Is Amazon Suffering an Identity Crisis?

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Is Amazon Suffering an Identity Crisis?


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You probably know that Amazon recently introduced its second-generation Fire TV streaming media player, which supports 4K streaming, uses a faster processor, offers more comprehensive voice search, and includes internal storage. (I just picked up a sample for review, so stay tuned.) What you may not have heard is what happened a few days later, when Amazon announced that it would no longer sell competing Apple and Google streaming products through Amazon.com. According to Bloomberg, Amazon sent an email to its marketplace sellers informing them of this policy change, ordering that all existing inventory be removed by October 29.

Amazon's reason for cutting off Apple and Google is reportedly because those companies' streaming media products don't "interact well" with Amazon's own Instant Video streaming service. Owners of Apple TV and Chromecast products may have noticed the lack of Amazon Instant Video support on these devices. Apparently, as Amazon invests more money in acquiring and developing content for its streaming platform, the company feels the need to say, "Enough is enough!" to this lack of compatibility. The explanation to the sellers was, "It's important that the streaming media players we sell interact well with Prime Video in order to avoid customer confusion." Amazon will continue to sell competing streaming media products that do interact well with Instant Video, such as Roku's product lineup, Microsoft's Xbox, and Sony's Playstation. So, the e-tail giant isn't banning the hardware competition entirely; it is simply banning the hardware competition that doesn't give users access to its own streaming platform.

This begs the question, what exactly is Amazon these days; or, perhaps more importantly, what does the company want to be? Does it want to remain the most powerful online retailer in the country, or does it want to be a major force in content creation, distribution, and hardware development? I suspect Amazon wants to be both, but can it do so successfully?

Amazon has played these types of games before. Last year, I wrote a story titled Will Blu-ray Discs Be the Real Casualty in Amazon's Current War?, describing how the company limited the home-video presale of popular films from Disney and Warner Brothers as leverage in behind-the-scenes negotiations. And it did the same thing with book sales as it negotiated with the publisher Hachette. Amazon's justification in those cases was that it was negotiating to keep prices low, to fight for the consumers, which may have earned the company some goodwill leeway with shoppers.

Amazon-Fire-TV-Remote.jpgBut there's no such rationale in this new ban of Apple and Google product sales. Amazon may label it a "confusion" issue, but this looks to be purely a competition issue, especially given the timing. Apple and Google also announced new versions of their streaming media devices this past month. The new Apple TV, in particular, will add gaming options and enhanced voice search that pits it even more squarely against the new Amazon Fire TV--although Apple's product doesn't support 4K and Amazon's does, which gives it a leg up in our little corner of the industry.

If this really is a compatibility issue, then who exactly is keeping Amazon Instant Video off the Apple and Google devices? Google opened up its software developer kit (SDK) to outside companies a long time ago. The Apple TV ecosystem has been notoriously locked down; however, as part of the new Apple TV introduction, the company announced the tvOS SDK to finally encourage widespread app development for the platform. So, Amazon's timing for this ban doesn't line up with its claimed reason for doing so.

The big question is, will Amazon eventually lose the trust of its shoppers if it continues to use its power as an e-tailer to benefit its media/hardware aspirations? The company may have every right to ban Apple and Google product sales, but that doesn't mean it's the right move. I like how Forbes contributor Larry Magid sums it up, complaining that Amazon's move violates "retail neutrality" and "Amazon's covenant with its customers."

The truth is, it's all about public perception. Right now, I think it's safe to say that the public still sees Amazon as an online retailer first and a media/hardware company second. Therefore they expect some degree of neutrality, at least on the surface for the sake of appearances. None of us bats an eye at the fact that Apple and Google don't sell Amazon and Roku players through their retail or online stores. That's because we perceive them as being hardware/software developers first and specialty retailers second. Up to now, that hasn't been the case with Amazon. We expect to go to the site and find a wide range of competing products in every category, with the freedom to choose the one we want. Can our perception change? Of course it can. Is Amazon willing to sacrifice some of its retail business to enact that change? Right or wrong, all signs are pointing toward yes.

Additional Resources
An Open Letter to Tim Cook Regarding HD Music at HomeTheaterReview.com.
Will the Xbox One Ever Become the Complete Home Entertainment Hub It Aspires to Be? at HomeTheaterReview.com.
Does Google Have the Power to Take Control of Your Whole Home? at HomeTheaterReview.com.


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