Amazon attempts to challenge iTunes anew

Posted at 08/02/2012 9:51 AM | Updated as of 08/03/2012 10:04 AM

Amazon.com Inc is trying to get its digital music and video on as many gadgets as possible as the world's largest Internet retailer replicates a strategy that paid off for its Kindle e-book business.

The theory is that if customers can play and watch Amazon music and video on all their existing devices, they are more likely to purchase the content from Amazon rather than competitors like Apple Inc's iTunes and Netflix.

The latest example of this emerged on Wednesday, when the company unveiled a new iPad app that lets customers stream and download Amazon videos on Apple's dominant tablet computer.

Earlier this week, Amazon updated its Cloud Player digital music app and said it would soon be available on Roku Internet TV boxes and the Sonos home music streaming system. The app is already on Apple's iPhone and iPod Touch, Web browsers, smart phones and tablets running Google's Android and phones running Microsoft's Windows operating system.

Developers and analysts say Amazon is likely working on new mobile devices of its own. However, the company is also focused on getting its digital media apps installed on the massive base of gadgets that companies including Apple, Google and Samsung have already designed and sold.

"A key objective is to sell more stuff, whether physical or digital. The way we do that is by looking at what problems customers have that we can solve," said Bill Carr, vice president of digital music and video at Amazon.

"They want to read books, listen to music and watch TV shows and movies wherever they are and they don't want that to be hard work," he added. "If the customer experience is better, they want to do it more often."

Amazon dominates the e-book market partly because customers can buy once from the company and read the content through Kindle apps on devices including Apple's iPad, iPhone and Mac computers, PCs, BlackBerries, Windows phones and smart phones and tablets running Android.

Amazon's digital music and video businesses have not had the same success. Around since 2007 and 2008, their market share is less than 15 percent, according to The NPD Group. Apple's iTunes store is the clear leader in digital music, with over 50 percent of the market. Netflix is dominant in paid digital movie rentals, with 55 percent of that market in the fourth quarter of 2011, according to NPD.

"It's so much easier and frictionless to buy from iTunes and play the content on your iPhone, iPad or iPod - even if the content is more expensive than on other platforms," said Atul Bagga, an analyst at Lazard Capital Markets.

If Amazon can help customers access its digital music and video more easily through Apple devices and other gadgets, it may boost sales of that content, Bagga and other analysts said.

"They've been battling for a long time and have not posed a significant challenge to iTunes yet," said Ben Schachter, an analyst at Macquarie. "But they are not giving up. They had success with the Kindle e-books strategy and they are hoping to do it again with music and video."

Amazon's Carr said the company's digital content sales have been rising fast recently.

"The availability of our apps on multiple devices is a big part of that," he added.

Amazon Instant Video is available on Mac computers and PCs, Roku, Sony's Playstation 3, Microsoft's Xbox 360, TiVo and hundreds of compatible Blu-ray DVD players and TVs, according to the company.

The new Instant Video iPad app lets users stream or download movies and TV shows from Amazon's library, which has more than 120,000 videos to rent or buy.

Members of Amazon Prime, a free shipping program which costs $79 a year, can also stream more than 20,000 videos for free and the new iPad app gives these customers access to this content too.

The iPad app also comes with Whispersync, a technology first rolled out in Amazon's Kindle e-book apps which lets users stop reading on one device and pick up where they let off on another gadget. In the case of the video app, movies and TV shows can be paused on an iPad and the videos can be re-started at the same point on other devices.