Amazon takes a step forward, Google is still behind

by Michael Tarsala

Amazon (AMZN) will take a big step forward in its platform strategy with the release of its own branded smartphone.

Google (GOOG), on the other hand, is now even more behind Apple (AAPL) and Amazon (AMZN) in a three-way race to control consumers.

“An Amazon phone puts pressure on Google to improve its content selection and to figure out a distribution strategy,” said Richard Shim, analyst at DisplaySearch.

As Bloomberg reported this week, Amazon is developing a smartphone that would compete with the iPhone, as well as Google’s smartphones (the photo is of an old Toshiba phone, not the new Amazon one).

It’s the logical next step for Amazon in completely owning its online ecosystem — the hardware, software, as well as the content distribution.

I am not sure that an Amazon phone is going to be technically amazing. And there’s no guarantee it’s going to help the company sell a lot more digital content at the start.

None of that is critically important in the big picture.

Going forward, there will be three major players in devices. And here’s how the competition breaks down:

  • Apple is in the lead by a long shot. It has the greatest hardware and mature software. It also has the broadest content selection with lots of distribution.
  • Amazon’s strategy is evolving, but fairly far along now. It has good content exceptional distribution and now it will have hardware beyond just the Kindle.
  • Google’s hardware and software is darn good. But the content is not as strong; the strategy there has only recently been defined with the launch of Google Play last month. And its content distribution strategy is far more uncertain; it’s not a company known for distributing other people’s content.

By the way, Google is not out of this race by a long shot. There’s still time for it to catch up.

But it’s fair to say that the upshot of the latest Amazon move is that it ratchets up the pressure on the Google Play strategy.

Photo by:  Pat 2001