December 24, 2012
Amazon And Google To Go Head-to-head In 2013, According To Reuters
Lee Rannals for redOrbit.com - Your Universe Online
The report quotes a former Amazon executive as saying Google's project to scan and digitize product catalogs was a "wake-up" call to Jeff Bezos, Amazon CEO.
"He realized that scanning catalogs was interesting for Google, but the real win for Google would be to get all the books scanned and digitized" and then sell electronic editions, the former executive told Reuters.
The news agency predicts a rivalry between the companies will escalate in 2013 when online advertising and retail to mobile gadgets and cloud computing begin to grow.
According to the report, the rivalry could "upend the last remaining areas of cooperation between the two companies.”
"For instance, Amazon's decision to use a stripped down version of Google's Android system in its new Kindle Fire tablet, coupled with Google's ambitious plans for its Motorola mobile devices unit, will only add to tensions," Alexei Oreskovic and Alistair Barr wrote for Reuters.
They said the confrontation marks the latest front in the technology industry war, and Facebook, the world's largest social networking site, is lurking in the shadows for both Google and Amazon.
"Amazon wants to be the one place where you buy everything. Google wants to be the one place where you find everything, of which buying things is a subset," Chi-Hua Chien, a partner at venture capital firm Kleiner Perkins Caufield & Byers, told Reuters. "So when you marry those facts I think you're going to see a natural collision."
Oreskovic and Barr point out Amazon shareholders have been patient as the company invests in growth, but the company will have to start producing strong earnings at some point.
They said not long after Bezos learned about Google's plans to digitize catalogs, Amazon began scanning books and providing searchable digital excerpts, pointing out it launched its Kindle e-reader a few years later.
"Amazon's fledgling ad business is still a fraction of Google's, with Robert W. Baird & Co. estimating Amazon is on track to generate about $500 million in annual advertising revenue - tiny, given it recorded $48 billion of overall revenue in 2011," Oreskovic and Barr said in the Reuters article. "By contrast, 96 percent of Google's $38 billion in 2011 sales came from advertising."