re happy that people are still using Kindle Ones that are five years old. They’re still reading on them, and every time they buy a book, that’s good for us. That’s alignment.
If we made a lot of money when we sell the device — if we allowed ourselves to make a lot of money when we sell the device, we’d be tempted to use that Kindle bookstore to make sure you only buy our devices instead of working so hard as our teams do on interoperability.
GeekWire and others took this as a swipe at Apple, and I think that was his intent. But it falls flat. Apple has managed the hat trick of having high margins on its devices, like the iPad, while also having a long-term investment in the customer’s happiness, as Bezos professes. (For more on the new devices, read “,” 7 September 2012.)
To the first point, the upgrade treadmill, that hits home much more closely to the Android ecosystem, which has multiple manufacturers producing new models seemingly monthly, even though the new models often run older versions of Android that lack marquee features, and older models are often incapable of being upgraded after even a single version release.
Apple, by contrast, has a three-to-five-year window of support for older equipment (iCloud compatibility aside!). I upgraded a 2007 Mac Pro to Lion last year, and Apple still sells the iPhone 3GS with iOS 5, and notes (at least at this writing) that iOS 6 will also run on the iPhone 3GS. (For a detailed look at the lifespan of Macs and iOS devices, see “,” 2 November 2011.)
I wrote extensively about the perception that Apple wants you to buy the newest “shiny” thing and the reality that it doesn’t necessarily in “” (29 March 2012).
Bezos’s second point seems much more directed at Apple, insinuating that the firm’s closed hardware ecosystem for media is distinctly different from Amazon’s “open” one which provides both its hardware and software that runs on multiple platforms, including Mac OS X and iOS.
Bezos is being a bit disingenuous here. If he could have made Kindle a dominant platform before the iPad appeared, I don’t believe we’d see this broad availability of the Kindle app as he describes. And one could argue that while Apple sells media into its own closed system for iOS and Mac OS X, the fact that third-party apps can also offer streaming content (Netflix, Amazon, Hulu, and others), and even be embedded into the Apple TV might argue against precisely Bezos’s point. It’s also worth noting that none of the Kindle models will read standard EPUB-formatted ebooks without independent software (see “,” 22 April 2012), and not all models can even read PDF files.
When I want to watch video on an iPad or a Mac, I have several choices. If I have a Netflix subscription, I may be able to stream it if Netflix carries the film, or I can rent or buy the movie from Amazon and stream it, or rent it or buy it from Apple and stream or download it, to name just a few. (I can also use Netflix and Hulu on a Kindle Fire, by the way.)
I don’t think Bezos’s remarks precisely hit home, but he has at least one valid point. The key element for me is choice in two forms (excluding music, which is now sold without protections):
Am I restricted from buying a particular kind of media to the company that makes the hardware or software on which I want to consume the media? Yes for Amazon’s non-Fire Kindles but no for the Kindle Fire (with some effort), and no to both Apple and Amazon for everything else. Provisos: You can email and load via USB certain unprotected ebook file formats, notably Mobipocket, onto any Kindle, and with an appropriate sideloaded app, you can read nearly any DRM-free ebook on a Kindle Fire. Apple allows competitive bookstores on the iPad, as well as unprotected formats, though restricts commercial titles created with iBooks Author to the iBookstore.
Once I’ve purchased media from a company that also makes hardware, may I play back that media only on devices made by the firm? No for Amazon, which has Kindle book and video streaming apps; no for Apple on the desktop with video, as I can use iTunes on a Mac or Windows for movie playback, but Apple allows books from the iBookstore to be read only in iOS, which is the only mobile platform supported for video sync or streaming.
I firmly believe that Apple should make its DRM-protected video and books interoperable across other hardware readers and software platforms, either by providing apps or negotiating the lifting of encryption as with music files, given that the DRM has little to no value in preventing piracy any longer, only in blocking legitimate uses. The question is if Apple wants to remove DRM, given that its primary function in today’s world is to lock customers into Apple’s platform.
Bezos is right: lock-in is bad, and while his system does not lock users into specific devices, it absolutely does lock you into the Amazon hardware and software ecosystem, thanks once again to DRM.
So neither company is being entirely open here, and while the book and movie industries may need to change their attitudes toward DRM first, it seems clear that the winners are Amazon and Apple, both of whom get to use DRM to lock users into their platforms. On the losing side are the publishers and movie studios, who are ceding a vast amount of control over their businesses to Apple and Amazon, and we users, given that our options for purchasing and interacting with media are restricted to a handful of companies.