Amazon, Google, and eBooks: Retail vs Search
January 9, 2011
I read “3 Ways Google Can Succeed in E-Books.” Interesting. I sat on the write up and my initial ideas until I had more information from the Consumer Electronics Show. CES was, I hoped, going to provide me concrete information about Android-based tablets. Well, there were tablets. My hunch is that the success of the Android tablet may have something to do with the success of Google’s e-book initiative.
Based on our research into Google’s machinations disclosed in open sources, we think Google may have a steep hill to climb. Think of a 12 year old slogging up Mt. Kilimanjaro. The “climb” is a walk, and if you are not in reasonable shape, you will not make it to the summit with your collected works of Ernest Hemmingway.
First, the notion that Google must win over, cater to, or somehow leverage independent bookstores is a great idea—just one of those anachronisms like the Connecticut Yankee in King Arthur’s Court. Bookstores are in deep doo doo, and I am not sure how one wins over, caters to, or leverages the moribund. Not far from Harrod’s Creek, Kentucky, we have one independent bookstore. The goslings and I shop there in order to help the shop out. I see more knick nacks which is a sign post saying, “The margins for books suck. Buy an expensive book light.” Good luck to any analyst who wants to build a hedge fund on book stores.
Second, Google has lots of hardware partners. The challenge is to find a way to get those folks to behave like fire ants on the way to a meal. With Andoid 2.3 available as open source, the hardware folks may say, “Thanks. Don’t let the door hit you on the way out.” Think forks, fragmentation, and proprietary behavior. Maybe not today, but I see these clouds on the horizon. Amazon and Sony have at this time been aced by Apple in the hardware department, and Google has to find a way to deal with the reality of consumer electronics that generates substantive revenues. I suppose Google can start reporting in Amazon fuzzy units. Victory is for Google indeed possible, but online behaves in mysterious ways. Cheaper definitely does not work. Better maybe if style and cachet are the key factors. Faster. Faster may be out of the hands of the Google. Faster has been a mantra for a while, and, frankly, I don’t think I know what faster means. Some of Google’s nifty new services seem sluggish to us.
Third, online commerce was supposed to be a slam dunk for Froogle, now, Google Shopping. I use Checkout, but only after I check to see if Amazon has a better offer. The dust up over Google’s app stores and their functionality may be over, but there are some payment methods in place that work reasonably well and some of the payment schemes workwell and have a strong position; examples include Amazon, Apple, and the on again off again PayPal. Can Google become the go-to payment system? The go to shopping system for mobile users? The go to price look up system? The go to deal system for the Groupon crazed crowd? Lots of opportunities. How many have slipped away from the ageing GOOG.
Fourth, Google is late to the party. Now I know that The Art of War talks about sitting back and striking when the enemy is listening to iPod music after dinner around the apple wood camp fire. What better time to show up and slaughter the winners? Our interpretation of our research data suggests that Google is no longer very good in the 100 yard dash. Heck, when it comes to social media, Google is challenged getting up the front stairs to Frye’s in Palo Alto. I hear the heavy breathing and the chuckles from the Xooglers at Facebook. Google is 12 and slowing down. Examples of Google’s agility are welcome. Plug them into the comments form on this blog. Maybe Google’s new entrepreneurial organizational set up will toss faerie dust around? We hope so.
Fifth, lock in and habitual behavior are challenges for Google and its partners. Once habits are formed in online, those bowling ball gutters are tough to change. Google’s dominance in search is one example. Other examples include Netflix, iTunes, and Amazon in eBooks. Google can change habits by 10 step programs and rehab.
The question is, “Can Google take the right actions at the right time?”This question has greater urgency now because Amazon has opened its own Android store. I wonder if Mr. Bezos wants to be positioned to deal with this retail opportunity than a search-and-advertising specialist.
Stephen E Arnold, January 9, 2010
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