Vendor watch: Amazon – A gift for disruption

By Gareth Morgan
17 Jul 2012 View Comments
amazon webservices reception

It was here that Amazon first made its presence felt in the enterprise, thanks to its pioneering Amazon Web Services platform. But in the main, Amazon has chiefly flown under the radar in the enterprise - AWS might be the first choice for skunkworks projects or used by discrete functions, such as marketing or accounts, but fewer well-established firms rely on it (short-lived test projects notwithstanding) for their IT.

Further reading

Even so, as history has showed us, with the phenomenal success of software-as-a-service company, IT companies that grow up in the shadows can easily become so useful that the IT function is forced to engage with them, says Laurent Lachal, an analyst with Ovum. “But given the traction it’s gained in pockets of the enterprise, Amazon is pushing IT towards decentralised applications in a way that nobody else is doing,” says Lachal. “As a CIO, you can’t ignore that.”

Coming out of the shadows

And that presence looks as if it will be even harder to ignore once Amazon’s second-generation Kindle Fires arrive in the UK. This will give the company not only a wealth of infrastructure and development tools but will be combined with a tightly integrated end-user device priced at a fraction of the cost of an iPad.

“The Kindle plus AWS? That’s a powerful combination,” says Wang.

Of course, the new Kindle Fire will be entering a crowded market. Google’s newly unveiled Nexus tablet is the most obvious competitor, with a similar neat 7in screen and comparable price tag. Meanwhile, Microsoft too is lining up a business-oriented tablet, hoping its Surface can steal a march on rivals. With its native Office apps, Surface is a tablet that will appeal to many from the IT function.

But it’s far from certain that Office apps alone will be enough of a pull, says Wang. “What we’ve seen from the whole bring-your-own-device (BYOD) movement is that users are putting an emphasis on usability.”

Amazon, meanwhile, appears to understand one facet of the tablet market that was missed by the first round of would-be competitors to Apple’s blockbuster tablet, the iPad, and that is price. While HP, RIM and a host of Android-based rivals shipped out iPad clones at similar prices, Amazon’s low-cost Kindle Fire emerged as the only competitor to dent Apple’s market share when it was launched in the US in November 2011.

Amazon itself has been remarkably reticent to break out figures, but according to market watcher IHS Suppli, the Kindle Fire accounted for 14 per cent of total tablet sales in the first quarter its was available. It estimated Amazon sold 3.9 million units in just six weeks.

Analyst firm Gartner is betting that Android-based tablets will continue to provide the main source of competition to Apple (see table below). Amazon’s Kindle gets lumped in with the other Android devices because it is essentially based on Android, albeit with most of the close integration with Google’s services hacked off. And while Gartner isn’t breaking out how much of the Android market it thinks Amazon will snaffle, there looks to be a big opportunity to exploit.


Stealing a march on rivals

And unlike Google and Microsoft, Amazon now has experience in making tablets and is believed to have new models on the way. So while Google and Microsoft have garnered plenty of attention with their forthcoming lines, Amazon is one generation ahead of its competitors. The differences between Apple’s first and second-generation iPad suggest that firms can learn a great deal in that time.

Another area where Amazon has an edge is that its Kindle is a tablet designed for cloud, says Wang. “Ultimately, every tablet needs to be connected to something,” he says, but from a business perspective, there’s a world of difference between a device built solely to connect to the wireless internet and one designed for cloud.


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