Will Amazon Announce the un-iPad?

Amazon.com has called a press conference for next Wednesday and all expectations are for an announcement of the long-awaited Amazon tablet. You’re going to read a lot of stupid stuff in the next few days speculating about whether Amazon can come up with an iPad killer. Pay no attention to any of it.

Amazon is a very smart company, and one thing they are smart enough not to do is to challenge Apple on its home turf. Nor do they have to. It is important to remember that Amazon and Apple, while perhaps being the two sharpest consumer companies in the world, are in very different businesses. Apple sees content and software as a way to sell hardware, because that is where it makes its money. Amazon needs hardware as a platform for its content, because that is where it makes all its money.

I suspect Amazon is mostly backing into a tablet business, think of it an an un-iPad, it would rather have left to hardware specialists. It brought out the original Kindle because it felt the time for an ereader had come and no one else was doing the job, although its Kindle platform quickly became hardware-agnostic as other alternatives emerged.

In the field of more capable tablets, Amazon is looking at another vacuum. Android is a mess, with no product gaining significant market share and most of the tablets not very good. iPad, while an important outlet, became a hostile environment when Apple effectively imposed a 30% tax on all in-app sales, an arrangement that would leave Amazon with little or no gross margin on most purchases. (Amazon has countered with an HTML 5 browser-based version of the Kindle app, but the technology isn’t quite there yet.) Amazon was an early partner for the Hewlett-Packard TouchPad, but we know how that turned out. Windows 8 is a promising tablet operating system, but we are probably a year away from seeing products.

So once again, Amazon seems ready to come out with its own hardware to give its customers a more effective way to consume its content. So rather than a product challenging the iPad in the general tablet market (such as it is), look for a specialized device, running a customized version of Android, that is optimized for Amazon services. That means Kindle, of course, but also Amazon Instant Video, Amazon Music, the Amazon App Store, and a great Amazon shopping app. I also would not be surprised if the tablet has a subscription component, perhaps a discounted price with an Amazon Prime subscription, or a discounted Prime subscription with a tablet purchase.

The key thing to remember is that this is not Amazon vs. iPad. There is a vast market in which both can thrive.