Is The Nexus 7 Aimed At Amazon?

Some writers have posited that the Nexus 7 is really meant to go head-to-head with the Kindle Fire, and not the iPad. When you look at the specs, and the positioning messages on the Nexus 7 web site, it might seem that way. The thing it, it assumes that Amazon is a “competitor” in the tablet market in the first place. I’m not convinced that Amazon really cares that the Nexus 7 is better than the Kindle Fire, because they aren’t in the hardware game, they are in the content game. A successful Nexus 7 helps Amazon as much (if not more) as it would Google.

What The Kindle Fire Is For

The Kindle Fire was not Amazon’s attempt to take over the tablet market, and wrest control from Apple, Samsung, et al. The Fire, like the other Kindle devices, is a way for Amazon to make available a cheap and effective portal to their customers that don’t have other devices. The point of the Kindle wasn’t to build a better tablet. The point was to sell content.

While I don’t know for sure, I suspect that the Kindle Fire is sold at cost, or possibly even at a slight loss. Amazon can do that because the increased sale of content can offset any loss on the device. Amazon’s goal isn’t to make enormous profit on the device. The point bears repeating and emphasis:

Amazon isn’t a hardware company, they are a content company

This can sometimes be lost in the churn and roil of the tablet market. Amazon only “needs” the Kindle Fire to provide an affordable entry point for all of the “other”, non-book content. They don’t “need” it as a core part of their business.

So What Is The Nexus 7 Competing With?

If the Nexus 7 is meant to “take on” Amazon, then it sort of misses the point of what Amazon is doing. A sale of a Nexus 7 doesn’t diminish Amazon, because all of Amazon’s real revenue stream is around content. That content can be as easily accessed on a Nexus 7 as it can on a Kindle Fire. It isn’t any more harmful to Amazon as an iPad sale is. All of the mainstream devices out there can consume some or all of Amazon’s “stuff”. If Amazon were truly intent on putting the Kindle Fire to the fore, and trying to coerce people to buy it instead of an iPad, Nexus 7, Windows Phone, etc., then they would start to limit how much of the content is available. But doing that limits the revenue potential for content delivery. Limiting their content runs counter to what is Amazon’s best interest.

Running Shoes and Running Tracks

Basically, the Nexus 7 vs. the Kindle Fire is a one-sided, and almost pointless, competition. Here is a (possibly weak analogy): let’s say Amazon sells time on running tracks for people who want to run. To encourage people to run on their running tracks, they start to manufacture a running shoe. It’s not the best running shoe, but it is “good enough”, and it is inexpensive. It gets people to run on their track, and that boosts their business. But Amazon is perfectly happy to let anyone and everyone wearing other shoes to use their tracks as well. They make lots of money selling time for track use. They make little or nothing selling shoes.

But along comes Google with “ah ha! We have a better shoe than you!” while also promoting this newer, better shoe for their own running tracks. Amazon looks on, somewhat perplexed, wondering why Google is picking a fight over running shoes, because the Google shoes are as equally effective on the Amazon tracks as the Google tracks. Google could strut around and brag about how much better their shoe is, but all Amazon cares is that people are using their tracks. They ultimately don’t care whose shoes they wear to use them. Google can even claim “victory” with their running shoes, because Amazon isn’t competing in that market. Their business is selling time on the track.

Okay, it’s not the greatest analogy in the world, but hopefully it gets the point across: there is no world-changing benefit to Amazon to having the “best” tablet out there. In fact, it is in their best interest to let everyone else put time, money and effort into building better tablets, because those tablets are still good for Amazon. Why put up the money and take risks? The Kindle Fire was a low-risk venture. It didn’t require an enormous investment on the part of Amazon to build and design. The upside potential was positive enough, but the risk itself was relatively low.

Not A Competition, Because One Competitor Doesn’t Care

Ultimately, the Nexus 7 could be another solution looking for a problem. Competing with Amazon is pretty easy, in part because Amazon isn’t really concerned about being number 1 in tablets. I suspect they knew going in that they probably weren’t going to displace the iPad. There should be no surprises if the Nexus 7 does outsell the Kindle Fire. The Kindle isn’t even at the track, let alone in the race. Winning that race doesn’t matter to Amazon.

If Google is seriously “going after” Amazon with the Nexus 7, then they brought the wrong weapons to the fight. The competition is about content, not about delivery. The Nexus 7 does nothing to slow down Amazon, and doesn’t confer any particular advantage to Google.