Amazon Has Boxed In the Kindle. Can Apps Help It Break Out?

To the degree that apps have become the measure of a mobile device's popularity and promise, the Amazon (AMZN) Kindle is in trouble. The platform has seen only a trickle of new apps and that doesn't seem to be changing.

If Amazon wants the Kindle to break out of its box and ultimately compete with the Apple (AAPL) iPad and other tablets, it will have to address the lack of third party applications. And yet, this will be tougher than simply recruiting development partners. Amazon has locked itself into a box, and getting out of it will be a tough proposition.

Amazon faces a problem of having done a job too well. When it first introduced the Kindle, the company did so in pursuit of the e-book market. The concept was as follows:

• Help fuel the early e-book market so that consumers wanted to buy them and publishers wanted to produce them.
• Create the Kindle to sell directly to Amazon's customers, assuming that they would include the most active readers likely to be interested in such a device.
• Lock readers into the Kindle format, so it becomes impractical for them to buy e-publications elsewhere.

Apps proved to be wildly popular. Amazon took note and decided to launch its own app store last January. Unfortunately, it has focused too well in making the Kindle an e-reader. Furthermore, it has never spent the resources necessary to really open the device as a platform.

For example, Amazon's Kindle store doesn't mention apps as a product category. Search for the term "Kindle active content" (Amazon's category for apps) within the Kindle store, and you get 486 results, many of which are ebooks.

For the Kindle to really compete with other devices, it needs a radically new strategy. Amazon needs to:

1. Acknowledge that e-readers are a limited category that will eventually fall prey to dropping prices and the increasing abilities of tablets.
2. Create a new Kindle that's still lightweight with long battery life, but that supports web browsing and apps.
3. Develop a real app presence on its site.
4. Recruit app vendors, providing additional incentives for them to work with the company.

Related:

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• Time To Focus on Cheap Color Tablets, Not E-Readers
• Could Amazon Be Planning a Google Android Tablet and a Software Suite?
• E-Reader Bad News: Some People Want 'Em, But Most Don't