Is Amazon Invincible?
Apple suffered a stunning defeat in court over ebooks and previously we witnessed a bloodbath at Barnes & Noble for having gotten its ebook strategy wrong. This makes many wonder whether Amazon is invincible.
Amazon has been the 800 pound gorilla of book retail for some time, but to some the behemoth form Seattle is looking more and more like Godzilla. There are many in the publishing industry — in New York City, London, Tokyo, Paris and Madrid — who are genuinely scared when they look at Amazon’s market share. It has 70%-to-80% market share for ebooks sales and about a 50% market share for books sold online (that’s ebooks *and* printed books sold via the Internet). This dominance in not just a U.S. phenomenon, but is appearing in more and more countries around the world. The notion that local players might get a head start on Amazon has proven to be false. Amazon has become the No. 1 in most of the countries it has set its sight on and the number of countries is rapidly increasing. Amazon enjoys immense scale advantages and books are a global business. Amazon’s scale advantages are not unique to the US. Amazon is a globally competitive company.
Of course, from a consumer perspective, none of this really matters. Consumers love Amazon. Amazon has an immense range and choice of titles that delight customers (advantage No. 1); it has a trusted relationship with consumers and the credit card details for over 100 million individuals (advantage No.2); and, last, but not least, it has one of the easiest to use buying and reading platforms across the widest range of devices (advantage No. 3). Being the first company to bring a killer reading device — the Kindle — to market did not hurt, either. Tablets may rule but Amazon is mastering the world of tablets and smartphone with finesse, too. It may even sell more books through the iPad to Mac fans than Apple does. That is no mean feat!
There is a Silicon Valley saying that that Google didn’t beat Microsoft by building a better computer operating system and Facebook didn’t beat Google by building a better search engine. By the same token, nobody will beat Amazon by building a better “Get the book in 60 seconds” e-commerce platform. Yet, the history of technology also tells us that technological dominance in technology is extremely ephemeral. Today’s top dog is tomorrow’s underdog.
So, where is Amazon weak?
– Amazon still struggles with social and this was maybe one of the prime drivers of its Goodreads acquisition.
– Amazon has been around for a long time (by the standards of the Internet) and its users don’t like changes to the Amazon user interface. This means Amazon cannot easily retaliate, if a competitor were to emerge with a different user interface for discovering, buying and reading books (so maybe a much better reading ecosystem might lead to a competitor emerging – Readmill maybe?).
– Amazon’s systems are built for speed. This is a dictate of e-commece, so any competitor that deploys a user friendly system that is more leisurely can make very different engineering choices. Amazon has to produce recommendations and load new pages in microseconds or users abandon the site. Twitter was a service we forgave endless outages because we were addicted to it. Nobody is addicted to Amazon. Amazon is just convenient.
– Amazon is obsessively secretive about its data. Due to its competitive streak it hates sharing data, but we live in a much more open world where data-sharing is becoming the foundation for new services. Author’s are thirsty for data, so Amazon’s NSA-style approach to secrecy may damage its own long-term interest. Lets see what companies like Wattpad may bring about (itself rumored to be the next Amazon acquisition target — if you can’t beat them, buy them, a skill at which Amazon is a samurai master).
Is there a force or company that may bring Amazon down? Maybe not, but the next “cool thing” may just be around the corner.
Exciting times ahead!