Is The Amazon Phone a Boon or Threat for Google and Android?

The Kindle Fire was a master stroke by Amazon to entrench it’s content and shopping platform in consumer households, especially because Apple’s premium pricing left the door open for Amazon to fill a void at a lower price point as the iPhone has done for Android phones in the handset market. The fire used the ‘open’ Android platform as the operating system for its device, but the OS was forked with a heavily customized version to highlight Amazon products and services.

This move by Amazon was both a boon for and threat to Google. The boon to Google came from the use of the Android platform and the sunk costs that tie a user to any platform in the form of apps purchased and user experience. In the age of cloud computing, it is easy to move from one platform to another. For example, I have recently moved from PC to Mac with little difficulty. The determining factors then are platform inertia due to accumulated customer familiarity and sunk costs in the form of platform-specific apps purchased.

What I have found time and again, in both the PC/Mac and Android/iPhone markets is that the most used apps are available on all platforms. For example, Office, Photoshop, TweetDeck, Evernote are all on both  the PC and the Mac. Same goes for TweetDeck, Evernote, Facebook, and Twitter on Android and the iPhone to name a few apps I use. Games are apps that are most specific to individual platforms. So, again, here, cloud computing says that platforms are less important because the content is universally accessible via familiar interfaces.

However, consumers are loathe to spend money for apps and then switch to a different platform where that money would be for nought, irrespective of whether equivalent apps exist for free on the new platform. The term for this is sunk costs. But psychologists have proven that sunk costs are always cherished by human beings who are loathe to write them off. This actually helps the iPhone because a greater percentage of apps are paid. But the human desire to value sunk costs makes Amazon a net benefit for Google since Amazon uses Android and therefore uses Android apps as well.

The threat to Google comes in the form of platform fragmentation, which can impede development for Android because of incompatibilities and inconsistencies from one device to the next. Many point to fragmentation as the biggest problem for Android. And as such, the heavily customized forks that Amazon is using for its tablet and will use for its phone represent a challenge to Google’s platform integrity.

But more than that, Google wants adoption of Android to power use of Google products and the Android forks are specifically designed to put Amazon in the catbird seat and not Google. So Google was forced to respond to the Kindle Fire threat with its own low-priced tablet competitor, the Nexus 7.

My sense here is that an Android phone is a net positive for Google because it increases the installed base of Android in a period where there is a land grab for customers adopting smartphones. Customer inertia from sunk app costs will factor heavily in making those customers happy to stay on Android, even if they switch away from an Android phone for their next device.

Apple is the loser here as they get yet another well-funded competitor – and one not likely to be easily sued for patent infringement like Samsung.

Exclusive: Amazon phone confirmed, could be announced tomorrow | The Verge

“The phone itself is said to be currently unfinished, so if Amazon does announce it we wouldn’t expect too many details. But at this point we would expect it to run a forked version of Android 4.0 as the leaked Kindle Fires seem to do, and to include Nokia Maps as the location solution — forking Android means Amazon can’t use Google Maps, and Nokia spoke today of adding a “major” mapping partner at its own Windows Phone event.”

Nokia Debuts Lumia 920 With Windows Phone 8, Wireless Charging – Bonnie Cha – Product News – AllThingsD

“As expected, Nokia unveiled its new Lumia phones at an event today in New York, and among the highlights are wireless charging and a more advanced camera.”



The ECB adopts the crisis role of the IMF | Gavyn Davies

“By admitting that there is a perception of “convertibility risk” in the market, Mr Draghi is in effect conceding that the Target 2 system is no longer wholly credible in the eyes of investors. “

Le FMI débloque une nouvelle tranche de son plan d’aide à l’Irlande

Ireland gets its eight aide disbursement from the IMF

Extremadura no acudirá al fondo de liquidez ni pedirá anticipo “en principio” – CincoDí

Extremadura, Spain’s poorest region, has said that it will not ask for aid using Spain’s regional bailout fund.

German bond auction struggles as ECB expectations weigh | Reuters

“A German government bond failed to attract bids worth the amount offered at its launch on Wednesday — only the second such failure this year — as expectations of ECB action and competing supply hit demand.”

“Can Draghi Be Believed?” by Simon Tilford | Project Syndicate

This is the kind of logic the ECB will use to support unlimited bond purchases:

“The Italians and Spaniards are right: the principal reason for the size of the spread between the periphery and Germany is convertibility risk. Investors are demanding a hefty premium to insure against the chance that Italy and Spain are ultimately forced out of the eurozone – thus bringing that day closer by weakening countries’ fiscal positions and raising their private-sector borrowing costs (which are set by government bond yields).”

United States

O.C. homes for sale drop 73% from peak – Lansner on Real Estate : The Orange County Register

“Why is it so hard to fund a local home to buy — and prices seemingly firming? Orange County’s housing market has a stunning 73% fewer homes for sale than it did in Sept. 2007 — the peak of the market.”

