Amazon.com's (NASDAQ:AMZN) engineers have had a busy year of device announcements, including the Fire TV and (most recently) a leak to The Wall Street Journal about a handset to be released in September. Amazon is trying to position itself as a player in every major consumer-electronics market but it's also trying to lock customers into its content library.
While it might work, this strategy could backfire and leave a large opportunity for Apple (NASDAQ:AAPL). Especially if it decides to pursue a simple strategy and give customers what they want.
Amazon's phone might rely on 3D content
On Friday, The Wall Street Journal published a story citing Amazon.com's intent to offer a mobile phone sometime around September. The article cited as a source "people who were briefed on the company's plans." The Journal doesn't often get specific claims wrong, so this event should happen as expected.
The article goes on to say that the differentiating feature would be a 3D viewing experience that makes some images appear like a hologram. Sounds cool: But cool for whom? The biggest reason (beyond the headaches) that 3D TVs haven't caught on is the lack of content. Perhaps 3D images would sway the decision-making process of a niche group of buyers, but it risks going into the closet for many people.
So why would Amazon take this chance? Because it ties you to Amazon created content.
Fire TV creates a lock into Amazon's rental and gaming content
The Fire TV is a similar situation. According to most accounts, the product is very similar to the other set-top boxes on the market. You can stream content from YouTube or Hulu, but if you want to rent a title that isn't already in their content libraries, you have to use Amazon.
Beyond video, consumers can purchase an add on handheld controller for $40 that allows you to access Amazon's game library, which has received good reviews. You're not going to find games like Titanfall, but there is a wide selection of fun and easy to play games.
Is being locked into one company's framework acceptable? Maybe, it worked for Microsoft for two decades when there was no real competition. But this isn't the same landscape.
Opening the content landscape could set Apple apart
Apple, is one of the last self-proclaimed hardware vendors and seems to be in the best position to give people a premium appliance that can tie into any back-end content. Isn't this what people really want?
If Apple is willing to risk people choosing Amazon for much of their online viewing, it could dramatically improve the chances that iTunes remains at the center of personal content libraries. This would require a leap of faith, at a time when risk is a four-letter word.
David Eller has no position in any stocks mentioned. The Motley Fool recommends Amazon.com and Apple. The Motley Fool owns shares of Amazon.com and Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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