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What Amazon Should Do With Its Kindle iPad App

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This week, the iPad app world is frantically sorting through some recent changes in its environment. Apple (NSDQ: AAPL) has quietly altered its app approval policies in a way that will make publishers – in particular, subscription-based publishers like The New York Times – much happier. Specifically, Apple has relaxed its control over whether apps can access content paid for outside of the App Store’s purchase APIs. The company has also given control over pricing content back to publishers, allowing them to price however they want, both outside and inside of the app.

Interestingly, in the same week, the Financial Times released the first major subscription-based HTML5 web app intended for iPad users that bypasses Apple entirely, giving the publisher its own path to market that does not depend on or enrich Apple directly. The coincidence of these two events is not lost on most of us industry observers and is the topic of a new Forrester report by my colleague Nick Thomas. In it, Nick explains why the FT‘s move is probably the first of many such moves by the most recognized publishers, even with Apple’s newly announced policy reversal.

But while publishers figure out their next steps for their content apps, there’s one app that no one is talking about but I believe everyone should have their eye on. It’s the Amazon (NSDQ: AMZN) Kindle app. This app violates all of Apple’s policies – it has a buy button that shells the user out to a browser to complete the transaction using Amazon’s customer authentication and purchase systems. In fact, back in February when several publishers and booksellers contacted me to ask why their apps were being rejected by Apple, it was always the Kindle app they pointed to as the model they had used for their own app development. Once Apple finally explained that it had extended to existing apps a grace period through June 30th, the other publishers and app developers quieted down somewhat, but it essentially set a clock ticking on Amazon’s place in the App Store.

Amazon was actually one of the first of Apple’s competitors to seize on the iOS platform as a distribution mechanism. It was in March 2009, less than a year after the launch of the iPhone App Store that Amazon released the first Kindle app. At the time, many reporters I spoke to assumed this was foolish on the part of Amazon – why would Amazon bolster a competing platform when it was trying to make inroads with consumers on its own Kindle device? I explained then – and still believe now – that Amazon was living according to new digital rules, where you satisfy your customer’s need, regardless of whose platform they are on. This was industry-leading strategy and it has paid off for the company.

Now it’s time for Amazon to lead once again. While the FT‘s new web app shines a guiding light on the path that other publishers should take to distribute content to iPads and other tablet devices, whatever Amazon does with its app will have even more far-reaching implications because it will teach other developers – whether publishers or not – how they can deal with Apple’s tendency toward ecosystem control.

I don’t claim to know that company’s plans, but I will claim to tell Amazon what it should do:

1) Release an updated, compliant App Store app, with a little attitude. There’s no reason to snub millions of iPad and iPhone owners so Amazon should release an app that complies with Apple’s new rules. But this app should have no Buy button at all. Instead, it should be positioned as a Kindle reading app where people who have purchased Kindle books elsewhere can access them for reading on an iOS device. And the company should just let its iOS readers know that although it would like to help them shop for and buy books, it is not allowed – as per Apple’s policy – to do so. This is how the company handles eBooks it does not control pricing for, simply informing the customer that it’s not Amazon’s fault a digital book costs $12.99 when the hardback is available on Amazon for $13.99 (see Hillenbrand’s Unbroken for an example of this

2) Release an amazing HTML5 “app” that gives Kindle readers everything Amazon has to offer
. I have to believe that Amazon is furiously at work on this app already, but if not, consider this a very public encouragement to begin such development forthwith. The challenges of HTML5 should be nothing for Amazon’s developers. Building an app-like experience for web browsers on any HTML5 device opens doors for Amazon to expand its customer relationship to include Netflix-style video streaming, paid VOD, and its cloud music service. Think of it as an Amazon iTunes store – not just a Kindle store, and now is the time to do it, while all eyes should be fixed on Amazon.

All of this has some messy implications for Amazon’s own Android Appstore, by the way, which also has a 30 percent revenue share policy and does not currently allow for magazine app subscriptions but will have to. Will Amazon offer publishers and even competitive app developers the policies it wishes Apple would have offered? Remember, this is a company that enables hundreds of other retailers to sell competing products at whatever prices they want on the Amazon web store.

Conversely, Amazon may wish to follow in Apple’s footsteps for as long as the 30 percent and customer control things last. Whatever it decides, it should hurry up and get through this, because none of this deals with the hardware side of Amazon’s business, where the company is falling far behind rival Barnes & Noble (NYSE: BKS) which has two Nook devices that make Amazon’s current Kindle crop feel a bit like Palm (NYSE: HPQ) Pilots.

James McQuivey is an analyst at Forrester Research, where he serves Consumer Product Strategy professionals. James blogs here.

This article originally appeared in Forrester Research.

19 Responses to “What Amazon Should Do With Its Kindle iPad App”

  1. Seriously hope to see a kick ass HTML5 Amazon app that groups together their various stores, VoD streaming, Kindle purchasing (including mag purchase) that by default is multiplatform. All I’d need is a bookmark on my device and off we go to do some shopping. I think building a ‘view only’ kindle app (just the reader) is a good idea. Would the app be able to link back to Amazon’s HTML5 site in any way or would that break Apple TOS?

