This is an aggressive expansion into a new market for Amazon. Photo: Getty
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Amazon's smartphone launch offers a prudent platform for growth

What the launch of Amazon’s smartphone tells us about the company’s future strategy.

Amazon, the e-commerce internet giant, is launching its first smartphone. Media attention is focusing on whether the phone’s features, such as its rumoured 3D interface, are really as cool as portrayed in its trailer video which aims to wow early users. But by entering into the fray of an already hyper-competitive mobile phone industry, Amazon is doing a lot more than adding another gee-whizz feature to a smartphone.

This launch tells us a great deal about CEO Jeff Bezos' strategy for his company – and what it might mean for the future of competition and innovation in our increasingly digital world.

First, let’s ask the obvious questions. Why is Amazon, known for internet retailing and related software development, entering a hardware market where leading incumbents like Nokia have already failed? After all, what does Amazon know about the telecoms business? Can it succeed where Google has failed?

We have seen Google, which has virtually limitless financial resources, enter the mobile phone handset industry by purchasing Motorola Mobile in 2012, only to take a heavy loss after selling it on less than two years later. Even incumbent firms who had a very strong set of phone-making capabilities have taken tough hits in this turbulent market – witness Nokia’s dramatic plunge, which led to a sale of its mobile phone business to Microsoft.

Platform Number 1

You cannot understand Amazon’s move without situating it in the broader context of platform competition. Platforms, these fundamental technologies such as Google search, Facebook and the Apple iPhone, are the building blocks of our digital economy. They act as a foundation on top of which thousands of innovators worldwide develop complementary products and services and facilitate transactions between increasingly larger networks of users, buyers and sellers. Platform competition is the name of the game in hi-tech industries today.

The top-valued digital companies in the world (Amazon, Apple, Google, Facebook) are all aggressively pursuing platform strategies. App developers and other producers of complementary services or products provide the armies that sustain the vibrancy and competitiveness of these platforms by adding their products to them. The more users a platform has, the more these innovators will be attracted to developing for them. The more complements available, the more valuable the platform becomes to users. It is these virtuous cycles – positive feedback loops, or “network effects” – that fuel the growth of platforms and transform them into formidable engines of growth for the companies and developers associated with them.

The smartphone is a crucial digital platform. Achieving platform leader status in this space is a competitive position all the hi-tech giants are fighting for. Google has its ubiquitous Android operating system, Apple has shaped the whole market with the iPhone, Microsoft has purchased Nokia’s phone business, and Facebook has invested $19 billion in WhatsApp among other acquisitions for its growing platform.

In fact, I suppose I should have rephrased my question a little earlier – why hasn’t Amazon already staked its claim to lead this digital space after having launched its Kindle Fire tablet and Fire TV set-top box?

Opening the door

Simply put, the smartphone is the main gateway to the internet today, and, in the hand of billions of users throughout the world, is the physical embodiment of a conduit that links those users to each other and to the whole content of the internet. There are almost 7 billion mobile phones in the world (and only 1 billion bank accounts). And the trend is staggering. Mobile payment transaction value surpassed $235 billion worldwide in 2013, and is growing at 40% a year, with the share of mobile transactions already reaching 20% of all worldwide transactions.

So, while risky, Amazon’s entry into the smartphone business is a classic play: a platform leader entering an adjacent platform market that is also complementary to its primary business. All platform leaders aim to stimulate complementary innovation (think how video game console makers aim to stimulate the provision of videogames), and they often attempt not to compete too much with their complementors in order to preserve innovation incentives. But at some point all platform leaders start to enter these complementary markets themselves. Google has done it through Android, Apple has done it with iTunes, Facebook has done it with Facebook Home.

It happens when platform leaders feel threatened by competition in their core market, or when they want to steer demand, competition and innovation in a particular direction. The idea is to use their own user base as well as their own content and technologies to create an unassailable bundle, one that is difficult for external competitors to break into. Think of it as creating barriers to entry, while expanding the core market.

