The news: Even as Amazon.com remains synonymous with the e-commerce business it pioneered close to two decades ago, the company's platform continues to shift away from physical goods into digital media sales, a trend typified by the growth of its Amazon MP3 music storefront and its pacesetting Kindle e-reader platform, which now leads the worldwide e-reader market with a 51.7 percent share, far ahead of Barnes & Noble's Nook at 21.2 percent. But Amazon emerged as a true mobile powerbroker in 2011, launching new devices and services that established the company as a legitimate rival to the likes of Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG).
Amazon entered the mobile application retail business in March when it opened its Amazon Appstore for Android. The storefront promises a user experience rooted in the company's e-commerce and marketing expertise, highlighted by a series of automated marketing features extending its signature product recommendation engine to mobile software merchandising, as well as a Bestsellers section to further improve consumer discovery. Unlike Google's own Android Market, Amazon Appstore for Android tests all apps before introducing them in the store, guaranteeing a positive user experience and protecting consumers from potentially harmful situations. Also noteworthy: Amazon's Free App of the Day promotion, which offers a popular premium app as a free download for a 24-hour period.
Days after unveiling Amazon Appstore for Android, Amazon struck again, this time introducing Amazon Cloud Drive, a new solution enabling consumers to securely store music in the cloud for anytime/anywhere access via Android and iOS smartphones and tablets as well as PCs and Macs. From there, the company introduced Kindle with Special Offers, a version of its popular e-reader device incorporating homescreen deals and sponsored screensavers; priced at $114, $25 off the conventional Kindle unit, it started outselling other Kindle versions within two months, adding a local deals component in the autumn.
But Amazon's most auspicious threat to the mobile hierarchy is the Kindle Fire, announced in late September. The Wi-Fi only tablet is perhaps most notable for its price: $199--more than half off the price of Apple's cheapest iPad. The seven-inch Kindle Fire offers consumers access to the Amazon Appstore for Android, the Kindle e-book catalog and the Amazon Instant Video and Amazon MP3 digital storefronts--it also touts a customized browser, Amazon Silk, that interfaces with Amazon's EC2 cloud server to accelerate the data consumption experience. Analysts are expecting big things from the Kindle Fire, but initial consumer reaction is decidedly mixed, and usability experts have excoriated the device, underlining just how far Amazon still must go to become the mobile Goliath it aspires to be.
Why it was significant: Amazon closes out 2011 with its own app marketplace, an exploding e-book business and a cloud-based music streaming platform, not to mention a bargain-priced Android-powered tablet that ties all of its multimedia initiatives together. At the same time, its strengths in merchandising and its signature recommendations engine could solve the discovery dilemmas that continue to undermine larger, more established app stores. No less compelling, Amazon is pursuing the same mobile demographic as Apple, but the two brands are approaching the battle from diametrically opposite positions: Apple relies on digital content to sell its hardware products, and Amazon depends on affordable Kindle devices to drive content sales. It will be fascinating to see what the company can do to further shake up the mobile status quo.
