Amazon yesterday posted their quarterly results, and they also missed expectations set by Wall Street. However, Amazon also didn’t turn a profit, posting losses of $274 million. This is likely due to increased costs on the R&D side to create new devices, as well as costs incurred while trying to purchase the rights to music, movies, and books that can be accessed via Amazon’s growing tablet base. In other words, this likely isn’t an accurate look in to how Amazon’s model of selling devices at cost, and then trying to make money off of content sales is panning out. For that, the public will likely have to wait at least a year.
Even as Apple expands their ability to create and manufacture their own mobile chips, Amazon seems to be wanting to do the same for its Kindle (Fire) division.
Reuters reports the following:
If negotiations lead to an agreement, Amazon, which makes tablets and is expected to enter the smartphone industry, would become a direct rival to Apple and Samsung Electronics, which also designs their own chips. The value of any deal will probably be billions of dollars, Calcalist said.
Texas Instruments said last month it will shift its wireless investment focus from products like smartphones to a broader market, including industrial clients such as carmakers, where it is hoping for a more profitable and stable business.
Interesting, particularly considering that Amazon is quickly becoming a consumer electronics manufacturer that can rival Apple, with its Kindle Fire line of devices. Amazon, if this deal went through, would be joining an elite group of corporations – Apple, Samsung, Nvidia, Intel, and Qualcomm being the largest – who have the ability and expertise to create such chips in house. Such an ability is important, particularly to have an edge over the competition.
Texas Instruments’ chips, despite being fairly popular, have historically lagged in performance behind that of Samsung, Nvidia, and Qualcomm (and now Apple, with its in-house A6). Texas Instruments has expressed interest in selling their chip division, which has been struggling.
Tricia Duryee for All Things Digital, referring to the price of Amazon Kindles, writes:
But apparently [Amazon CEO Jeff] Bezos has tired of dancing around the subject, because when the BBC asked on Thursday, he answered: “We sell the hardware at our cost, so it is break-even on the hardware.”
As expected, Amazon sells its Kindle devices at cost. The online retailer sells Kindles to customers at virtually the same price it costs the company to manufacture the devices, instead earning profits from the sale of digital books and other content.
Apple takes an entirely different approach with the iPad, maximizing on sales of the tablet thanks to a generous profit margin. At the same time, Apple still receives its 30 percent cut from iTunes Store, App Store and iBookstore sales. Bezos notes that Amazon’s approach is not necessarily the right approach, but is something the company has been doing since its founding.
Amazon today, in a filing with the U.S. District Court in Oakland, suggested that the term “app store” has become so generic that it could not be possibly used by the online retailer for the purpose of false advertising. The claim is in response to a trademark lawsuit filed in March 2011, in which Apple accused Amazon of misleading developers by using the “app store” name to solicit a mobile software download service.
I’m sorry Amazon, but you’re wrong. The term “app store” should belong exclusively to Apple, especially since it filed for a trademark on the name in 2008 and had that request approved early last year. Apple was clearly not the first company to create an application distribution system, although it popularized the term “app store” by including it on the several million iPhone, iPod touch and iPad devices that have been sold in the past four years and counting. (more…)
Apple is doing fine – they’re selling the iPhone as quickly as they’re made, and the iPad is quickly ramping up to overtake even the iPhone. No company has been able to throw a wrench in Apple’s iPad rollout. While other tablets have come along, they have been hampered by various factors, including lackluster ecosystems, poor hardware, and a lack of tablet-native apps on other platforms.
That seemed like it could have changed last year, when Amazon launched the original Kindle Fire. (more…)
Amazon will be placing “special offers” (PR DoubleSpeak for “Advertisements) on all of the new Kindle Fire models, likely in a play to help subsidize the devices manufacturing cost and recoup some of the (supposedly) lost money for selling these devices so cheaply.
Even more strangely, Amazon has said nothing about the ability to remove these ads – previous generations of Kindles offered higher-priced models in order to remove the ads (an example of which is shown to the right). That doesn’t appear to be part of Amazon’s strategy, as no mention of it is made in the official press release:
The new Kindle Fire family comes with special offers that appear on the lock screen. Examples of special money-saving offers that customers will enjoy include a $5 credit in the Amazon MP3 Store and a $5 credit for select titles in the Amazon Instant Video Store. Customers will also receive special offers and screensavers from brands like AT&T, Discover and Intel, such as a special offer of a $10 Amazon.com Gift Card when a customer uses their Discover card to purchase a digital product on Amazon.
Definitely disappointing: while it may subsidize the cost, it will put off people who would prefer to know that someone isn’t monitoring how they use their tablet in order to gather valuable data to sell ads with.
Seemingly from left field, Amazon has released three new Kindle devices – one traditional, e-ink device, and two new tablet devices.
The traditional Kindle is called the Kindle Paperwhite, which features a backlight built in to the display for reading in the dark, along with various other tweaks to the display and device. Like the Kindle Fire, there isn’t a button to be found on the front – it’s a touch-only device. The original Kindle has seen a price drop to $69, though this new Paperwhite version only costs $79. Quite the device for the price, considering most other touch e-readers are significantly more money. (more…)
Nilay Patel, writing for The Verge states that they have “confirmed” that Amazon has a phone – however, they don’t know when it will be released. Recall that Amazon has a press event, believed to be for new Kindles, tomorrow, and things start to make sense – kind of.
While it has long been rumored that Amazon is going to release a phone similar to its Kindle Fire in that it would be based off of Android for app compatibility, but has been skinned so thoroughly as to almost erase any signs of Google’s original OS, there isn’t as much of a reasoning to do so. The Kindle Fire makes so much sense for so many people because it’s a peripheral device: unlike the iPad, it isn’t designed to replace a laptop computer. It’s designed to read Kindle books, listen to your music from Amazon MP3, watch video streamed from Amazon, and to download the occasional game from Amazon‘s app store. It has an email client, and a web browser, but both are so thoroughly skinned (and, frankly, slow) that most ignore that feature.
The Kindle Fire works because it is literally all about content. While an iPad plays videos and music and allows for the reading of books, it is also about content creation (some would argue that it’s to a limited extent; I’d disagree – I wrote this on an iPad). The Kindle Fire is about the Amazon ecosystem, but the Amazon ecosystem is one that isn’t really suited to smaller screens. There’s a reason that the Kindle Fire has a seven inch display – that size is widely regarded to be the best for reading, or for watching movies while relaxing. Both of those mediums are best consumed on a larger device, as opposed to a phone. (more…)
Last weekend, writer Mat Honan had his iCloud password reset on him and, subsequently, his Twitter account hacked and the content on his iPad, iPhone and MacBook remotely wiped. It was a dreadful weekend for Honan, in which his digital identity was taken over thanks to some clever social engineering between hackers and customer service representatives for Apple and Amazon.
Apple first responded to the situation and has now temporarily suspended over-the-phone iCloud password resets for at least 24 hours while it looks into the issue. This move is being taken to ensure that the incident is not repeated while Apple investigates its security measures. Amazon too has changed its security measures, no longer allowing customers to make credit card or email address changes on the phone.
Fueling the fire surrounding the rumored Amazon phone, The Wall Street Journal made a report early this morning saying that Amazon is “working with component suppliers in Asia to test a smartphone.” According to people familiar with the situation, Amazon is currently considering expanding its mobile offerings, and that these could include the recently speculated iPhone competitor. To back up these rumors, the Journal has reported that unnamed officials who work with Amazon’s part suppliers have also commented, saying that Amazon is testing a smartphone, and that mass production could begin “late this year, or early next year.”