Sony, Panasonic, Motorola, Nokia, Samsung, HTC. All big names in the
consumer electronics market. All struggling to find relevance in a
newly connected world.
Enter Apple, and Amazon?
Apple begin the revolution with the iPod, and iTunes. Vertical
Integration. They added the iPhone, and soon after added an App Store
to iTunes. And then the iPad. And importantly (in the long run), the
Amazon joined the revolution along the way with the Kindle tied to their
ebook store. It really is 'an iPod for books'. And guess what, people still read.
Amazon has been busy building up their ecosystem. They've gone from
selling paper books to becoming the market leader at selling virtual
hosting services (EC2). They've added cloud storage, and streaming video.
Today Amazon announced new Kindles, including a new 'tablet' Kindle, the Kindle Fire.
The Fire aims to bring the web, native apps, music, video, and books
to the palm of your hand, all brought to you by Amazon's 'Cloud
The Kindle Fire and the iPad make interesting competitors, but that
isn't really the point here. (Short Version, they can both win). The
point is, no one else can compete.
Barnes and Noble has some vertical integration with their Nook Reader,
but they do not have anywhere near the ecosystem to compete with Amazon.
They are doomed to be an also-ran in this space, and will eventually
Sony, Samsung, HTC, RIM, HP, Motorola. None of these companies can
deliver a product with this level of integration, this level of 'it just
works'. Apple has realized the power of this for a long time. Amazon
is a believer as well.
Does Google realize this? Is that why they bought Motorola Mobility?
While there have been various reports about the justifications and
plans for the acquisition, it is clear in my mind that their best long
term play is to INTEGRATE with Motorola very closely. Regardless of
whether they keep Android Open Source, they should focus on Motorola
producing 'the one true Android' devices. But that isn't all. Google
needs to figure out how to deliver the rich set of media offered by
Apple and Amazon as well. Seamlessly. I'm certainly not counting them
out, but they have a lot of work to do.
What about Microsoft? Well, aside from the fact that they are probably
making more from selling Android phones then Windows phones (based on
their Android licensing deals), they are still an interesting play.
Their movement into the gaming space (XBox) has achieved market share,
if not financial success. Their efforts with the Zune and their music
services have built up some ecosystem. I think they need focus, and to
break from 'Windows'. (Windows Phone 7, really?) But I wouldn't count
them out. Yet.
However, if you are Samsung, Nokia, HTC, what can you do? I'd focus on the parts business.
Who else is in the cross-hairs? Netflix. Amazon is building a solid
competitor to their video streaming service, and with the device
integration (Kindle Fire) and set top box integration, they are serious
The pendulum is swinging back to vertical integration. Nothing lasts
forever, and I'm sure the pendulum will swing back some day, but I think
we have a long road of vertically integrated devices ahead of us.