Amazon Kindle Fire - burning books? Quite possibly....

                The Amazon Kindle Fire was announced today in the US – as yet no UK date. Alongside an incredibly cheap price (half that of the ipad) the device boasts a heavy use of cloud computing, a fast browser, smaller than Ipad dimensions for easy transportation. All the tech specs are in these articles, no pint in repeating them:-

tech review
businessweek

                What is intriguing about the Fire for me is that its introduction – based on the success of the original kindle - demonstrates that the tablet space is maturing to the point where it is beginning to impact the publishing market. While I doubt I will entirely dispense with real books, the series of improving and cheaper introductions to the market (alongside audio books which I love, and get through an enormous amount of content on) are chipping away at publisher’s traditional business model of sticking ink on paper and flogging it. This is – as most things are – a threat and an opportunity to those inhabiting that market place.

On the alarming side publishers and resellers only need to look at the disastrous effects of peer file sharing and the ever lower costs of entry to the music market which saw retailers (like HMV, Zavvi etc) essentially made redundant, while the big music conglomerates suffered huge financial turmoil as they returned less and less money for each CD sold. While the exposure is less for publishers – books lend themselves less easily to replication than music (you cannot just ‘scan them in’, also there is a significant attachment to the physical nature of a book which does not exist to the same degree to the ephemeral nature of music) – it remains a concern that over time. And as the children of the future are undoubtably to be raised on electronic textbooks sentimental barriers will erode.

                More positively, from my perspective as an avid novel reader and fiction writer of sorts, I am excited in that it could promise the flowering of independent publishing. Low cost of entry (well apart from the frankly awesome level of work it takes to produce a novel), ease of delivery and an expanding market created by the Kindle, iPad and the like, point towards real transformation. The effects of this should reduce the influence of publishing houses in filtering the work that becomes available to the public. This is a two edge sword - a lot more crap is going to be available to read on your tablet as there will be fewer people to quality control. However on the other hand it means more unusual work could make it to market when it might otherwise have been filtered out. Harry Potter (does not seem unusual now but was in 1997) was ignored by a dozen publishers and took some time to be picked up. I am sure hundreds of novels of excellent quality never saw the light of day because publishers (perhaps erroneously) judged them as marketless. The upshot of this more varied fiction landscape however will be that the great burden of sifting the wheat from the chaff will fall to reviewers on the web – to highlight and publicise the best indie fiction to the larger market. And in this you see another mirror held up to the music industry – to more aggressive marketing to ensure the best independent coverage of the novels you do wish to push, publisher to survive witll have to be PR agencies of sort and work harder to pick up the best performers.

Transformational times.  The chances of me being able to say I am ‘published’ one day seem to be increasing.

On-Live

On Friday the new - potentially revolutionary – cloud gaming service On-Live was opened to the public. My interest was piqued firstly as a reformed computer games player myself (it gave me the excuse to get off the wagon so to speak), as well being intrigued as to the dramatic changes that this service could herald not only in the gaming but also across interactive media and cloud computing space as a whole.

                On-Live’s proposition is that it delivers computer games instantaneously and dynamically over the cloud - remote servers connected to the user through a standard broadband connection for the jargon uninitiated. The business case is based on three key benefits in comparison to standard gaming devices (PC, Xbox, PS3 etc):-

·         The ability for low spec machines to deliver high spec games to consumers

o   The result of specialised server infrastructure performing all the 3d heavy lifting. The terminal only needs to handle an app front end

o   A simple TV box retailing at £89 has been launched to undercut competition

·         The ability for a customer profile of purchased games and saved points to be accessible from any machine instantly.

o   Greater flexibility to meet your lifestyle

o   Greater sociability – you can log in from a friends location

·         This profile to be linked to a dynamically updating selection of games delivered through a monthly subscription

o   Currently OnLive have a £6.99 per month package which gives the consumer access to dozens of different games (although only a few of these are high profile)

o   This list can be updated with new titles.

o   Much like a mobile or utility contract this can be used to build ‘stickiness’ to customers and guarantee revenue flow.

It is the first of these benefits which really strikes me the key to the success of the product. As cloud computing can remove the need for bulky, expensive and rapidly obsolete hardware the potential commercial advantage for On-Live is huge. However in my initial experience there seemed to be a problem with this. I logged on using a feeble Samsung Netbook (outstanding for web browsing and word processing with a brilliant keyboard – but very light in the processor area) across a 5Mb connection.  These are modest specs but quite indicative of a large swathe of the market who do not have high end computers who are presumably a key target for OnLive executives.

                Unfortunately the result was unplayable. Lag on the games – waiting from pressing a key to the action being translated within the game clocked in at around three or four seconds. The GUI informed me that there were network connectivity problem, although when I used a broadband speed checker I was managing a consistent 4Mb/s connection.

