Observing a market in development, such as the e-book business today, teaches the thoughtful analyst one thing above all else: No company is making investments that lead to failure. They only fail by mistake, by placing too large a bet on one direction the market might take. Amazon is no more at war with Google than it is with Apple. Yes, they are competing for dominance. But neither company would kill itself over this one vertical within either of their much broader businesses.
Amazon can drop the Kindle hardware to sell more books on an Apple device or through Google Books. Google could embrace the Kindle format, as well as the Mobipocket format that Amazon owns. Apple could provide hardware to serve up both Amazon and Kindle books. Microsoft, as the odd-man out and dominant operating system player is least like to control the high ground in any of these markets, because it holds the largest share of revenue generated by consumers today.
None of them will destroy the rest of their business to control the book publishing market, which is worth only $46 billion annually according to the most optimistic estimates. Mobile phone hardware, search engine marketing and advertising and PC operating systems are all larger markets than books, though one could argue that publishing has the greatest potential to drive revenue if managed perfectly. It is easier for any of these companies, however, to sell hardware, advertising and operating systems and development tools than to undertake the challenges of publishing.
Instead, these companies are jockeying for leadership, which will allow them to dictate their share of the resulting market for e-books, e-magazines and e-anything that generates revenue. Eventually, and I believe it will not be long, Amazon will yield to Google, making its book available on Kindle, or by licensing its formats to Google to sell independently of Amazon (but sharing revenue when the Google-scanned books are sold in Amazon’s Kindle Store). Apple will sell hardware, driving sales of e-books through any channel that provides books that run on its hardware. Likewise, Microsoft, which know it has lost the high ground in electronic publishing, will cede publishing revenues in exchange for support of its OS by the widest range of e-readers.
Only Google and Amazon are so decidedly at odds that they cannot work together. One of Microsoft’s most profitable divisions has long been and remain its Mac software unit. Everyone else in the e-books market has only their long-term survival at the center of their calculations, and none of them depend on dominating publishing.