      • Ah, thanks for the clarification there. 

        You know, personally, I think this would all go away if Apple changed their policy such that the “renewal” or the “2nd purchase” was 15% instead of 30% when done via the Apple in-app store. 

        That means that Amazon would be paying Apple more than their highest affiliate rate, but then Apple would also be dealing with tech support, payment, etc. so it might not matter so much. 

        For other apps, the message is “we take more on the first sale because we’re helping you get that first sale, but the second sale is all you”. 

        Either that or just make a different price rate for media then for app upgrades. Amazon does this for their seller services, their cut varies all over the map depending on the product category:

        Computers are 6% up to Grocery and Gourmet Food that’s 20%. Media items are 15% + $1.35. 

  2. There are two problems with option 2. The first is you kill off the main advantage to snook readers: offline reading. The second is that Amazon would have less control over how users work with the data (I.e copying text) which would not make content publishers happy.

    There is zero chance that Amazon will pull their native app. HTML5 is simply not a substitute.

    • To second Pierce Wetter, eReading on the web already exists. Kindle Web is a good example. I imagine there may be a way of caching the content of an eBook so that reading offline may still be possible…

      Not sure, but HTML5 can certainly be a substitute if need be.

    • Just making sure you realize that I’m not suggesting either 1 or 2, Tim. I’m saying do both. you have a native app (that concedes nothing to Apple), and an HTML5 app. You give people both experiences, not one or the other.

  3. I was under the (85% certain) impression that the Amazon Kindle app is not violating Apple’s policies now that Apple has pulled a 180. Please explain what rules Amazon (and – by extension – B&N, Kobo, etc) may be breaking under Apple’s new terms. By kicking a user out to the browser to make the final purchase, Amazon is sidestepping their rules, not breaking them…

    But I would love to hear why I’m wrong! :)

    • “11.13 Apps that link to external mechanisms for purchases or subscriptions to be used in the app, such as a “buy” button that goes to a web site to purchase a digital book, will be rejected.”
      I’m assuming that this is still considered an external mechanism. In the latest version of the Kindle app for Android you can actually buy a book directly in the app, without being transferred to the website. 
      But I agree that there is quite a bit of room for interpretation in this rule.

      • Awesome, thanks so much for the response. Questions:

        1) Is that clause (11.13) in the (very) recent policy reversal by Apple? I was under the impression that one of the major newsworthy reversals by Apple is that very topic – that they will now accept purchases from outside the app…Maybe I’m mistaken, but many news sources covering the issue seem to be noting the same thing. 

        2) The Kindle App for Android is outside of this discussion, no? Android and Apple app store policies are notably different…

        Aaaand here I am answering my own questions, I should have looked more closely:

        11.14 Apps can read or play approved content (specifically magazines, newspapers, books, audio, music, and video) that is subscribed to or purchased outside of the app, as long as there is no button or external link in the app to purchase the approved content. Apple will not receive any portion of the revenues for approved content that is subscribed to or purchased outside of the app

        This certainly suggests Amazon is breaking that rule (as are many other app retailers, then), but I agree with you Hypnotosov, there is room for interpretation. Technically the links do not purchase the content. They take you to the website where the option to purchase is presented. Oh, words.

        • Sorry I’m coming a bite late to this, guys, but I can confirm for you that Apple has spoken to app developers behind the scenes and informed them that the current approach of Kindle does indeed violate the policies it will enforce as of June 30th. Of course, Apple can change the policy (or its interpretation) at any time.

          • The biggest question is where “buy this book” button links to. If it links directly to a this book’s mobile page with a 1-click button – then yes, this is violation. But what if it links to an Amazon search page saying “You’re searching for” and you have a title of a book in a search box already? It’s not linking to a purchasing mechanism in a first place. The book page with this mechanism comes in a second step, after you click OK.

            I know it has nothing to do with 1-click charm, but it had nothing to do before as well.

            • I think you’re raising the right question — many of my bookseller clients are wondering the same thing (one of them is testing your idea, we’ll find out soon if it works). Another alternative being considered is whether or not you can create a “wishlist” in the app, which you can then go online and click to buy. we’ll see how aggressively Amazon or others pursue these alternatives. 

            • Amazon’s mobile site is extremely well designed, so one, two or three more
              taps are not a big deal, if Apple won’t give me a choice. Wishlist is one
              idea, another one is user’s activity history with “you have finished a free
              sample of…” displayed on top.

    • If Amazon HAD to do something, this might be the way to go, but I don’t think Amazon is expecting to have to change anything, even if it does still officially violate the revised Apple terms. 

      We’ll see though. Maybe Apple would see it as a competitive move for iBooks? I hope not, because I won’t touch an iBook and my primary activity on my iPad is reading Kindle books.