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Comment by codex | Hacker News Reader

Google's tablet business model is actually superior to Amazon's. Google has better ad. monetization than Amazon, and just as good a theoretical monetization of digital media (movies, music, and books).

Amazon has sustainable advantages in a shitty business (retailing/warehousing/shipping physical goods) but when it comes to digital media, it's just bits, a commodity. It is much easier for Google to sell digital content than it is for Amazon to monetize web browsing and email, which is what most people do with tablets.

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Amazon is in a much superior position than Google in this competition. They didn't gain significance because of better tablet product or ad monetization; they are significant because of all the credit card information in their database before they entered the digital content delivery business. The friction from buying content on Kindle Fire is minimal, which is a deterministic advantage Amazon and Apple have over every other digital content provider in the mobile device market.

Time will tell. I suspect that the digital media market is not large enough to provide meaningful subsidies at this stage, especially since a huge portion of tablet time is spent on the web and in email. When customers want to buy a movie, they'll probably use whatever ships on the device they have already purchased. The better device wins--people aren't going to choose a tablet based on customer service or even content selection; witness Amazon's failure in the music market.

If this is true, than Google has the stronger position, as they can afford deeper subsidies on the device through advertising. I don't know what Google pays to be the default search engine on the Fire or the iPhone, but it is significant.

Note that it’s being sold through the play store (collecting the users card details) and comes with free credit for the store.

Exactly, "collecting", not "having".

That is an excellent point. A track record of good customer service also means Amazon has an advantage over Google.

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