Tuesday, October 16, 2012

Amazon May Soon Add Some Chips

If you were in Jeff Bezos shoes would you buy the smartphone chip business of Texas Instruments (TI) who currently supply them with processors for their Kindle tablet?
It’s an interesting question and one that Isreali finacial newspaper Calcalist claims is in advance stages of talks today.
So you start of selling books on the Internet, extend that to media, open it up to create a marketplace, then to a wide range of other products, move to become a publisher and deal direct right back to manuscript, launch your own ereader, move into cloud based services, continue to grow both organically and by acquisition, into a one stop shopping emporium. The question is how far do you go technically? Does the ownership of the processor design give you better integration and lower cost base?
Amazon is becoming harder to define but increasingly focused on creating that vertical total experience. They start with the products and service and move to encircle the total experience. Apple on the other hand start with the device and work back to the product. Which approach makes more sense and is easier to develop? The two things we are joining together is the creator and the consumer and Amazon clearly have that chain increasingly covered. Apple still are consumer and technology bias. Amazon has built an impressive walled garden but has also enabled others to participate all be it often only on their terms. Apple remain entrenched in their walled garden.
The other player of interest, is Google and their approach to building Android and then effectively sub licensing the technology devices interface to others. Their approach is again different but their vision of being at the top is the same.
Three different routes three different players.
We don’t envisage seeing Amazon not moving for the likes of TI’s processors. It makes good sense to own the design through to the delivery and to not merely knit the technology together. Is Amazon capable of managing such operations – why not? Will it deflect Amazon – we doubt it.
So will Amazon extend its device range to includes smartphones, ereaders and tablets – why not?   

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