MG Siegler addresses the Amazon Tablet issue in a post entitled “Why Amazon *Has* To Make A Tablet Now”.  My original point is still the same.  Amazon would be foolish to alienate all the other tablet manufacturers by making their own.  But he did raise two interesting points I wanted to address.

There has been a lot of talk today about how and why Amazon could become a big player in the tablet space. And a NYT report from last week points to Amazon specifically looking at expanding their work on Android in the space. (We also heard about an Amazon Android tablet back in September from the same source that knew about their app store.) But there really should be no question about it. After seeing their Android Appstore, it’s clear not only that they need to get into this game, but that they’re going to.
Currently, to install Amazon’s Appstore, you need to jump through a bunch of loops. This laborious process has been ripped apart — “8 easy steps” — and rightfully so. This isn’t like installing just any other Android app. You have to alter system settings and send yourself files. If you’re somewhat geeky, it’s not hard. And to be fair, Amazon does the best job they can walking you through the process on their site. But there is no way that an average person is going to do this.

This seems like a case where he’s taking a short term problem (the difficult install) and using it to suggest Amazon pursue a very expensive, very long term strategy.

Making a tablet is no trivial task.  A quick look at all those generic tablets littering K-Marts and Discount Stores around the world proves that point.  Industrial Design is hard.

Companies like Motorola and Samsung have a deep bench of people who specialize in this type of thing and even they have trouble keeping up with Apple.  So Amazon would be entering a highly competitive industry and they’d be doing so at a huge disadvantage (remember the Kindle essentially had no competition when it was released).

So the question is this: Which is easier, coaxing other tablet manufacturers to pre-install your app store or entering the highly competitive tablet market and trying to become the dominant player?  To me, the answer to that question is obvious.  Even if Amazon had to pay tablet manufacturers to be pre-loaded it would still be much cheaper than entering the tablet business themselves.

The key to Amazon’s Appstore is going to be getting it pre-installed on devices. Earlier, my colleague Jason suggested that Amazon should strike up deals with carriers to get their store pre-installed on Android devices. I too have no doubt that those discussions are already well underway. The problem is that at least some of those carriers (and OEMs) are also doing their own app stores — will they really want more competition?

Well…you can’t win them all.  Yes, there will be other companies that venture into the “app store” market but I have to believe they’ll be few and far between.  Apple and Google have both said they make little to no money off their app stores. 

Amazon’s interest is in being the world’s #1 retailer in every category.  Apps are a growing product category so it makes sense for them to get into the market.  Plus it compliments a strategy where they can act as an iTunes replacement for Android devices. 

But if you don’t already have a retail infrastructure it makes no sense to build your own app store.  I mean, you’d have to build an entire infrastructure around a business with miniscule margins.  

That’s even more true when it comes to Video, Music and Books.  You’d have to negotiate distribution deals with hundreds of labels, studios and publishers.  There’s no way that’s worth it especially if Amazon’s offering you a piece of that business for the low, low price of a pre-load.