Why Don’t Google Marry Amazon?

Google perfectly complements Amazon, so why don't they work together?

I stumbled onto a Wikipedia page of the movie called EPIC 2014. In this movie, released just seven years ago, term “Googlezon” was coined. Word came from a fictional merger of Google and Amazon in the alternative universe, done to to create an ultimate product recommendation tool developed by user’s search queries. In this alternative universe, there’s nothing that can slow Googlezon, not even Supreme Court and New York Times. The company eventually releases the tool called “Epic” in the year of 2014, hence the title of the movie. The tool stores user’s reading habits, demographics, and political preference (supplied by users themselves, with Googlezon paying each user) to deliver news best tailored to user’s needs. Eventually, online version of New York Times collapses, with NY Times staying solely as print newspaper “for the elderly.”

Why am I mentioning Googlezon? Because as Google and Amazon infringe more on each other’s business, I feel like those companies should cooperate, instead of compete, with each other to develop whole Android ecosystem. By developing the ecosystem filled with contents and integrated natively to smartphones and tablets, Google and Amazon have a chance of taking down what amounts to be Apple’s last trump card, flawless iTunes integration to iPhone, iPad, and iPods.

Smartphone manufacturers, hoping to develop their own content service to further distinguish themselves from the rest of the pack, already jumped into content delivery business. Samsung has its Media Hub for Galaxy S devices, and HTC has done a nice job of making Android version of Netflix available only on its devices (Nexus S excepted), even though it’s likely to be for very short time, along with HTC Watch for Sense 3.0 devices. Motorola signed a deal with Blockbuster all the way back in 2009, and Blockbuster apps are available on its Droid line of device as well as Atrix 4G. Yet, no service has managed to gain any kind of success in the market now. As much as they try, no smartphone buyers even factor in Samsung’s Media Hub or Motorola’s Blockbuster app into their smartphone buying decisions.

In a meanwhile, Netflix has been a killer app for iOS devices while Apple rents more than 500,000 movies/TV-shows a day, earning about $ 400 million a year according to estimates. More than million people bought HBO Go for iOS and Android in its first week. Video streaming services can be and are successful. It’s just that Android smartphone manufacturers and Google failed to get any contents that can lure people to use their services ($ 2.99 a day for movie rental didn’t help either).

So when Google finally released movie rental service for Android, there was certain expectation that Google finally may come up with something that can compete with the iTunes and Amazon. However, when I heard the announcement, it was just “meh”. When I saw the actual store, alas, I was even more disappointed. Movies were relatively expensive (to be fair, competitive with iTunes). Beside few featured movies, movies were also old and obscure. While other rental stores also share similar problems (infamous 90-day window for Neflix comes to my mind) I felt like Google Movies is more lacking than industry titans Google is trying to compete with. It already shows in numbers, with Amazon having 10x amount of movies in its rental store than Google Movies. With Netflix timely launching in Android devices, Google Movie’s tauted ability to watch rented movies anywhere without syncing simply banished as well, as I can watch Netflix anywhere from my PS3 to iPad and Google TV. So, even as Google Movie is trying to take off, the service already faces a quantitativeness challenge from Amazon and iTunes, and cost as well as technological challenge from Netflix.

When I tried to find Social Network, all I saw was bunch of B-movies.

Google Music is more promising than Google Movies, with an ability to store 80GB of songs and all (I’m hoping that I can get the invite soon so I can get some hands-on time). While it’s highly unlikely that the user can upload 80GB of songs given how slow upload process is, its offline playback feature and interface do look intuitive and highly user-friendly. However, Amazon Cloud Drive did launch a couple of months earlier, and it features enough features that can persuade people to choose Amazon over Google Music. Amazon has its own MP3 store, so if I chose to, I can buy MP3s from Amazon (and they have some great deals) and sync it right to Amazon Cloud Drive. It’s also a bonus that songs that you buy from Amazon don’t count toward the 5GB limit, practically allowing unlimited storage if you buy songs only from Amazon. Amazon Cloud Drive is also a multi-platform software, working both on Android and iOS now. Although Google Music has a pretty cool tool that imports every songs you buy from iTunes, songs with Apple DRM and lossless files don’t work as well as songs from Amazon (you have to do it manually). Sure, iTunes still hold a massive lead over Amazon, but as Android phone manufacturers further embrace Amazon and iPod sales decline, this may arise as a problem in couple years or so. For many with iPod Touch and Android phone combination (or an Android phone and an iPad), multi-platform nature of Cloud Drive also helps, as one can literally listen “anywhere, on any device,” which Google Music can’t.

Google is trying its hands at content delivering process, perhaps to combat iTunes, but the products introduced simply don’t live up to hype, and falls behind what Amazon and Apple offers. The fundamental difference between those companies lies in that Amazon and Apple have a long experience in delivering contents, while Google is a relative newcomer. So even though Google is trying to outwork Amazon and Apple, that fundamental difference and Google’s beta approach to everything it does eventually lead to Google’s failure to even staying competitive with Amazon and Google, just as with Google’s repeated attempts to enter social networking area.

Amazon, in a meanwhile, is getting its feet wet in hardware business. Kindle has been a huge success, and Jeff Bezos practically admitted that there will be an Amazon tablet out this holiday season, based fully on Android. What we’re seeing is Google trying to make a move to create one-stop content delivery market, which Amazon is more familiar with, while Amazon is trying to develop its own ecosystem based on Android, space that Google is more familiar with. So the question is, why are both companies trying to approach areas where they are not familiar with, when they can simply choose to complement each other in the areas that each is lacking in?

