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August 12, 2011

Amazon Cloud Player Adds Social, Google Goes Social Gaming as Ecosystem Wars Heat Up

By Peter Bernstein, Senior Editor

A common thread has emerged this summer. Everywhere one turns there is an out-cropping of ecosystem wars —the positioning of various Internet dominators (Google, Facebook, Apple (News - Alert), Yahoo, AOL, Microsoft, YouTube, Amazon and others) to not just get you to click, but encourage you to never leave. Establishing an all-encompassing ecosystem which includes initial engagement enriched with a seemingly endless variety of interactive (social, gaming and entertainment) and transactional capabilities is the goal.  



Lots of tools (search, operating systems, browsers, app stores, etc.), are being employed. We are also witnessing massive industry re-alignments. The sands shift almost continuously in terms of relationships. Microsoft’s buying of Skype (News - Alert) and befriending of Facebook; Google huffing and puffing about the intellectual property challenges of Android, who is supporting HTML5 and for what reasons, are just a few examples.  On top of this is all of the jockeying for position against start-up interlopers like Spotify (News - Alert) and Pandora, and interest in IPO and takeovers of things like Hulu. This is why I love my job.

This week we have seen a ratcheting up of ecosystem enhancements which started with the Kindle Cloud Reader announcement, got on a roll with Google adding social games to Google+ and ending with a flourish in a Tweet that Facebook and Twitter integration has been added to the Amazon Cloud Player — a service launched by Amazon that utilizes Amazon Cloud Drive storage to stream music to a mobile Android device or to a computer.

Since all of these capabilities are things you literally can try at home on your various platforms, the competitive aspects are actually much more interesting than the services themselves.

Amazon had to go social not just to position against Apple on the iTunes front, but also to slow down some of the momentum of streaming services Rdio, Spotify and Pandora. In short, creating not just customer engagement but sustainable customer intimacy is the goal.  In fact, while it needs to have Amazon music being stored in the Amazon cloud so that you never click, and doing so by leveraging social media and the ubiquity of other peoples’ platforms, it is also why many are predicting the Kindle itself will ultimately be the low-end offering of a Kindle on steroids tablet computer.

Despite being an investor in Zynga, Google can’t break the Facebook hug on Zynga, and actually needs to get involved in the Web game business. It is a little known fact, but 75% of the revenue of the top 100 apps downloaded to mobile devices comes from games. A recent study by Gartner (News - Alert) pegs total video game revenues at $74 billion in 2011 going to $112 billion by 2015 with online gaming rising from 15 percent to 20 percent of that total. This is huge. Google literally has to play, and Google+ has to be its weapon for delivering mass destruction.

In regard to the latter, take a look at OnLive, Gaikai and OTOY. Multiplayer/multi-platform online (i.e., cloud-based) gaming maybe in its infancy and still somewhat problematic due to the “best effort” Internet issues, but they are certainly harbingers of the future, and critical to ecosystem managers given the amounts of time people spend gaming.

Back to Amazon for a moment. I remember meeting Amazon CEO Jeff Bezos shortly after he founded Amazon in 1994 when he spoke to the New York New Media Association. He said he thought the opportunity of the Internet, putting porn aside, was in creating things in the virtual world that could not be replicated in the physical one, meaning stocking every store with every customer choice imaginable and with just the right inventory. He noted that his choices were books, music and drugs. History tells us that books was a nice place to start, drugs are problematic for a host of reasons, and music is an opportunity that he never lost sight of.  Again, from an ecosystem perspective, he has to play, and he has to do so on multiple platforms as well as eventually on his own.

I can’t wait to see what next week has in store.


Peter Bernstein is a technology industry veteran, having worked in multiple capacities with several of the industry's biggest brands, including Avaya, Alcatel-Lucent, Telcordia, HP, Siemens, Nortel, France Telecom (News - Alert), and others, and having served on the Advisory Boards of 15 technology startups. To read more of Peter's work, please visit his columnist page.

Edited by Rich Steeves
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