Lessons From the Kindle

I will admit that I am fascinated by the Kindle, not so much as a book reader but more as a computer. I am looking forward to see where Jeff Bezos, the CEO of Amazon, and his developers will take this device. An article this weekend by Jay Yarow of Business Insider on the Kindle and the iPad got me thinking about the subject again. The article references Mark Mahaney, a Citibank equity analyst, who follows Amazon.

Yarow/Mahaney make three good points.

1. The iPad will help Kindle by creating a larger e-book reader market, in which Kindle's share will lead to greater sales than today. Kindle's 70 percent share of the current market will decline, in part due to the iPad, but iPad and the 12 other new entrants will promote and make the market grow to a substantial size.
2. The Kindle provides a more limited feature set than the iPad at a substantially lower price, which means that it should attract a very different customer than the iPad.
3. Amazon is developing a new version of the Kindle that may provide a better web browsing experience and the checking of email. The Kindle is becoming a computing device, which I discussed in February.

Some additional thoughts are worth mentioning.

1. The computer market has always been competitive yet everybody (Dell, Lenovo, Acer, HP, etc.) makes money by differentiating their products by features and price point to appeal to a different customer segment. Kindle is just another example of this strategy.
2. The computer market is becoming what I call an appliance market, where specific purpose machines are built to serve niche markets. The GPS, iPod and the Kindle are obvious examples. This trend will continue as more manufacturers build machines where the hardware and software are tightly integrated (like in the MacBook) and generic providers like MS Windows and Intel become less popular.
3. As the computing market moves more and more to appliances, special built ARM processors will become more popular. (A Freescale ARM processor powers the Kindle.)  ARM processors are energy efficient, cheap and more and more frequently being designed to incorporate previously external components in the processor. This design approach is possible because the appliance has a limited purpose and related functionality. This design approach also lowers the cost of the appliance by reducing the number of components. (A previous discussion of ARM processors is here.)

I more and more think that in a few years I will be carrying something like a Kindle as my everyday computer. The weight, form factor and ease of use are just too compelling. It may not be made by Amazon but it's grandfather was a Kindle. If someone would produce a lower cost GSM cellular modem, it might even be my phone.