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Aug

27

The Kindle presents an Amazon Associates opportunity

Affiliate, Amazon, Apple, Ideas, Insights, Kindle, Mobile, Telecom, WiFi, iPhone, iPodTouch 

Arrington on Techcrunch talks about the possibility of Amazon licensing its Kindle ebook reader hardware specs and trademark to third-party manufacturers:

…a licensing program that gave hardware manufacturers the ability to build Kindle clones, along with an incentive to sell them at near-zero margins. Amazon would give those manufacturers access to the core Kindle hardware specs (there’s no real magic there anyway) and the right to call it a Kindle device so long as they also put the core Kindle software on the device. That software links the device to Amazon’s store, meaning downloads revenue flows through Amazon.

Amazon would then share a percentage of net margin generated from downloads with the hardware manufacturers.

Techcrunch has put into words what I’ve felt since the day the Kindle was announced. After all, Amazon isn’t in the hardware business at all; it’s in the product and content retail business. I can imagine that in the initial days of the Kindle launch, Amazon needed its own device to build a strong association between Amazon’s brand and the mobile ebook model. Now that that purpose is served, manufacturing and selling the Kindle hardware is an overhead that Amazon could avoid.

Just like Associates?

This isn’t very different from the masterstroke that Amazon played years ago with its Associates affiliate program. Before Affiliate Marketing became the wild jungle that it is today, Amazon launched a series of innovative tools - aStore, Omakase Links, Product Previews - to let publishers (people who owned websites/blogs/suchlike) add links to Amazon’s content onto their web pages. These publishers then earned a cut of the sale generated by clicks from the links on their web pages.

Kindle is Associates all over again, except instead of web-based tools, we’re talking hardware specs.

For instance, Amazon’s aStore let developers build their own focused online “stores” (which displayed Amazon’s books). (A religion-focused website would be able to draw viewers and sell that category of books better than Amazon.com itself.) In the same vein, a student version of Kindle with access to e-textbooks and additional bookmarking features would be better marketed and sold by a third party which is focused on only that market.

With such an Affiliate/Franchise/Licensing model, manufacturers would fall over themselves for a chance to access Amazon’s massive ebook and newspapers database - and a cut of the subsequent revenues.

The Mobile Opportunity

Once third party manufacturers have licensed the Kindle specs, they are no longer restricted to building anything that looks like the Kindle today. I can readily think of well-designed iPhone/iPod Touch ebook applications like the New York Times app. This fits in with American universities doling out iPods Touch and iPhones to their incoming freshmen.  A market for Nokia’s S60 devices would be many times larger.

What do you think? Would you purchase a Kindle application for your mobile device?

Aside: Of course, manufacturers would then be free to choose the carrier of their choice for wireless content delivery. That sure isn’t going to make Sprint-Nextel happy.


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