U.S. home prices record largest gain in six years, firm says – San Bernardino County Sun

“National home prices recorded their largest gain in more than six years in July, according to data released Tuesday, adding to hopes that the housing market’s worst days are behind it.
CoreLogic, a Santa Ana-based firm tracking real estate numbers, reported that U.S. home prices rose 3.8 percent from July 2011 to this past July.

That price increase, which includes sales of “distressed” homes like foreclosures or short sales, is the greatest year-over-year increase since August 2006.”

Phoenix home prices up 20 percent from year ago to lead nation – Phoenix Business Journal

“Phoenix-area home prices in July were up 19.9 percent from a year earlier, easily the largest percentage gain among major U.S. cities, according to a CoreLogic report released today.
Arizona was also the leader by far among the states in July home price gains, with a 16.6 percent increase from July 2011.”

Did Bill Clinton’s Budgets Really Destroy the American Economy? – Forbes

“Weisenthal is right to be skeptical of the simplistic view that it is always good for the government to run surpluses or even balanced budgets; the right budget balance for an economy will change over time depending on underlying conditions in the private sector. But using sectoral balances to reach back in time to blame Bill Clinton for the financial crisis is an argument that doesn’t fit the facts.”

Banks Facing Suits as States Weigh Their Libor Losses –

“The scandal over global interest rates has state officials like Janet Cowell of North Carolina working intensely behind the scenes to build a case for suing the nation’s largest banks.”

Schwab’s Liz Ann Sonders Argues Profit Margins Could Go Higher – Business Insider

“According to historical data cited by Sonders, this doesn’t mean stock prices are doomed to go lower.  In fact, stocks usually deliver double-digit returns in the one and two years following peak margins.”

INTERPOL: Judge Orders Extradition And Arrest Of Former U.S. Treasury Undersecretary David Mulford – Home – The Daily Bail

“A judge in Argentina has ordered the arrest of Credit Suisse executive and former U.S. Treasury Undersecretary David Mulford because he failed to testify over a 2001 Argentine debt swap, the state news agency reported on Monday”

Warren Buffett’s municipal weapons of mass destruction | MuniLand

“A lot of ink has been spilled recently over Berkshire Hathaway’s move to close out $8 billion worth of municipal credit default swaps. Journalists and market commentators have wondered whether Warren Buffett has soured on municipal bonds as an investment vehicle and whether other investors should as well. “

Ron Paul and American Exceptionalism at the RNC | Justin Logan | Daily Podcast | Cato Institute

Republican National Convention has two tracks on spending says Cato. On the one hand, the Republicans are against increasing domestic spending but are reticent on defense spending. Interesting podcast.

No Movement on Key Disputes as Clinton Meets With Chinese Leaders –

“The United States and China clashed openly on Wednesday on two of the most contentious issues riling their relationship, the violence in Syria and growing tensions over territorial disputes in the South China Sea.”

“Mitt Romney’s Fair Share” by Joseph E. Stiglitz | Project Syndicate

“public goods must be paid for, and it is imperative that everyone pays their fair share. While there may be disagreement about what that entails, those at the top of the income distribution who pay 15% of their reported income (money accruing in tax shelters in the Cayman Islands and other tax havens may not be reported to US authorities) clearly are not paying their fair share.”



Guest Post: Gina Rinehart Is A Bubble | ZeroHedge

“Perhaps Gina Rinehart should spend less time drinking, socialising and writing awful poetry and more time preparing her business for the inevitable iron ore bust?”

World’s richest woman suggests $2 a day wages for Australian miners | The Raw Story

““The evidence is unarguable that Australia is indeed becoming too expensive and too uncompetitive to do export- orientated business,” she insisted, adding that “Africans want to work. Its workers are willing to work for less than $2 per day.””

Why is Putin stockpiling gold? – MarketWatch

“According to the World Gold Council, Russia has more than doubled its gold reserves in the past five years. Putin has taken advantage of the financial crisis to build the world’s fifth-biggest gold pile in a handful of years, and is buying about half a billion dollars’ worth every month.”

Extreme weather will push food prices higher, consumers warned – Telegraph

“Consumers could face more rises in food prices as extreme weather caused by climate change affects major crops worldwide, according to a new Oxfam report.”


Why You Should Start Using a VPN (and How to Choose the Best One for Your Needs)

“A VPN alone is just a way to bolster your security and access resources on a network you’re not physically connected to. What you choose to do with a VPN is a different story. “

The Complete Guide to Solid-State Drives

“Adding a solid-state drive (SSD) to your computer is simply the best upgrade at your disposal, capable of speeding up your computer in ways you hadn’t thought possible. The even better news: A good SSD is now cheaper than ever. “

In a Parallels World, Mac and Windows Coexist App-ily – Walt Mossberg – Personal Technology – AllThingsD

“Both Parallels and Fusion are able to run Windows and the Mac operating system at the same time because they create “virtual machines” on the Mac, essentially faux Windows PCs that run side by side with the Mac operating system.
By contrast, Apple’s own solution for running Windows, called Boot Camp, turns the Mac entirely over to Windows, running only one operating system at a time—and requires a reboot to switch between them.”

One Per Cent: Honeytrap reveals mass monitoring of downloaders

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