The reasoning behind entering a complementary market is well known, and related to the benefits of bundling. In the case of hi-tech platforms, the benefits are even stronger. By optimising and controlling the interface between a platform and complements, a company can have a structuring impact on the evolution of the platform ecosystem – and that means on all the innovators around the world that invest and make efforts to develop complementary products and services.

In your hands

So, these are the reasons why Amazon is entering the mobile phone market, despite the difficulties inherent in taking on an über-competitive market. This strategic choice makes a lot of sense.

As to whether Amazon has a fighting chance of succeeding, there are reasons to be optimistic. Beyond its deep financial resources, Amazon has learned something of what it takes in the development and successful commercialisation of various versions of the Kindle. That has given it expertise in hardware, on top of its software background, and should prove a useful training ground to allow it to launch other consumer products such as the smartphone.

But the ultimate judge will be you, gentle readers. Will you be willing to swap your favourite mobile phone for a yet another new kid on the block, even if it does let you browse Amazon’s ever-growing catalogue in splendid 3D?

The ConversationAnnabelle Gawer does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.

This article was originally published on The Conversation. Read the original article.

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Space suicide: the sad but noble death of the Cassini probe

It’s not surprising that scientists and space geeks around the world will bid it adieu with a heavy heart.

Since April 2016, a Twitter bot called @CassiniNoooo has been tweeting out “Nooooo” followed by random numbers of “O”s. The last tweet sent by the bot is just “I......”.  

The account has been paying a light-hearted tribute to one of the most important important scientific projects of recent times, and one which is soon to come to an end. 

Launched in 1997, Cassini-Huygens is a plutonium-powered probe that has been circling Saturn since 2004. Providing teams of scientists with unparalleled images of Saturn and its moons, it has allowed experts to examine the composition of solar bodies one billion miles away.

But on 15 September, Cassini will begin its final mission, referred to by Nasa scientists as its "Grand Finale". It will shed its modules and sensors as it heads towards a final fiery death in Saturn's gaseous atmosphere.

When news of Cassini's impending end was announced in April, scientists, casual space fans, engineers, teachers and other assorted stargazers expressed sadness about the craft’s suicide mission. Many are expected to tune in to watch the live stream of the probe's final moments on Nasa’s dedicated webpage

Cassini has provided some of the most intriguing discoveries about our solar system. It discovered a saltwater ocean under the icy surface of one of Saturn’s moons, Enceladus, by "tasting" molecules – a finding that could, in theory, support alien life. It also took photographs of Titan, a moon bigger than Mercury, which enabled scientists on earth to discover liquid on its surface – only the second body in the universe to have free-standing liquid after our own planet. 

In a way, Cassini's discoveries signed its own death warrant. Potentially life-supporting pristine environments must not be contaminated by Earth-originating microbes and, left to its own devices, Cassini could collide with one of the moons it discovered so much about.

Faithful until its last moment, Cassini will be diving in and out of the space between Saturn and its rings as it reaches the end of its final orbit, a feat never achieved before, transmitting completely novel data that would be too risky to gather unless it was already destined for immolation.

Cassini's contribution to science, laid out in this oddly moving webpage from Nasa, not only allowed us a deeper understanding of our solar system, but also helped us picture other kinds of worlds. It's a service that has been recognised well beyond academics or professional scientists. One six-year-old is even throwing Cassini a goodbye party, with a themed cake and games – because, he said, it was the “only spacecraft he ever knew”. Others have tweeted out music composed for Cassini, and comics depicting their versions of its final moments.

It has not been easy for the scientists who had to approve the decision to kill Cassini. In a press conference on 4 April, roughly three weeks before Cassini started its final orbit, Linda Spilker, a planetary scientist at Nasa's Jet Propulsion Laboratory, admitted that it was hard to say goodbye to their “plucky, capable little spacecraft”. Some even referred the probe as their child.

On Earth, we get to think of these robotic explorers like astro-ambassadors, not least because so much of the current discussion around space monitoring centres on how information collected will enable life in space for humans. Now one of those ambassadors is about to make its final visit to a foreign planet, long before its creators will get to make their own introductions.