Amazon vs the world

We tend to think of technological convergence as something that happens at the consumer level. In the last decade phones have become music players and video cameras, and tablets have become personal video players and e-readers. But the bigger convergence is happening at the other end of the food chain as the world’s tech titans increasingly stray on to each other’s turf.

Everyone knows is world’s biggest online retailer.
Most of us also know that Amazon now sells nearly as many electronic books (e-books) as it does physical ones. But few people realise that Amazon doesn’t consider bricks-and-mortar retailers its big rivals anymore, or even other online retailers. No, Amazon is competing directly with the likes of Apple, Google and Microsoft.

Witness the launch, on Tuesday, of Amazon’s online music locker service. This lets you store your music (as well as several other types of files) on Amazon’s own massive computers (called “servers”) and then allows you to “stream” your tracks to any mobile device running Google’s popular Android operating system. The first five gigabytes of storage are free, which equates to an average of well over 1 000 songs.

This kind of service, known as “cloud” storage, isn’t new to Amazon. It is already making hundreds of millions of dollars a year renting computing power and storage to companies that want an extra boost without having to buy additional equipment. But this is its first cloud offering aimed directly at its (enormous) consumer customer base.

So where Amazon was already competing with Microsoft and Google in the burgeoning “enterprise cloud” market, now it is going head-to-head with Apple in the consumer cloud services market. Not bad for a company that started out hawking discounted books online.

Predictably there were some squawks from the music companies, who complained about not being consulted before the launch. Then again, when do they not squawk?

Amazon’s argument is that it doesn’t need a licence to store music any more than an ordinary consumer needs one to store their own music on a portable hard drive. And, besides, Amazon already has rights in place for its online music store, which it launched way back in 2007.

What’s really significant is that Amazon beat both Google and Apple to the punch—both are planning to launch similar services this year. And it has bundled the service cleverly with its existing music offering. Your free storage limit gets bumped up to 20GB the moment you buy an album from it.

Being first to market isn’t everything. Despite its ambitions, Amazon still has a long way to go before it can truly rival the likes of Apple or Google, both of whom control the entire mobile value chain, from data centres right through to the device in the user’s hand. Google is worth more than twice as much as Amazon, and Apple more than four times as much.

The move may also get Amazon sued, just as MP3tunes was when it tried the idea in 2007. The record companies may claim (as they did with MP3tunes) that streaming their music, even privately, amounts to a licence infringement.

But Amazon has proved, once again, how agile and innovative it can be. And with rumours flying about an Amazon-branded tablet device to rival Apple’s iPad, we can be sure we haven’t heard the last of the world’s biggest, and most unusual, online retailer.

Alistair Fairweather

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