Hearst's Skiff vs. Amazon's Kindle: A Tech Showdown That Kindle Can Win
%%DynaPub-Enhancement class="enhancement contentType-HTML Content fragmentId-1 payloadId-61603 alignment-right size-small"%%And like Google's multipronged push into the mobile market, Hearst's strategy is being compared to the devastating end run Microsoft (MSFT) made against Apple decades ago in the PC market by casting a wider net than Apple's closed approach. Given the calamitous consequences of Apple's move -- the company was relegated to a tiny sliver of the market as generic PCs and Microsoft ruled -- investors are understandably quick to use that misstep as a point of reference.
Focused Companies Have the Edge
But a more recent showdown -- between Apple's iPod and Microsoft's disastrous Zune, not to mention a host of other generic music players -- may be more instructive about how things will play out in e-readers. Despite the massive competition, the proprietary iPod is a blockbuster success, of course. And that's because the dynamic surrounding a hot, emerging consumer technology, like the e-reader is now, are different from most commodity hardware, where more mundane aspects like price and performance prevail.
At the start of a technology's life, early-adopting customers tend to be enthusiasts who gravitate toward devices because of their elegance and rich features -- not just their functionality. Those kinds of products are often easier for focused companies with passionate CEOs, like Amazon's Jeff Bezos and Apple's Steve Jobs, to deliver than a hodgepodge of partners and competitors.
And creating an e-reader that customers get revved up about is still considerably difficult to do. Barnes & Noble's (BKS) Nook competitor to the Kindle, for example, has gotten a lackluster reception despite the fortune awaiting the bookseller if it can take chunks of market share from Amazon.
Over time, of course, a mob of Skiff-like devices may emerge as a standard for the e-reader market. But by that time, much of the buzz -- not to mention high profit margins -- will likely have evaporated from the e-reader market as well.