That's right: If you have anything other than a Kindle Fire, you can't play video purchased from Amazon's store on your Android tab. Well, you can, but only in the browser on a screen that adjusts awkwardly because it's not optimized for video playback. There's no custom app that supplies access to your items.
Why don't investors see this as a problem? Sure, the Fire appears to be the top choice among a mostly lackluster list of Android tablets. Yet according to what little data we have, the Fire still badly trails the iPad when it comes to sales: 4 million Fire tabs sold in the holiday quarter versus 3 million new iPads sold during its opening weekend.
Lack of demand isn't the big issue here. There's plenty of demand for the Fire. Trouble is, Amazon is a retailer with a strategy that promotes hardware sales -- money-losing hardware sales at that -- over content distribution. Stupid. And worse, it's a 180-degree reversal from what CEO and founder Jeff Bezos proposed three years ago:
The [Kindle] device team has the job of making the most remarkable purpose-built reading device in the world. We are going to give the device team competition. We will make Kindle books, at the same $9.99 price points, available on the iPhone, and other mobile devices and other computing devices.
In short: Amazon was to become the Netflix
Smart plan. As of last May, Amazon was selling more e-books than printed editions. E-book sales rose 175% in the holiday quarter alone. A good portion of those sales surely went to those who own something other than a Kindle device. Readers like me, in other words.
Despite being a longtime Mac user, I've mostly ignored Apple's iBookstore, choosing instead to buy Walter Isaacson's biography of Steve Jobs from the Kindle store. Why isn't this same distribution model available for video? Why can't I purchase episodes of The Walking Dead at Amazon and watch them on my Samsung Galaxy Tab? Wouldn't Amazon make more money this way?
Don't get me wrong; I'm not suggesting that Amazon stop selling e-readers. The Kindle has been remarkable in its ability to drive content sales. What I'm saying is that the e-book sales strategy that has worked so brilliantly can work for video, too, if given the chance.
Think I'm wrong? Go ahead and tell me so using the comments box underneath. Or if you'd rather learn about other ways to profit from the triumph of tablets, download this new Motley Fool special report: "The Next Trillion Dollar Revolution." The research is free, but only for a limited time. Get your copy now.