In a fascinating email sent to PandoDaily, the new tech site started by former TechCrunch writer Sarah Lacey, an unnamed but highly knowledgeable publishing executive admitted that the Amazon Kindle team was in the process of slowly killing all of the big publishers. The retail platform was achieving this by slowly pushing to become the content distributor and publisher all at the same time, by putting a financial squeeze on the already-struggling book publishers.

Business model

The email to Lacey is lengthy – and well worth a read in entirety – and is packed with perhaps the best insight I’ve seen on the relationship between publishers and disruptive retail platform with significant clout, with Amazon being the example here.

Bidding war for big books

The anonymous executive writers: ‘Publishers like to pretend that we make our money from discovering unknown talents for small advances and selling millions of their books. That’s a very small part of our business. The bestselling books are all written by celebs, by people with huge platforms, by fiction writers with a long history of bestselling books, or by people who do a proposal that’s on its surface brilliant. In short, there’s a bidding war among the publishers over the big books.’

Throwing around money in a money-less industry

The publisher explains, though, that as overall book sales have declined, so too have the advances the publishers are willing to pay for said books. Amazon, however, does not have this problem. ‘Amazon could probably afford to lose $20 million/year in their publishing arm just to put the other publishers out of business.’ There is reason to believe that that is what they’re doing, wrote the executive.

Platforms more valuable than content

Amazon today and Apple before it have shown that any media that can be digitized puts the gatekeepers – the content owners and publishers – at business risk. While it would be presumptuous to take this anonymous executive at their word, there’s little reason to believe that the Amazon Kindle team are not doing this, either.

Reports have emerged that an official ‘Google Nexus’ tablet PC is in the works and that the search giant was targeting the Kindle Fire as opposed to the iPad with this device. In this respected, it is expected to have the same display size as the Fire, and priced less

Price and form factor

Digitimes is behind the rumour, saying that the in-the-works tablet PC would be targeted at the Kindle Fire both in terms of capability and in terms of price. The publication writes: ‘The sources believe that Google will launch the own-brand tablet PC in March-April, featuring a 7-inch panel and Android 4.0 with a price less than US$199 to compete against Amazon.’

Is this smart?

At surface level, this seems intelligent. The Amazon Kindle Fire has quickly become the number two tablet PC on the market behind only the iPad, and it has achieved this by employing a different strategy to Apple’s high end tablet PC. Android, through attempts like the Motorola Xoom, has had little success at competing with the iPad in its class, and will instead attempt to compete with Amazon in its class.

At a deeper level, this could be dangerous, too. Tech-writer-turned-venture-capitalist MG Siegler writes: ‘If Google is going to undercut the $199 price, the hardware is either going to be sh*t — or Google is going to have to take a significant loss on each one sold. Maybe they do that and say they’ll make it back in search advertising. But there is real money they’re going to have to pay to an OEM to get them to agree to that.’ For Google, who’s Executive Chairman Eric Schmidt recently said they had plans of making ‘a tablet of the highest quality’ within the next six months, sacrificing quality or deferring payments to advertising may be a tough pill to swallow.

For now, we recommend taking Digitimes’ report with a pinch of salt, although we’re quite confident a Google Nexus tablet of sorts is, in fact, in the works.

Christmas has just past, and a look at many wish lists, recommended gifts lists, and Twitter revealed which were the hottest Christmas gifts in 2011. Our list is paired down to consumer gadgets and electronics.

Amazon Kindle Fire

Unsurprisingly, the Amazon Kindle Fire was one of the hottest Christmas gifts this year, proving a massive hit in North America. While Amazon has yet to – and may never actually – reveal sales numbers, it’s thought that the company may have sold 3-5 million Kindle Fire tablet PCs in the fourth quarter, with sales spike around Thanksgiving and Christmas. It’s suspected that the Kindle e-readers are also selling very well, too.

iPhone and iPad

Apple’s mobile devices have sold incredibly well, and, at various points throughout Christmas, the iPhone was a trending topic. The iPhone 4S is on course to be the highest selling smartphone (if not mobile phone) of all time, and the iPad is still leading the pace for tablet devices, even though the Kindle has made it slightly less comfortable. Not to be outdone, though, sales of Android smartphones were also incredibly strong throughout the holiday season, with Android chief Andy Rubin reporting that activations of Android devices had crossed 700,000 units daily.

