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Amazon’s Fire Phone is about the ecosystem, not the phone

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In 2013, Apple sold something of the order of $10bn of apps, making profit of the order of $3bn. Estimates suggest a further $2bn profit from iTunes sales. These figures suggest that these two classes of digital content alone account for nearly 14% of Apple’s profit.

As is widely reported, the Google Play store on Android has higher download figures, but brings in only about a third of the revenue of Apple’s App Store (though revenue is growing faster for Google than Apple). The trajectories suggest that Apple’s closed ecosystem will become decreasingly relevant in revenue terms over the coming decades – though I’m sure Amazon would open an iOS app store in moments if permitted to do so.

I suspect that Amazon is playing into the smartphone market with an eye keenly trained on these figures. I buy Kindle books, rather than iBooks or Google Play Books, because I can read them anywhere, on many devices. For Android users, this is already partly true for Amazon’s App Store: apps bought on Amazon’s store can be used across Android, FireOS, and Blackberry devices, yet Google Play or Blackberry app sales are limited to their own ecosystems. Since I own a Kindle Fire, I tend to buy on Amazon’s store even if buying for my Android phone.

Amazon’s move into the smartphone market makes this all the more compelling: if I might, at some point in the future, own a non-Android phone, then I would be crazy to buy apps for my Android device from Google rather than Amazon… especially as Amazon Coins generally make the same apps cheaper via Amazon than via Google.

Amazon’s strategy for digital content has (almost) always been to capitalise on cross-device compatibility. I doubt Amazon expects huge sales for it’s phone: I think it is the digital content market it wants, and that the phone is merely a means to an end.



The image at the top of this post is an Amazon press shot.

This post also appears on Medium.

This 2,252nd post was filed under: News and Comment, Technology.






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