E-retail giant Amazon, today announced that it has reached an agreement to acquire Audible.com, the leading online supplier of “digital spoken word audio content” (think: audiobooks, magazines, newspapers and radio programs). The move clearly signals Amazon’s intent on placing ever greater bets on a digital future, whereby consumer demand for DVDs, CDs and “dead tree” books, will be replaced with movie downloads (UnBox), digital music (AmazonMP3), eBooks (Kindle), and now audiobook downloads too.
In yesterday’s Q4 2007 earnings call, Amazon CEO Jeff Bezos explained the company’s latest strategy (via TechCrunch):
“When media was largely physical, it made sense to buy it in the physical world. But as media becomes digital it does not make so much sense to buy them in the physical world. The bulk of the sales now are in the physical world. So our relative advantage over time should improve.”
In other words, Amazon is able to place these future bets because of the company’s strong position as an e-retailer of physical media. This is very similar to the advantage that Nextflix has over Apple’s iTunes movie rentals for example: the move away from physical to digital will be a gradual and messy one, tangled up in issues such as poorly designed technology, entrenched business models and pre-digital licensing — not to mention, in some instances, the lack of consumer appetite. Any company that is able to hedge its bets, competing hard in the physical world, while it invests in and waits for the digital world to catch up, is going to be in a pretty strong position; presuming of course that they execute well during the transition.
On that note, according to Bezos, demand for Amazon’s newly released e-Book reader, Kindle, is outstripping supply:
“Kindle is, in terms of demand, is outpacing our expectations, which is certainly something that we are very grateful for. It’s also on the manufacturing side causing us to scramble. We’re working very hard to increase the number of units that we can build and supply per week, so that we can get back — our goal is to get into a situation as quickly as we can where when you order a Kindle, we ship it immediately. That’s the standard we want to hold ourselves to and we are working very hard to get there. We are super-excited by the very strong demand.”
That’s something we definitely didn’t see coming.