Apple and Google may be the first companies people think of when you ask who won mobile, but Amazon and Facebook were not far behind.
Amazon spent the smartphone era not only building out Amazon.com, but also Amazon Web Services (AWS). AWS was just as much a critical platform for the smartphone revolution as were iOS and Android: many apps ran on the phone with data or compute on Amazon’s cloud; mobile also created a vacuum in the enterprise for SaaS companies eager to take advantage of Microsoft’s desire to prop up its own mobile platforms instead of supporting iOS and Android, and those SaaS companies were built on AWS.
Smartphones, meanwhile, saved Facebook from itself: instead of a futile attempt to be a platform within the browser, mobile made Facebook just an app, and it was the best possible thing that could have happened to the company. Facebook was freed to focus solely on content its users wanted and advertising to go along with it, generating billions of dollars and a deep moat in targeting advertising along the way.
What is not clear is if Amazon’s and Facebook’s management teams agree. After all, both launched smartphones of their own, and both failed spectacularly.
Facebook’s attempt was rather half-assed (to use the technical term). Instead of writing their own operating system, Facebook Home was a launcher that sat on top of Android; instead of designing their own hardware, the Facebook One was built by HTC. Both decisions ended up being good ones because they made failure less expensive.
Amazon, meanwhile, went all out to build the Fire Phone: a new operating system (based on Android, but incompatible with it), new hardware, including a complicated camera system that included four front-facing cameras, and a sky-high price to match. It fared about as well as the Facebook One, which is to say not well at all.
That, though, is what made last week’s events so interesting: it is these two failures that seemed to play a bigger role in what was announced than did the successes.
Amazon and Facebook’s Announcements
Start with Amazon: the company announced a full fifteen hardware products. In order: Echo Dot with Clock, a new Echo, Echo Studio (an Echo with a high-end speaker system), Echo Show 8 (a third-size of the Echo with a screen), Echo Glow (a lamp), new Eero routers, Echo Flex (a microphone only Echo that hangs off an outlet), Ring Retrofit Alarm Kit (that lets you leverage your preinstalled alarm), Ring Stick Up Cam (a smaller Ring camera), Ring Indoor Cam (an even smaller Ring camera), Amazon Smart Oven (an oven that integrates with Alexa), Fetch (a pet tracker), Echo Buds (wireless headphones with Alexa), Echo Frames (eyeglasses with Alexa), and Echo Loop (a ring with Alexa). Whew!
This is an approach that is the exact opposite of the Fire Phone: instead of pouring all of its resources into one high-priced device, Amazon is making just about every device it can think of, and seeing if they sell. Moreover, they are doing so at prices that significantly undercut the competition: the Echo Studio is $150 cheaper than a HomePod, the Echo Show 8 is $60 cheaper than the Google Nest Hub, and the new Eero is $150 cheaper than the product Eero sold as an independent company. Amazon is clearly pushing for ubiquity; a whale strategy this is not.
Facebook, meanwhile, effectively consolidated its Oculus product line from three to one: the mid-tier Oculus Quest, a standalone virtual reality (VR) unit, gained the capability to connect to a gaming PC in order to play high-end Oculus Rift games; Oculus Go apps, meanwhile, gained the capability to run on the relatively higher-specced Oculus Quest. It is not clear why either the Go or Rift should be a target for developers or customers going forward.
The broader goal, though, remains the same: Facebook is determined to own a platform; the lesson the company seems to have drawn from its smartphone experience is the importance of doing it all.
Beachheads and Obstacles
What Amazon and Facebook do have in common — and perhaps this is why both seem to look back at their very successful smartphone eras with regret — is that Apple and Google are their biggest obstacles to success, and it’s because of their smartphone platforms.
Amazon to its great credit — and perhaps because the company did not have a smartphone to rely on — found a beachhead in the home, the one place where your phone may not be with you. Now it is trying to not only saturate the home but also extend beyond it, both through on-body accessories and also an expanding number of deals with automakers.
Facebook, meanwhile, is searching for a beachhead of its own in virtual reality. That, the company believes, will give it the track to augmented reality, and by extension, usefulness in the real world.
Amazon’s challenge is Google: Android phones are already everywhere, and Google is catching up in the home more quickly and more effectively than Amazon is pushing outside of it. Google also has a much stronger position when it comes to the sort of Internet services that provide the rough grist of intelligence of virtual assistants: emails, calendars, and maps.
Facebook, meanwhile, is ultimately challenging Apple: augmented reality is going to start at the high end with an integrated solution, and Apple has considerably more experience building physical products for the real world, and a major lead in chip design and miniaturization, not to mention consumer trust. Moreover, while there is obviously technical overlap when it comes to creating virtual reality and augmented reality headsets, the product experience is fundamentally distinct.
