Forget Facebook. Forget Apple. Amazon is the company that keeps Googlers awake at night.It’s only going to get worse for Google with the release of Amazon’s Kindle Fire HD.
Here’s why: Amazon’s Fire software is built using Google’s Android, but it cuts out Google search, which is how Google makes money.
Most Android devices usually have a Google search bar pinned right ot the home screen. Google makes money from people searching for things they want to buy, like Rain Boots. Around 20 per cent of Google’s total searches are these kinds of searches, and Google drops an ad right on top of them.
Because Android is a completely open ecosystem anyone can essentially take it and do whatever they want with it. That’s what Amazon did with the Kindle Fire HD. But, instead of having a Google Search bar, Amazon can have its own version of search — one that points directly to Amazon’s store.
Amazon now has a tablet that is cheaper than the Nexus 7 (the $159 Kindle Fire), as well as a tablet that is slightly more expensive than the Nexus 7, but appears to deliver more bang for the buck (The 8.9-inch Kindle Fire HD for $299). Both are powered by Amazon’s variation of Android, which can easily just point directly to Amazon as a first option for any search query.
Googlers worry in private about whether consumers will skip Google and jump straight to Amazon for a product they want to buy. Search ads for commercial searches are prized because there’s an intent to purchase that comes with that ad, so Google can charge more for those ads.
The more Kindle Fires in the ecosystem, the more people will end up skipping commercial Google searches.
At the prices Amazon is charging, with its huge distribution channel of Amazon.com, expect to see more and more Kindle Fires in the market.
This could just be the start. There’s also the reported Amazon Phone, which while it wasn’t announced at Amazon’s Kindle Fire event yesterday, could also carry the Fire operating system and Amazon’s own version of search.
Basically, Amazon represents a two-fold problem for Google. It’s eating up the most lucrative part of Google’s search business, while at the same time building a new rival operating system using Android, which Google invests heavily in.
No wonder Google is losing sleep over Amazon.
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