Why Amazon’s Tablet Matters: It’s Not a Computer. It’s a Store.

9/28/11Follow @xconomy

Updated 11 am Pacific
The tech world is going into hype-tastic overdrive today with the release of Amazon’s new tablet computer. If the predictions and previews are correct, the new device could be a big competitor to the market-defining Apple iPad and cement Amazon as a major player in the computing game.

But this isn’t really about the chunk of hardware that Amazon will be showing off. The reason Amazon’s entry into the tablet market is such a big deal has much more to do with all the merchandise and media that Amazon can put in your hands, without having to pay Apple some pretty hefty tolls for the privilege.

I’m not saying that competition with Apple in the tablet market isn’t a major piece of this story. Plenty of others have come out with me-too devices to follow the iPad, just as millions of people own smartphones from some other company. But none of those tablets has done much to dent the iPad’s hold on the market. Amazon’s move into tablets, however, is the only effort so far to fundamentally copy the Apple playbook, bringing a unified software, hardware, and application experience to the user.

That’s hugely significant as a piece of business strategy, because it signals that one of the more innovative companies around is truly dumping the old Microsoft view of the world, where companies specialize in one area (like software, or retail) and get others to build around that brand. It’s another vote—a big one—for Apple’s approach, and if it catches on, you’re going to see more movement in that direction. That’s surely part of the reason why Google would pay billions for Motorola.

But something much more basic is going on here. Amazon isn’t putting out tablet computers because it wants to be a computer-maker. It’s doing so because Amazon is fundamentally a retailer, and the tablet is the new digital store.

“People leaning back on their sofas, buying things from Amazon, is another tailwind for our business that I’m very excited about,” CEO Jeff Bezos said during this June’s shareholder’s meeting.

Let’s look at some of the offerings that Amazon has in its quiver, either already announced or pretty solidly reported by journalists covering the beat, which would make sense to consume over a tablet:

Movies and TV: Amazon already has a Netflix competitor, Amazon Instant Video, that beams programs to your computer. Significantly, this has been offered as essentially a loss-leader for Amazon’s Prime membership program, which previously was mostly about free shipping. That seems … Next Page »

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