Amazon spent the smartphone era not only building out Amazon.com, but also Amazon Web Services (AWS). AWS was just as much a critical platform for the smartphone revolution as were iOS and Android: many apps ran on the phone with data or compute on Amazon’s cloud; mobile also created a vacuum in the enterprise for SaaS companies eager to take advantage of Microsoft’s desire to prop up its own mobile platforms instead of supporting iOS and Android, and those SaaS companies were built on AWS.
Smartphones, meanwhile, saved Facebook from itself: instead of a futile attempt to be a platform within the browser, mobile made Facebook just an app, and it was the best possible thing that could have happened to the company. Facebook was freed to focus solely on content its users wanted and advertising to go along with it, generating billions of dollars and a deep moat in targeting advertising along the way.What is not clear is if Amazon’s and Facebook’s management teams agree. After all, both launched smartphones of their own, and both failed spectacularly.
Facebook’s attempt was rather half-assed (to use the technical term). Instead of writing their own operating system, Facebook Home was a launcher that sat on top of Android; instead of designing their own hardware, the Facebook One was built by HTC. Both decisions ended up being good ones because they made failure less expensive.
Amazon, meanwhile, went all out to build the Fire Phone: a new operating system (based on Android, but incompatible with it), new hardware, including a complicated camera system that included four front-facing cameras, and a sky-high price to match. It fared about as well as the Facebook One, which is to say not well at all.
That, though, is what made last week’s events so interesting: it is these two failures that seemed to play a bigger role in what was announced than did the successes.
Amazon and Facebook’s Announcements
Start with Amazon: the company announced a full fifteen hardware products. In order: Echo Dot with Clock, a new Echo, Echo Studio (an Echo with a high-end speaker system), Echo Show 8 (a third-size of the Echo with a screen), Echo Glow (a lamp), new Eero routers, Echo Flex (a microphone only Echo that hangs off an outlet), Ring Retrofit Alarm Kit (that lets you leverage your preinstalled alarm), Ring Stick Up Cam (a smaller Ring camera), Ring Indoor Cam (an even smaller Ring camera), Amazon Smart Oven (an oven that integrates with Alexa), Fetch (a pet tracker), Echo Buds (wireless headphones with Alexa), Echo Frames (eyeglasses with Alexa), and Echo Loop (a ring with Alexa). Whew!
This is an approach that is the exact opposite of the Fire Phone: instead of pouring all of its resources into one high-priced device, Amazon is making just about every device it can think of, and seeing if they sell. Moreover, they are doing so at prices that significantly undercut the competition: the Echo Studio is $150 cheaper than a HomePod, the Echo Show 8 is $60 cheaper than the Google Nest Hub, and the new Eero is $150 cheaper than the product Eero sold as an independent company. Amazon is clearly pushing for ubiquity; a whale strategy this is not.
Facebook, meanwhile, effectively consolidated its Oculus product line from three to one: the mid-tier Oculus Quest, a standalone virtual reality (VR) unit, gained the capability to connect to a gaming PC in order to play high-end Oculus Rift games; Oculus Go apps, meanwhile, gained the capability to run on the relatively higher-specced Oculus Quest. It is not clear why either the Go or Rift should be a target for developers or customers going forward.
The broader goal, though, remains the same: Facebook is determined to own a platform; the lesson the company seems to have drawn from its smartphone experience is the importance of doing it all.
Beachheads and Obstacles
What Amazon and Facebook do have in common — and perhaps this is why both seem to look back at their very successful smartphone eras with regret — is that Apple and Google are their biggest obstacles to success, and it’s because of their smartphone platforms.
Amazon to its great credit — and perhaps because the company did not have a smartphone to rely on — found a beachhead in the home, the one place where your phone may not be with you. Now it is trying to not only saturate the home but also extend beyond it, both through on-body accessories and also an expanding number of deals with automakers.
Facebook, meanwhile, is searching for a beachhead of its own in virtual reality. That, the company believes, will give it the track to augmented reality, and by extension, usefulness in the real world.
Amazon’s challenge is Google: Android phones are already everywhere, and Google is catching up in the home more quickly and more effectively than Amazon is pushing outside of it. Google also has a much stronger position when it comes to the sort of Internet services that provide the rough grist of intelligence of virtual assistants: emails, calendars, and maps.
Facebook, meanwhile, is ultimately challenging Apple: augmented reality is going to start at the high end with an integrated solution, and Apple has considerably more experience building physical products for the real world, and a major lead in chip design and miniaturization, not to mention consumer trust. Moreover, while there is obviously technical overlap when it comes to creating virtual reality and augmented reality headsets, the product experience is fundamentally distinct.
by Ben Thompson, Stratechery | Read more:
Image: uncredited
