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Amazon into hardware?  Not so sure about that one…

The Wall Street Journal's digital network reports that Amazon is hiring hardware engineers and plotting a move to combat Apple's iPad in the hardware space.  I can only react with surprise – if the story is true, what makes Amazon think they can out-innovate people whose core business is making hardware?  They would have to quantum-leap the iPad and other handheld devices in hardware to be successful, and that hardly seems likely, as my good friend venkat N. Venkataraman notes on his facebook page.  When a smart company like Amazon starts to make these sorts of moves, it suggests to me that something else is going on. 


My bet is that it is a move that simply buys Amazon what I call "positioning" options — something to have in your arsenal in case the main strategies go off the rails and that keeps you from getting locked out of the game.  Positioning options are part of a larger strategy of managing an entire portfolio of opportunities.  When the core is under threat, or there is significant uncertainty in the face of demonstrated demand, positioning options can help a company to keep its options open.  In addition, by investing in some hardware savvy, Amazon will be in a position to slow down or de-fang competitors who would have an open field in the hardware space otherwise.  Perhaps the Amazon play is to create an entirely new platform for shopping.  I could see, for example, transporting the 'one click' feature to a dedicated device which would make interacting with the Internet for shopping infinitely easier.  Consider, for instance, people who can't relate to a mouse and don't like to click around.  They might be intrigued.


It reminds me a little of the time that Motorola allied with Apple to introduce the now-little-remembered "Rockr" phone.  I said at the time (circa 2005) that I thought it was simply a feint – a product to stave off rapid development of the phone/music market which bought Apple time to introduce its own phone.  Sure enough, come 2007 Apple introduced the iPhone and the rest is history. 

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