There has been much talk about how the Kindle Fire is or is not an iPad killer. In my opinion, and the opinion of some other people (CDEspinosa), Amazon (AMZN) isn’t focused on Apple (APPL) or the iPad, and isn’t looking to kill anything other than quarterly results… with Amazon Silk.
One of the many technologies built into the Fire is Amazon Silk, the web browser. What is interesting about Silk is its ‘split design’. Basically what Amazon Silk does is use the vast computational power that Amazon has in AWS, the enterprise class cloud services that Amazon runs, to deliver content to the user faster and make the web browsing experience better. The design allows each part to do what it does best, Fire displaying content and AWS to process and deliver content.
On the surface, this seems like Amazon is being altruistic by allowing customers to piggyback on its enterprise class infrastructure, but dig a little deeper and it gets more interesting. Because all of the browsing activity goes through Amazon, they can and will capture the browsing behavior of its users. Why would Amazon care about what its users are looking for on the internet? It’s the same reason that Google (GOOG) and Facebook care, information is power. Unlike retail that has slim margins and new competition every day, the browser data and the information inside it are hard to duplicate and with scarcity comes value.
Is Amazon going to launch an ad network like Google or Facebook? Only Amazon knows, but remember that Amazon started as an online bookstore and now has millions of products for sale and has services like AWS. If anything, this browsing behavior data will extend the usefulness of its recommendations within Amazon.com. Currently, Amazon knows what you look at and buy on Amazon but does not know why you did what you did or what you might buy later. The predictive power of this data is worth the effort alone.
There are some that have raised privacy concerns and brought up the detail that Amazon allows you to disable the ‘split design’ but these are non-issues. Amazon, and many other people know, that the vast majority of people will not disable the better and faster web browsing because Amazon might be capturing data on them. The familiarity and trust that Amazon has built over the years will trump any concerns for the average person.
The Kindle Fire and Amazon Silk in particular remind me of a scene from a classic documentary “Animals Are Beautiful People” where a baboon’s natural curiosity and knowledge are used to find water for a hunter (see: The Thirst Baboon). Amazon is playing the role of the hunter, the Kindle Fire is the salt and the user is the baboon. Amazon knows that if you give the user some salt and be patient, the user will gladly lead Amazon to a deep pool of data that is worth more than a quick meal of baboon or salt.
Editor’s note: Chuck graduated from Carleton College in 1999 and received his MBA from Carlson School of Management – University of Minnesota in 2004.
No positions in any of the securities mentioned at time of publication.
Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of his employer or any other person or entity.
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