Video games

Video game consoles are traditionally strong sellers over this period, but it’s been a mixed bag in Christmas 2011. In Japan, the Playstation Vita got off to a so-so start, selling 321,000 units, with the device being marred by usage problems, too.

The Nintendo 3DS, on the other hand, also did well in Japan and other parts of the world, with the console crossing the 4 million units sold mark, off the back of a record high of 510,629 units in a week. While the sales are still not at a level Nintendo would want they are indicative that handheld consoles have life in them still. It appears reports of smartphones killing handhelds are exaggerated, but it is undeniable that they have eaten into their market share.

In addition to strong sales of handheld consoles over Christmas 2011, it would be unsurprising to see consoles post strong sales figures, too, for this period when the NPD Group reports sales figures for the period.

Comedian Louis C.K. has reported that the self-distribution experiment for his latest comedy special has been a rousing success, grossing $1 million in just 12 days of availability. The special – Live at the Beacon Theatre – went on sale to customers for just $5 – allowing them two full streams and mp4 downloads without any copy restrictions circumvented distributing through traditional retail platforms like iTunes, or distributing through TV networks like HBO, and it has been a huge success.

Lots of money

Announcing the progress on his website, C.K. writes: ‘So it’s been about 12 days since the thing started and yesterday we hit the crazy number. One million dollars. That’s a lot of money. Really too much money. I’ve never had a million dollars all of a sudden.’ He continues, saying: ‘I want to set an example of what you can do if you all of a sudden have a million dollars that people just gave to you directly because you told jokes.’

What to do with all that cash

Comedian Louis C.K. plans to distribute the money amongst various sources, keeping just a fraction of it for himself. $250 000 (about  £160k) will cover production costs, $250 000 (£160k) will be paid to his staff in bonuses, $280 000 (about £180k) will be given to charities, while the remaining $220 000 (£140k) he will keep for himself. He has also committed to distributing more cash

Why this is important

More so than any change in modern day retail, the rise of the internet has fundamentally altered how people are able to distribute products to end users – both digital and physical. With this experiment, C.K. has managed to completely circumvent digital middlemen like iTunes and Amazon, as well as broadcasting middlemen like the television networks who would air the special and later package it on DVD. His fans have benefitted from DRM-free video, while Comedian Louis C.K. grosses more than he would have if a network financed this.

The symbolism of this experiment – much like that of Radiohead’s In Rainbows Experiment – is important, and it points to a future where performers can survive – and thrive – without media houses controlling them.

On the heels of plenty of press, the Amazon Kindle Fire tablet PC is poised to become the second-biggest tablet PC before the year’s end. This is according to a survey conducted by ChangeWave, who also found that year-on-year tablet PC demand more than tripled, and that demand for Apple’s iPad remained very strong.

Triple the tablet demand from last year

ChangeWave surveyed 3,043 North American shoppers to find out how many of them planned on purchasing tablet PCs within the next 90 days. Fourteen per cent of them responded ‘yes’. This is more than double the 6 per cent of respondents who had said yes when they were asked this question back in August, and its more than triple the 4 per cent of respondents who intended on buying tablet devices in November of 2010.

iPad dominates, Kindle Fire second

Unsurprisingly, most of those planning on purchasing tablet devices had intentions of buying an Apple iPad 2. A whopping 65 per cent of respondents said they would buy Apple’s tablet. This was followed by 22 per cent of respondents who indicated their intent of purchasing an Amazon Kindle Fire. Rounding up the top three – and way off the pace set by Apple and Amazon – was the Samsung Galaxy Tab, with 4 per cent of respondents saying that was their choice device.

None of the remaining tablet manufacturers managed to get more than 1 per cent of consumer interest from those polled – a very telling stat about how one company (and now, potentially, two) has a vice grip on the space.

Early promise

For the Amazon Kindle Fire, the early demand is promising. The Apple iPad 2 is established and its dominance has been this way since day one. If this ChangeWave survey is anything to go by, other tablet PC manufacturers have plenty of work ahead of them.

On the heels of rolling out the Amazon Kindle Fire tablet, the folks at Citigroup say that the online retail giant is working on a smartphone scheduled for release in 2012. If this is true, Amazon would be a full-fledged competitor in the highly lucrative mobile devices space currently dominated by manufacturers Apple and Samsung, and platform owner Google through Android OS.

