How Jeff Bezos is taking a page from Steve Jobs's playbook in pursuing the Kindle revolution
New York, June 24, 2009 - In the July/August issue of Fast Company, Adam L. Penenberg explores how Jeff Bezos's push into e-books may be putting Amazon on a collision course with Apple. In "The Evolution of Amazon," Penenberg offers insights into a fascinating strategic battle that spans tech firms, publishing houses and even, potentially, the entertainment industry.
Bezos, Amazon's founder and prognosticator-in-chief, often turns to the past to divine the future, and has always programmed evolution as part of the company's intelligent design. The Kindle, Amazon's e-book reader, is seen by Bezos as "the logical evolution of a 500-year-old analog technology, and this frightens those in the $24 billion book publishing industry already skittish about Amazon's growing clout," Penenberg writes.
What's more, he explains, Bezos may be taking a page out of another titan's playbook. "Jeff Bezos is trying to do to book publishers what Steve Jobs of Apple did to the music industry. With its iPod and iTunes store, Apple carved out a largely virgin market so fast that it was able to wrest control of the digital-music distribution system and thus dictate what the record labels could do. With Amazon jamming (its latest earnings were sky-high even as other online retailers are in a state of malaise), Bezos may sense similar opportunity, a moment when he, in true Jobs-like fashion, could colonize this growing niche for the Amazon ecosystem. Should that happen, book publishers would have more to fear than just being squeezed. Amazon could phase them out completely, treating them as the ultimate middlemen orphaned by a new technology.
"But in a plot twist worthy of the latest Dan Brown novel, there's one man who could save them," Penenberg says. "And that man is Steve Jobs." If Apple makes a move into e-books, as some evidence suggests it might, it could "muscle its way in with a full-color multitouch-screen media tablet that not only reads books but also offers video, music, Web surfing, e-mail, and the combined power of the iTunes and Apple App store. The device might even load into a desktop dock that accommodates a full-size keyboard," Penenberg writes. "Books would be only a small part of what it offers, making it appeal to a vastly larger audience than the Kindle's."
Penenberg says that for Bezos's strategy to pay off "he needs either the Kindle to win the hardware arms race, or to find a way to make money on Kindle titles, or both. He's not afraid to lose money while he moves into a new niche - the first five years of Amazon's existence were spent in the red - but it can't go on forever."
Penenberg also looks at how the Amazon/Apple battle could end up being good news for books in general. "Taking on the characteristics of our present online habits, and riding a wave of rapid innovation in screens and microprocessors, books may soon become multimedia events," he says. "In this transformative model, the book industry could actually be well-positioned. Publishers could team with authors and multimedia producers to forge a new channel for dynamic e-books that go far beyond linear prose; they may provide a blend of text, video, audio interviews, 3-D maps - an entire ecosystem of content built on top of the book."
The July/August issue of Fast Company is on newsstands beginning June 30, and online at www.fastcompany.com beginning June 24.
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