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Why is Amazon becoming a hardware company?

Molly Wood Jul 24, 2012

Amazon used to be just a website where you could buy things and have them sent to you. Increasingly, Amazon is making the things themselves as well. The president of Staples says five or six new Amazon tablets are on the way to go with the Kindle reader and the Kindle Fire tablet.

David Carnoy from CNET, what will they look like? “You may just see two different versions with say 8 GB, 16 GB, maybe even 32 GB of storage, so they have learned something from Apple in that the big money is to be made actually in overpricing the memory.”

Carnoy says that’s when Apple charges way more for the devices with more memory than the memory actually costs.

So Amazon might make money selling memory. Where it really stands to cash in, however, is how well suited the tablets are to other stuff on Amazon.

Kevin Tofel writes for GigaOm. He says, “People aren’t buying products, they’re really buying platforms these days.  And, Amazon has a vast ecosystem. They have the shopping experience. They have digital media through their video store and music store, and quite honestly, they want to make it easier to sell things to consumers, and the best way to control that experience and make it a good one is to actually provide the hardware that’s optimized to go with it.”

This model of selling the device as a gateway leads us back to Apple. Tofel says, “When you buy an iPhone, you’re not just getting a phone, you’re also getting an entry into the iTunes ecosystem, so you can quickly and easily buy movies, you can buy apps, you can rent videos, TV shows, buy music, so you’re getting a whole digital ecosystem that you’re purchasing with that iPhone.”

You’ll be able to get these new tablets pretty cheap. Amazon knows it can make up the money with the products you’ll buy to go with it. And once you link your account to the tablet, the tablet knows everything else you’ve bought at Amazon. Says Tofel: “The device itself is, really, a sales terminal that Amazon can see what you’re buying. They probably have more sales data than anyone I can think of, maybe more than Apple. And then, very similar to Google what they will do is they’ll target your device by sending it ads that are relevant to you, what you purchased, what you researched, what your friends are buying.”

So you can think of it as a tablet or as a shopping cart that knows everything you ever bought and can steer you through the store toward what it thinks you want to buy.


Let’s ride! It’s the Robot Roundup, a periodic check in with our mechanical pals.

ROBOTS are using cells from rats in order to act like jellyfish. Yuck! What? Yes! Huh? I know. Researchers at CalTech took rat heart cells and applied them to a silicon polymer membrane. THEN they added proteins in a way that roughly corresponded with the musculature of a jellyfish. When the whole thing was charged up in an electrified water tank, it made a semi-organic jellyfish that moved around. It will be useful in artificial organ studies and in weirding out the researchers’ friends.

ROBOTS aren’t as good as humans at “Angry Birds.” At least one of them isn’t. It was built by roboticist Jason Huggins specifically to play the time wasting game. Despite all efforts, it totally stinks at the game. Other robots might do better but when challenged they condescendingly point out that they’re too busy with actual work.

And ROBOTS are compensating for human shortcomings in office basketball. A Japanese inventor has come up with a trash can that can catch your crumpled up paper even if your shot is way off. It’s actually a regular trash can tricked out with video game style motion sensors and some wheels. Kind of rotten luck that a way to have more fun with paper arrives at about the same time people stop using paper.

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