Supply chain research

Citigroup analyst Mark Mahaney issued a research note making the unexpected claims about the Amazon Kindle smartphones. ‘Based on our supply chain channel checks in Asia led by Kevin Chang, Citi’s Taipei-based hardware research analyst, we believe an Amazon Smartphone will be launched in 4Q12,’ he writes [via AllThingsD].

The thorough research report breaks down who would be involved in the manufacturing process, with FIH manufacturing the device and Hon Hai (who own the controversial Foxconn business) will be supplying components through their TMS business. Mahaney says ‘We believe the smartphone will adopt Texas Instrument’s OMAP 4 processor and is very likely to adopt QCOM’s dual mode 6-series standalone baseband given QCOM has been a long-time baseband supplier for Amazon’s E-reader.’

Price aggressive

True to Amazon’s recent strategy of competing aggressively on price – as evidenced by the dirt cheap Kindle e-readers and Amazon Kindle Fire tablet – Citigroup analyst Mark Mahaney thinks that Amazon Kindle smartphone will be priced aggressively, too. He predicts it could cost in the region of $150 to $170 to make one, and they may sell each unit very close on that price point. He writes: ‘For a normal brand like HTC, they need to price the product at US$243 to make 30% gross margin. If Amazon is actually willing to lose some money on the device, the price gap could be even bigger.’

It’s also widely expected that the Amazon Kindle smartphone will run on Android, with the online retail giant reportedly paying Microsoft a royalty for each unit sold. That Android patent licensing campaign is clearly going very well for the folks in Redmond.

In a lengthy Wired feature with Steven Levy, Amazon founder Jeff Bezos spoke about his company’s long-term strategy, its product initiatives, and the internet at large. What was particularly interesting were his feelings on software patents, with Bezos admitting that his company has been prone to take advantage of them, since they were the status quo, but would rather have them done away with altogether.

I’ll give you 1-Click shopping, you destroy patents. Deal?

Levy prompted Bezos by first speaking on Amazon’s own controversial patent – the 1-Click shopping patent the company was awarded. He asked: ‘Now, technology patents are so widespread that they’re seen as a real hindrance to creativity and innovation. Has your thinking changed?’

Bezos, somewhat surprisingly (or unsurprisingly, depending on your view), responded, saying: ‘For many years, I have thought that software patents should either be eliminated or dramatically shortened. It’s impossible to measure the toll they’ve had on the software industry, but on balance, it has been negative.’

Interesting take. Levy shot back telling Bezos that if it weren’t for software patents, his company would not have exclusive rights to the coveted ‘1-Click’ shopping tech. Bezos’ response? ‘If that were the price of having a dramatic reduction in software patents, it would be great.’

Smartphones to blame

Amazon founder Jeff Bezos’ take on technology and software patents comes at a time where the smartphone industry is characterised by patent litigation as much as it is characterised by new handsets being released and a rush for customers’ hard-earned pounds and dollars. Some companies like Microsoft have taken full advantage of their strong mobile device patents, while others like Google and Android handset developers have been burdened by comparatively week patent holdings.

With Amazon entering the tablet PC battle, they too expose themselves to even more patent litigation than they’ve had to previously deal with. The problem, ultimately, is that this litigation stifles innovation in an industry characterised (and defined) by remarkable innovation. It’s good to know that Amazon founder Jeff Bezos, and hopefully some other tech titans, think the system should be thrown out altogether.

The hotly anticipated Amazon Kindle Fire tablet PC is expected to sell by the truckload in the closing months of the year, with some estimating it will sell up to five million units. Now a new report by electronic shopping guide Retrevo suggests that Amazon’s tablet could outsell even the mighty iPad 2.

Tiny poll

Having polled 1,000 customers last month, Retrevo reported that 12 per cent of the consumers polled stated they would purchase the Amazon Kindle Fire during the holiday shopping season. By comparison, only 10 per cent said that they would purchase the iPad 2. In addition, of those shoppers who already own a tablet PC, 27 per cent said that their next purchase would be Amazon’s Kindle Fire, while 20 per cent indicated they would opt for the iPad. One has to wonder though, with the second statistic, if it is not just a case of the would-be upgraders already owning an iPad.

