September has been an exciting month in mobile, or more generally, connected devices. Last week, Amazon announced two new Kindle Fires and is trying to move into iPad-sized tablets. In spite of the controversy over ads displayed on the lock screen, it’s a very compelling price point.
Perhaps most interesting is how Amazon views Android. Amazon CEO Jeff Bezos says “it’s a base operating system layer”, like Linux but with a lot of customization. In other words, they’re not in the game of making Android devices; they’re making Kindles.
Amazon’s not alone. Barnes and Noble’s NOOK comes to mind, as do other OEMs who’ve shared their plans to move in this direction. For tablets, the trend away from Google-approved Android devices is accelerating.
This week, Apple is expected to announce the iPhone 5, but there’s also speculation that a 7″ iPad (the so-called iPad mini) is in the works. It’ll be interesting to see how the turf wars play out. As Amazon moves into the iPad territory with its larger, retina-like 8.9″ Kindle Fire, Apple moves down into the 7″ tablet category.
Their business models are quite different. Apple makes more money on devices than from selling content/services, while Amazon is the opposite. Now, Apple’s model is much more profitable right now, and that’s because they can charge a premium. But in order for them to maintain that premium, they have to innovate in ways that make it difficult for competitors to catch up.
This explains why Apple is updating iOS at such a furious pace, so they can differentiate themselves sufficiently to create value in their hardware. The billion (trillion?) dollar question is how long will this game of “catch me if you can” last? Will it continue indefinitely? Is there some critical threshold?
Apple keeps pushing the envelope on hardware (e.g. retina displays) that force changes in the software. As long as they can keep doing that, the competition will be chasing them for a very long time!