Why Amazon is the king of innovation: Kindle's clout

Amazon is far more innovative than Google, Apple - or any other tech company in existence. Here's why.
Written by David Gewirtz, Senior Contributing Editor

Image: iStock

We begin our week long series on Amazon innovation with a discussion of how Kindle transformed ebooks, and, in the process, changed the entire book industry.

Amazon, fundamentally, is a far more innovative company than any other tech company in existence. Here's why.

Many of us use services from Amazon.com in one way or another every day. But even though we are all intimately familiar with the company, and how it impacts our lives, it's hard to grok the totality of the company and what it provides.

At the most simplistic level, Amazon is just another shopping cart site, an electronic retailer. Except, of course, Amazon is pretty much the electronic retailer, eclipsing even Walmart's brick-and-mortar operation in many areas.

From another perspective, Amazon is an enterprise computing company, providing the IT backbone for many of the most exciting startups and businesses we all rely on.

From yet another perspective, Amazon is our closet, our basement, our library, and our movie theater, providing us with goods, services, reading, and entertainment in both virtual and physical form.

We could even go beyond, to discussions of drones, same-day services, shipping and logistics services, and more. This week, we'll look at five key areas: AWS, Alexa, Kindle, Prime, and the store itself.

Let's get started with Kindle

It was back in 2007. The iPhone had just launched. Those were the days when hardware companies were hardware companies, software companies were software companies, and Web companies were Web companies.

Google wasn't in the phone, tablet, operating system, or even the self-driving car business. Apple then, like now, had retail stores, but they only sold Apple products. Microsoft was running strong with Windows, and while they had keyboards, mice, and the Xbox, the company certainly wasn't thought of as a hardware company.

In other words, most tech companies stayed in their lane. Amazon's lane did not include handheld hardware devices. But all of a sudden, there it was: the Kindle, Amazon's newly introduced ebook reader.

The idea of ebooks is nothing new. In fact, the first mention of an ebook reader in concept goes back to the 1940s, when Spanish inventor Angela Ruiz Robles created a compressed air-powered book reader called la Enciclopedia Mecánica (the Mechanical Encyclopedia).

In their discussion of ebooks, The Guardian skips forward a bunch of years (particularly past mouse inventor Doug Engelbart's work), and credits Project Gutenberg in 1971 with introducing the first ebook, a transcription of the Declaration of Independence.

After that, there were many other incarnations, including many e-reader style devices. I read a whole bunch of ebooks on my various Palm handhelds back in the early 2000s.

So what is so innovative about the Kindle?

Amazon's early Kindle devices were overpriced and clunky. They had performance issues, and were disliked by many (including me). The Kindle data format, which was, at least back then, fussy and arcane was far from unique. As previously mentioned, other comparable ebook formats preceded the Kindle format.

An argument can be made that the innovation was all about Amazon's reach. By then, Amazon's goal of becoming the "world's largest bookstore" had already been met. It made sense, therefore, that if they were selling physical books online, which had to be shipped to customers, that distributing books electronically was a cost-effective practice. But Barnes & Noble was also powerhouse back then in book sales, and while the Nook made some inroads, it had nothing like the staying power of the Kindle.

An argument can be made that it was the device-independence of the Kindle format. You could get Kindle readers for almost any device format, and could read your library on almost anything. But PDF readers and open text formats abounded, so that wasn't a benefit unique to Amazon.

Why, then, can we consider the Kindle a game changing innovator?

Why, in fact, has Amazon wound up with -- as author tracking aggregator Author Earnings reports -- 74 percent of the market share of ebooks? Apple's iBook format is richer, and Apple certainly has greater market share for devices than Amazon. Yet iBooks has only 11 percent of the market, compared to the absolute dominance of Amazon.

The answer is, "All of the above."

Amazon has its own Kindle devices, but its format runs on everything. Apple's does not. Amazon has the readers. Remember Prime? The free Prime lending helps as well. Amazon has the reach and the customers. Buyers are used to going to Amazon for reading, so the cycle perpetuates itself.

Amazon's innovation here was to combine vertical integration with the willingness to allow users to read on whatever device they wanted to read on. Nearly my entire book library is now on Kindle. Yet I don't personally use a Kindle device, because I still don't like them. I like reading on my phone. Had Amazon tried for lock-in, which so many other vendors do as naturally as they breathe, I never would have replaced my paper books with Kindle books.

As you think about moving into markets, remember the lesson of the Kindle. You can have market dominance even if you don't lock your customers into your own devices. I probably own thousands of Kindle books by now, but I've only bought one or two devices.

Amazon is selling the blades and hasn't gotten sidetracked by demanding that people buy their razors. Sure, they make the readers available, but the blades business (the books themselves) is so profitable that it's good all on its own.

Next: Prime power

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