AWS meets Kindle Fire

On Sept 28th, Amazon announced the new Kindle Fire tablet. This post digs into the two key cloud integrations that Amazon brings with Fire.

Amazon Silk, The Cloud Accelerated Browser

The browser deploys a split-architecture where all of the browser subsystems are present on the Kindle Fire as well as on the Amazon’s cloud computing platform, AWS.  Each time a user load a web page, Silk makes a dynamic decision about which of these subsystems will run locally and which will execute remotely on EC2. The goal is to improve user experience by delivering content to users faster. Silk achieves this in a number of ways. EC2 acts as a staging area where web pages can be pre-processed before being redirected to the user’s browser. It uses content compression techniques, such as re-encoding video and images before sending them to Fire. It also keeps connections constantly open to popular websites, which reduces the time needed to negotiate connections on a one-to-one basis and caches content such as images, JavaScript, and Cascading Style Sheets that are used to render the web pages that users view every day.  Finally Amazon is leveraging Google’s SPDY protocol for faster connections to Web servers.

The performance of Opera can be a testament to the improved user experience that Silk can deliver. However, the split browser approach raises privacy concerns as Amazon Silk logs the sites that the user visits along with Fire’s IP or MAC addresses.  Privacy advocates have raised concerns about how this data may be used by law enforcement agencies or lawyers. However Amazon is really only interested in shopping habits and is willing to bear the cost of using its cloud infrastructure for every Fire user to understand what are people buying at rival sites. Remember that the Amazon store is just one click away from any library that the user is in Some users may not mind this invasion of privacy if Amazon can deliver a better shopping experience. Besides, it is possible for users to turn off the EC2 service altogether and use the browser in a standard way.

Free cloud storage for all Amazon content

Amazon has designed the tablet with only 8 GB of storage space. But it allows users to leverage its cloud storage solution to save content (books, music, video, apps) that they are not frequently using. Content is available instantly to stream or download for free and Amazon uses its Whispersync technology to sync content across devices

By leveraging its massive cloud infrastructure, Amazon can deliver a tablet with skimmed down hardware and low price point. Although free cloud storage and streaming is available for those that go beyond 8 GB, this privilege is restricted to Amazon content. If users have invested in content from other providers and plan to use Fire as their primary device for content,  they will either need to make sure that the non Amazon content fits on the 8GB or pay for additional storage on the Amazon cloud.

Whats next? Beyond Browsing and Storage

Amazon could use its cloud computing infrastructure to not just improve a user’s browsing experience or give away free storage, but also offload processing of resource intensive applications such as security scanning, number crunching, gaming etc. MIT’s Technology Preview explores some of the options. It will be interesting to see how Amazon further evolves this marriage between AWS and kindle.

This post was originally posted on cloudave.com

A deeper look at Nokia’s decision to partner with Microsoft

Within a year, Google overtook Nokia to become the leader in the smartphone market. A 132,430 employee company was brought to its knees by a relatively smaller sized Google (24,400 employees). Size is really less of a factor here but rather  an environment that promotes innovation and entrepreneurship and a culture that may care less about competition but has its pulse on the market.

On January 27th while announcing Nokia’s Q42010 earnings Stephen Elop discussed the following

Lack of pulse on the market: “The game has changed from a battle of devices to a war of ecosystems and competitive ecosystems are gaining momentum and share. The emergence of ecosystems represents the broad convergence of the mobility, computing and services industries. Today, the winning ecosystems at the high-end to mid range deliver great hardware, compelling user interfaces and the coherent aggregation of search, advertising, ecommerce, social networking, location-based services, entertainment and unified communications, just to name a few. At the same time, we see a different type of ecosystem building around mid-range to low end devices and developing markets involving very low cost components and manufacturing processes. In this range, brand, scale, price, design, distribution and speed are critical.  It is on this basis of ecosystems that Nokia must now compete.”

Lack of innovation: “In addition to changes in the competitive landscape, there are challenges that are specific to Nokia. For example, our experiences are not competitive in all markets. As a result, we witnessed a pattern of disappointment in those markets. Asia-based suppliers have made it possible for new handset vendors with limited R&D capabilities to enter this part of the market. In addition, in Q4, we were challenged by component constraints and the lack of competitive dual SIM products in our portfolio.”