The goal that both are looking for it is ironically the same, to create perfect competitor to iTunes that can nullify Apple’s trump card. Both companies look to be the first one that develops the ecosystem. The truth is that both companies lack an aspect of ecosystem that Apple worked long to develop. Google lacks any kind of knowledge in content delivering business, as shown with the failed negotiation with labels to develop music store. While Amazon has tasted a success in hardware manufacturing device with Kindle, it lacks an ability to natively integrate its software to the OS, as Apple has done with iTunes and iOS. But if two companies worked together (I’m not suggesting a merger in any way aka. Googlezon, I am just looking for a partnership), they can fill what each other is missing. And with Amazon’s content natively integrated with Android, two companies finally can get a chance to develop the ecosystem that natively integrates content delivery to the operating system. Also, just as what Apple has done with the iTunes, Google can fully set up its “Googlezon” service as the entertainment store for Android. With even more content  and cheaper price than what iTunes has, I think Android users will take a look at Googlezon with the right marketing. When those users are persuaded enough to fully ditch iTunes in support of Googlezon and think Googlezon=Android as many iOS users think iTunes=iOS, I think Google and Amazon, after years and years of effort to beat iTunes, can finally beat iTunes in market share and show themselves as the market leader.

Dear Carriers, Give Us More Deals Like Optimus V.

Smartphone carriers have always tried to attack both the high-end and the low-end market, with $ 200 iPhones and EVOs sitting right next to free Optimus Ones and Cliqs. The strategy may work for UK and other nations that have tiered plans and no 2-year contracts, but it obviously doesn’t work for the U.S., where carrier subsidies (and good deals from Amazon) basically equalized the price of low-end and high-end smartphone with iPhone excepted. For instance, who would pay $ 50 for Optimus S when you can get Atrix 4G for $ 100 from Amazon? Especially when Atrix has CPU that’s almost four times faster than the one in Optimus, not to mention that Atrix has bigger (and better) screen as well? Customers obviously are not blind, as seen in the list of bestseller phones from Amazon, where Top 25 feature no “budget” smartphones.

Then where’s the room for low-end smartphones? Well, look no further than Metro PCS, Virgin Mobile, and other regional/MVNO carriers. Optimus One line of phones as well as dumbed-down Galaxy line of phones have invaded MVNO carriers for months, launching at price that’s no higher than regular smartphones (around $ 200-$ 300) but with a plan that costs far less than that of national carriers. Optimus V is a great example. The phone launched in February of this year, at low price of $ 150 (at $ 200 now) and the plan that only cost $ 25, and the reception has been outstanding.  Users gave the phone 4.7 out of 5. It received editor’s choice award from PC Mag. BNET called the phone “perfect pick for cash-strapped business owners who crave smartphone power.” Seriously, the praise for the phone can fill up the entire phone book at this point. While the phone itself is just a budget smartphone that can’t compare to EVOs and Droids, its relatively cheap off-contract price and cheap plan definitely became a selling point for many people, especially those first-time smartphone users.

What Optimus V speak about the smartphone market is that cheap price doesn’t matter, it’s the cheap plan that matters. With Virgin Mobile’s plan, one can easily use a smartphone for a price lower than even regular featurephone (24 month – Optimus V: $ 800, LG Cosmos Touch from Verizon with 450 minutes – $ 1040). And with lot of MVNO carriers using cellular towers from national carriers, reception and call quality have been thrown out of the question also. So, budget-conscious users, like me, can finally consider moving to MVNO carriers, with solid phones and cheap, yet feature-packed and reliable plans. Especially if AT&T/T-Mobile merger drives the cost of plan up, those in a financial pinch basically have no choice but to move to prepaid carriers.

This is why carriers should seriously consider developing another plan for low-cost smartphones, especially when data clearly shows that those with budget smartphone uses less data than those with premium smartphones. While data tiered plan lessened financial burden on those who use very little data (not many, FWIW), it has not done enough to lower the overall cost of owning even a low-end smartphones in national carriers. What I recommend would be this:

• Budget Smartphone – Unlimited Data for $ 15.
• Premium Smartphone – Unlimited Data for $ 30.
• Other features such as voice and text remain same for both categories.

This will save $ 360 (along with $ 150 ~ 200 user will save when he/she buys low-end smartphones) per two years, not a chump sum. It will definitely drive more people into smartphone area (You only have to pay $ 15 more a month to get Optimus S instead of enV Touch? Sweet!), not to mention extra money carriers will gain when smartphone users buy apps (30% of Android app revenue goes to carriers). This will also drive more people to buy premium smartphones as users are sucked into smartphone ecosystems already (“I already bought $ 200 worth of app for my Kyocera Zio, and I don’t want to go back to featurephones and not be able to use those apps I bought… But my Zio is so slow. Wait, there’s Galaxy S II that’s faster and that can use apps that I bought? Sign me up! It’s only $ 15 more a month than what I pay for Zio anyway”).

What’s good about Android is that the OS have already progressed far enough that it’s very smooth on even a basic, 600-MHz CPU at this point. Along with cheaper and more efficient chipsets developed, manufacturers should be profitable even by producing $ 300 no-contract smartphones. Even $ 200 no-contract phone may work, as LG is trying to do. Although embracing low-budget smartphones with cheap plan may cut carrier’s profit margin at first, carriers should easily see benefits as more and more users will dive into smartphone world and more expensive plan in general. Beside, with lord of money already hauled in by carriers, I got to think that at least one carrier is willing to take a chance.

Inspired by: http://thisismynext.com/2011/04/30/carriers-act-swiftly-save-low-end-smartphone/