                However, while it is of course early days, it seems to me certain that cloud technology will dominate gaming in medium term if implemented and supported successfully. This opinion is founded on three separate elements-

·         Economies of scale reducing costs resulting from massed site server locations. Component, logistical, marketing prices will be significantly cheaper than those of stand alone system retailed to consumers. These savings can be passed on.

·         Efficient utilisation of capacity (ie. you don’t have all those unused playstation threes with idle processorts kicking around) – this again bringing down cost versus stand alone systems. Effectively less processors, memory, other components etc will be required to serve the same set of customers.

·         The dynamically updating specification of system allowing consistently cutting edge game play – it will be possible to make your gaming offering ‘obsolete-proof’ without the expensive cycle of releasing a new stand alone system into the market.

The barriers to this business model are (as ever) mainly technical and logistical - and On-Live will be hoping that they will be able to  ability to shape and dominate this new market before competitors with greater resources lumber in. Surely it can only be a matter of time before Microsoft and Sony venture forth. The key considerations seem to me –

·         Quality and consistency of service

o   Interruption of service/Poor service – a real concern for anything so bandwidth heavy in a time of ever more severe contention on the web – could be devastating to reputation and credibility of the technology

·         True accessibility from minimal spec machines to drive penetraition into mobile devices, tablets and other devices

o   On a technical level this will be driven by the ‘back loading’ of processing and memory requirements onto the cloud server as much as possible, and the ‘slimming’ of the on device app.

·         A first rate offering of games

o   Without the games you cannot attract the customers. On-Live’s profile is tiny and poor compared to that of Sony, Xbox etc. This will need to be aggressively and rapidly expanded.

o   This is the area where On-live are most exposed to the big players who have huge portfolios of existing games, and extremely strog relationships with development houses, to call upon.

It will be interesting to see how this one will pan out.

Google Wallet and Google Offers

Today Google announced the launch of Google Wallet and Google Offers. Google Wallet is an open source payment solution driven by the early signing up of Citi Bank Master Card. Google Offers is (yet another) offer based website that seeks to leverage the economics of low price high volume time window offerings. Details of these new products can be found via these links:-

techcrunch
zdnetasia


Google Wallet

From my perspective Google Wallet is the first shot in what promises to be an intense electronics payments battle. While the technology has progressed from the days when credit cards were launched many of the economic characteristics are the same. What consumers require from a payment agent is:-

• Total security
• Total usage coverage (ie. all places where you purchase anything - from pub to car dealership - to allow payment via your 'wallet').
• Low (or ideally zero) cost

Beyond these factors there aren't really any features that will have significant differentiation on customer's choice of product. On this basis the google strategy seems sound - get in early (first in), try and dominate through ubiquity (quick roll out in two major urban centres), build brand name (already all powerful with Google), minimise cost (through open source and no usage fees), dominate innovation (again through open source).

Existing payment giants Mastercard and Visa must be trembling mightilty at the promise carving up of their 'ecosystem' (when did this bit of  business jargon become the flavour of the month?) which has dominated the payments sphere for decades. This perhaps underpins Mastercard's support for Google Wallet, it is surely highly likely that Visa will jump on board too at some point to limit the damage and try to tie up in some sort of propriety format the links between electronic wallets and banking infrastructure.

Visa and Mastercard will always have a strong edge in subject matter expertise in the payments arena, but presumably the arrival of the mobile wallet marks the end of their control of delivery of electronic payment. It will be interesting to see how this pans out - and what other competitors will enter the field to bridge the gap between the mobile wallet and the consumer's bank account.

Google Offers


The business case for this venture seems, to me at least, a lot more shaky. Google are late to the party on this one - VoucherCodes, Time Out, UK Hotdeals, Tip Token have all been in this market for sometime. There is severe contention, and the apparent USP - that Google Offers can be linked electronically to Google Wallet seems a weak (perhaps even undemining?) feature. The point of a discount service is to:-

• Mass advertise discounts to large groups of people
• As a results have a huge impact on volumes of sales

In no way does limiting the outreach - such as having to use an electronic wallet with limited penetration - appear to be particularly promising in attracting retailers to the platform or therefore customers to utilise it. I imagine therefore that GO will use a standard voucher format as all other players in the market do. The result of this will be a standard toe to toe slog between competitors for market share. Google's brand will greatly help, as well as cross pollination from its vast array of services, so perhaps there will be leverage there.

As a side note I am unsure of the long term economics of group offers where short term spikes in demand are cutting long term margins. While a particular supplier may get a vast number of orders the general depression of prices across the market must be severe over time. Indeed such pressure on prices from on line retailers and aggressive deals may be leading to the retailer anxiety we are seeing on the high street today.