Is Amazon Hiding A Tipping Point In Its New Tablet? - InformationWeek

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7/29/2011
04:56 PM
David Berlind
David Berlind
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Is Amazon Hiding A Tipping Point In Its New Tablet?

If and when Amazon releases an iPad-killer of a tablet, it won't be its industrial design or user interface that might tip the industry on its ear. If such a tablet is released, it's reliance on Amazon's Whispernet and the business model behind it could be a tipping point.

So Jeff Bezos, why are you smiling? Is that a tipping point in your tablet, or are you just happy to see me?

There have been few times in my career as a tech journalist when someone taught me something so profound that it took years for me to stop thinking about it. One of those was in the mid-90's when then-Microsoft executive Charles Fitzgerald told me that one day, voice (as in the transmission of voice) would be free.

At the time Fitzgerald told this to me, voice was very expensive by today's standards. Especially given how much of it was trapped in the analog world. Today, we get so many minutes for a pittance from the various wireless carriers that Fitzgerald's prediction essentially came true. No wait. It actually came true. Think Skype, now pushing the boundaries on video. Fifteen years later, I still can't stop thinking about what Fitzgerald said.

One reason that voice is free -- and the market condition that Fitzgerald anticipated -- is that it's dwarfed by data-intensive, bandwidth-sucking apps like video. Data-intensive apps make for big revenue opportunities for all sorts of companies from wireless carriers to content providers (think Netflix) to content delivery networks (like Akamai). But before anybody can succeed in a data intensive market, the cost to the end-user for all that bandwidth must be affordable.

Now that most voice is digital, its payload pales in comparison to the data-intensive applications that the industry is inexpensively delivering to end-users. In a mock accounting of their voice costs, even the heaviest Skype users would be surprised to learn how little of their overall bandwidth utilization is attributed to Skype voice usage. Voice would essentially work out to be free.

Few concepts have revolutionized the industry the way free voice has. But now, with its so-called iPad-killer on the way, Amazon is poised to turn the industry on its ear in a way that could rival the impact of free voice.

Amazon's Secret Weapon: Whispernet
Even if everything BYTE has been told is true about Amazon coming out with an iPad killer, I highly doubt whether its industrial design or user interface will be enough to win converts away from the iPad. Like a bug on your shirt needing a finger-flick, the iPad has had little trouble brushing-off would-be competitors.

But the hidden nugget in Amazon' s tablet news is a revelation that user might get to enjoy the same contract-free 3G connectivity that current Kindle owners have come to rely on. Imagine the iPad with free connectivity to a giant hot spot that covers a significant portion of the United States. That could be what we're talking about here.

You've heard of free voice? This takes it one notch further. If (an unlikely "if") Amazon delivers a general purpose multimedia tablet with unlimited, Kindle-like, contract-free 3G connectivity, we will have just entered the world of free data. Like the day that the tipping point of free voice passed, there would be no turning back. Apple and Google would be left with no choice but to respond, pushing the industry beyond the point of no return.

The big question right now is, "Is this for real?" Can Amazon really deliver a general purpose (compared to the specific purpose of the Kindle) multimedia tablet with unlimited, Kindle-like, contract-free 3G connectivity?

For the free 3G-connectivity that comes with its Kindles, Amazon relies on Sprint AT&T [Editor's Note: Amazon's US version of the Kindle relied on Sprint, but was discontinued in 2009 in favor of the International version that domestically relied on AT&T). But, most of that 3G-access is for the purpose of downloading electronic books that users purchase from Amazon. Somewhere on some Amazon bean-counter's spreadsheet, the cost of the bandwidth required to download an e-book (even if it's multiple times for multiple Kindle devices) is built into the cost of the book.

Should Amazon release a general purpose iPad killer that's just as capable as the iPad at using free bandwidth-sucking applications like YouTube, the spreadsheet that shows the cost of the bandwidth being covered by the margin in the content would undoubtedly blow up.

So, what gives? Has Amazon Jeff Bezos turned into some maniac, hell bent on disrupting the industry at any cost? Has Sprint AT&T figured out how to leverage a nearby black hole in a way that magically scales its 3G network at no additional cost (a benefit that it would pass along to customers like Amazon)? Answer: None of the above.

Sprint AT&T hasn't unlocked the hidden power of the universe and Wall Street would crucify Amazon for writing a blank wireless check to its customers. If there's truly a general purpose multimedia iPad-killing tablet coming from Amazon, my guess is that it will not have unlimited 3G access.

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