This is a rapidly evolving market and standing still is not an option.  To fix its eroding market share, Nokia announced a plan to make Microsoft Windows Phone 7 its high end smartphone operating system, reducing MeeGo to a research platform while still keeping Symbian for mid range and low range products. Android seems to be the most obvious choice that Nokia should have made. However, this choice wouldn’t have provided Nokia a sustainable competitive advantage.  Huawei shipped over 3 million smartphones in 2010, and it plans to ship more than 10 million in 2011, mainly based on Android software. Its Ideos phone sells for about $100, unsubsidized!!! If Nokia has component issues as Elop pointed out, a price war will not cut it for Nokia. But why would Nokia partner with a company that saw a 20% decline in market share and has only 9000 apps in its marketplace? Could Nokia have gone with any of the other platforms such as RIM, Palm Web OS?

Elop used to work for Microsoft from January 2008 to September 2010 as the head of the Business Division, responsible for the Microsoft Office line of products, and as a member of the company’s senior leadership team. He was also the 8th largest Microsoft individual shareholder at the time this partnership was announced. I cant blame him for having faith in Micorosoft’s ability to deliver. Additionally Microsoft sweetened the deal by paying Nokia $1 billion to promote and develop Windows-based phones.

But a billion dollars will go only so far for a company that makes $17.5B revenue / $1.225B operating profit in a quarter. And Nokia will pay Microsoft a royalty for each phone sold which may be offset by a cut in R&D spend. The deal is non exclusive, so microsoft has nothing to lose. Nokia on the other hand has made a gamble.  Many have written off this partnership. However I am excited to see how this gamble plays out

Navigating through the smartphone landscape

What smartphone you are most likely to buy? According to November data from The Nielsen Company, 40% of the people who bought a smartphone between June and November of 2010, bought an Android based phone. On a worldwide basis, Canalysis reported that Google Android overtook Nokia Symbian in Q42010 to be the leading smartphone platform with a market share of 33%. Apple, RIM and Microsoft came in at third, fourth and fifth places respectively. This is a rapidly changing market with Gartner reporting as recently as Sept 2010 that Nokia was still the leading platform and RIM had higher market share than Apple.

This picture can change in 2011 for a few reasons

1. Nokia adopted Windows Phone as its primary smartphone strategy, abandoning its own Symbian OS. All of the platform vendors had positive Y/Y growth in 2010 except Microsoft who saw a 20% decline even in this rapidly growing smartphone market. By partnering with Nokia Microsoft may be able to stem its loss and Nokia may be able to expand its market share.
2. iPhone is now available via Verizon in the US and a large percentage of  existing android and blackberry users will switch to iPhone if they havent already. According to a Fortune magazine survey, 44% of Verizon Android users were going to switch to iPhone on Day 1 of the phone’s release on the Verizon network and a staggering 66% of Blackberry users were going to do the same.
3. Apple may release a smaller, cheaper phone to appeal to a wider audience. However, this will be a departure from their current strategy of concentrating on margins and the higher end of the smartphone market.

With the growing number and popularity of smartphones, the mobile app market is also growing at a rapid pace. According to Gartner, worldwide mobile application store revenue in 2011 is expected to surpass $15B, growing at a Y/Y rate of 190% from the 2010 revenue of $5.2B.  Amongst the stores, Apple is still the most popular driving 90% of the downloads, after all there are 350,000 apps available for the iPhone compared to 88000 for Android based phones. However, Lookout reports that Android market is growing at a faster pace than Apple App store. Android market grew at 127% since August in terms of number of apps, while Apple App Store grew at a rate of 44% during the same period.

A lot of numbers here, but the key points are

1. The andoid platform is growing rapidly as Google executes on its strategy to reach as many devices as possible with the goal of growing their online advertising revenue.
2. The iPhone is still popular with consumers and has the most mature app store. Thus when developing apps, an iPhone app is a must. However, so is an android app.