Amazon.com is reportedly considering building prototypes of gadgets other than its Kindle e-reader. But one analyst questioned the value of such devices unless they can be tied to Amazon-provided services and content. A New York Times blogger, citing unnamed sources, said Amazon engineers in its Lab 126 are "looking into building other gadgets [than Kindle] that it could sell to consumers."
Amazon officials did not respond to a request to comment on its prototype efforts. The kinds of gadgets Amazon is considering could be music or movie players or a mobile phone that could compete with Apple's iPhone or Android phones backed by Google.
Analysts said it makes sense that Amazon is trying to compete on every front against companies such as Apple and Google. With its iBookstore and the iPad tablet, Apple has stepped into a space that Amazon had with the Kindle e-reader, which is used to access Amazon.com books, for example.
But one analyst, Jack Gold of J. Gold Associates, said Amazon should be careful with new hardware ventures, unless it can tie the devices directly to content or services. "If Amazon gets into a gadget market, what is the value-add they offer [over competitors]?" Gold asked. "What service can they sell that purchasers of the device will buy? What would be the goal of Amazon's making gadgets?"
If Amazon makes a wireless phone, it wouldn't make any money off the services, since that is what the wireless carriers do, Gold said. If Amazon makes a music or movie player, it could turn its music and video online sales into an iTunes-like service, but not without risk.
"Competing head-to-head with the iPod is hard and risky, as Apple owns such a huge portion of that market," Gold said. By comparison, Microsoft, Sandisk and various Taiwanese players have not had a major impact on the iPod market, he said.
"If all Amazon is doing is making a gadget to sell, why would they not just resell all the other devices available on the market from all the vendors that want to sell in the Amazon marketplace?" Gold added. "But having a gadget plus services makes sense, following the Kindle example."