Fire commence

Writing on the service’s blog, Andrew Eisner of Retrevo says that ‘the iPad 2 is starting to show its age and the new Kindle Fire is about to make the scene with a very attractive $199 price point.’ He is cautious to not declare the Amazon Kindle Fire as a sure-bet, though, saying: ‘As popular as the Kindle Fire appears in this study, whether it lives up to expectations on things like battery life, performance, image quality, etc, the picture could get brighter or less bright for the Kindle Fire.’

He does commend Amazon for the clever release schedule of the device, saying: ‘With the iPad 2 nearly a year old and the iPad 3 rumored to not be available until next year (missing the holiday season), Amazon may have timed the launch of their tablet just right.’

We’ll see

It takes a bold person to bet against the freight train that is Apple’s iPad tablet device but, having said that, there is a lot of excitement surrounding the Amazon Kindle Fire. Could it do what seemed unlikely just a few months ago, and actually outsell the iPad over a quarter in 2011 still? The number of people surveyed by Retrevo is perhaps too small to infer too much from, but it’s interesting nevertheless.

Amazon customers who have both an Amazon Kindle and are Amazon Prime members now have access to ‘The Kindle Owners Lending Library. It is, as its name suggests, a library-like system for loaning ebooks on your Kindle e-reader. As fantastic as it is, it is not without its problems, facing stiff opposition by industry gatekeepers.

Good things coming

In the press release announcing the service, Russ Grandinetti, who is the vice president of Kindle Content said: ‘The Kindle Owners’ Lending Library is a great new benefit for Kindle owners and an entirely new growth opportunity for authors and publishers.’ After talking up how Amazon Prime has grown, he says: ‘We’re excited to expand that investment to books – with this launch, we expect three immediate results: Kindle owners will read even more, publisher revenues will grow, and authors will see larger royalty checks.’
Librarian, we have a problem

As great as the Kindle Owners Lending Library is on paper, there is one very serious hurdle to consider, and that is that publishers have to opt-in for their books to be included. The problem is none of the big six publishers are signed on, and they control the lionshare of the books that hit the best-sellers list, the classics and those that sit on the retail shelves of the fast-dying physical books chains.

GigaOm reports: ‘The selection of books that can be lent through this new program, however, is exceptionally small:  just 5,000, which may sound like a lot but isn’t really. Although it includes some best-sellers such as Moneyball, there aren’t going to be that many well-known books to lend because none of the six major publishing houses is participating in the program.’

For my money, the publishers are missing a beat here. A digital book subscription service is inevitable and should be embraced. I’m not sure that the Kindle Owners Lending Library is the best-suited program for it, but a Spotify-like solution for books would be great, and this is just the groundwork being laid.

Online retail giant Amazon has announced that it will boost production of the Kindle Fire Tablet due to incredible pre-order demand. Amazon CEO Jeff Bezos made the announcement after having reported earnings shy of industry expectations.

It’s all money, baby

Speaking on the Fire, Bezos said the company was ‘increasing capacity and building millions more than we’d already planned.’ Two things to take away from that – the company already expected to sell several million units (a reasonable expectation) and have added at least two million more units to their initial production (an amazing achievement).

Why so popular?

The Amazon Kindle Fire is the online retail giant’s first foray into the tablet PC market, with a fast approaching launch date of 15 November 2011. The tablet device has two big selling points – seamless integration with Amazon’s media services as well as the price it retails for. Priced at just $199, the Kindle tablet is likely the cheapest tablet PC available that is being sold by a big time tech firm capable of selling millions of products. Yes, there are cheaper tablets on the market. No, none of them have a more compelling offering.

Scary sales

Not only is demand for the Kindle Fire unprecedented, demand for the company’s full suite of Kindle devices is at an all-time high. Bezos revealed that: ‘Sept. 28 was the biggest order day ever for Kindle, even bigger than previous holiday peak days.’ He added that ‘In the three weeks since launch, orders for electronic ink Kindles are double the previous launch.’

For the company, early sales and pre-order numbers suggest that their strategy of pricing low to move millions of units and upselling media content to reap financial rewards may work. Some believe that the Kindle Fire could sell as many as 5 million units in Q4 2011. This would make it the best-selling Android tablet in the world by a mile, and the second best-selling tablet PC in general, behind only Apple’s iPad.