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Big Software Plans for Amazon's Kindle?

Giant online retailer may be plotting a broader foray into software for smartphones. The company already offers a handful of mobile applications. One lets users of Apple's ( (AAPL)) iPhone read electronic books on their screens. Another lets BlackBerry users snap photos of products in stores, then find similar items on Amazon. Those may be just the start of Amazon's ( (AMZN)) mobile efforts. In the past several months the online retailer has been expanding its team of mobile engineers. It's also acquiring companies whose products and knowhow could help Amazon turn out new software for cell phones. The goals may be to sell new programs that can run on Amazon's Kindle e-book reader, make Amazon's digital titles available for more devices, and ring up revenue from sales of mobile applications, say several software executives and analysts. Amazon won't comment on its mobile-software ambitions. "We don't discuss future plans or developments," spokeswoman Cinthia Portugal says in an e-mail. A push by Amazon into mobile software may make sense. Right now, smartphone users often buy applications from makers of their devices. But that may change if consumers' loyalties shift from smartphone vendors to online stores that supply software for these phones, says Alex Bloom, CEO of mobile-application vendor . "Devices change, and what's hot today isn't necessarily hot tomorrow," he says. "Consumers will shift among devices but maybe stay with one retailer." Handango runs an online PC software store within Amazon's site. If Amazon can create an online store for Kindle applications that complement the roughly 300,000 e-book titles it already sells for the device, it could beef up profit margins for its Kindle business. Currently, Amazon has to sell seven e-books, many of which are priced at $10, to make as much money as it makes on a sale of one regular hardcover book through its site, according to Jeffrey Lindsay, a senior analyst at . Mobile-App Market May Reach $25 Billion Amazon could sell 3 million Kindles by 2012, up from 500,000 in 2008, Lindsay estimates. The company, which has long dabbled in selling digital music and movies, may hope to grab a piece of the fast-growing mobile-applications market. Sales of mobile-phone software and related fees could reach $25 billion in 2014, compared with less than $1 billion in 2008, forecasts tech industry consultant Juniper Research. Another reason for Amazon's interest in software could be to make its collection of 285,000 electronic books, magazines, and blogs available for Research In Motion's ( (RIMM)) BlackBerrys, as well as cell phones from Nokia ( (NOK)) and others that run the Symbian operating system. "They can't keep the Kindle a closed system, because it will attract the attention of regulators" who may question Amazon's hold on the e-book market, says Bernstein's Lindsay. An executive at one mobile-phone software vendor also says Amazon may be considering making its Kindle mobile bookstore available for a greater range of handheld computers. In March the store became accessible via an iPhone app. Amazon is using a combination of selective acquiring and aggressive hiring to bolster its position in applications software. On June 18 it bought SnapTell, a maker of software that allows users of iPhones and other devices to snap pictures of CDs, DVDs, books, and video games on store shelves and then compare their prices with Amazon's. SnapTell also has expertise creating software for Google's ( (GOOG)) Android operating system. In late April, Amazon bought Lexcycle, whose software turns the iPhone into an e-book reader. Hints from Amazon's Job Ads The e-tailer is also hiring. Amazon lists 17 open mobile-related positions on its Web site, including for software engineers, a senior product manager for mobile payments, and a director of mobile applications. One job ad says Amazon expects its hire to "develop partnerships with mobile companies." Another posting seeks applicants who can write programs for Microsoft's ( (MSFT)) Windows Mobile operating system. Mobile apps could also help Kindle more effectively enter new markets, such as schools and colleges. Amazon is already planning to test its latest e-reader at and Oregon's . Amazon may also consider making mobile apps for the Kindle to provide for a more interactive reading experience, says Scott Ellison, a vice-president at market researcher . For instance, interactive cookbooks could walk readers through a recipe with step-by-step instructions, he says. Other e-book reader companies are considering expanding into mobile applications. Startup expects to release its first product—a reader for business periodicals and other documents—early next year. "There's no reason why [the products] couldn't evolve into something that's also applications," says Daren Benzi, the company's vice-president for business development. Ultimately, Amazon may need to embrace software to broaden the Kindle's appeal at a time when consumers are pressing their mobile devices into service to perform all kinds of tasks. The Kindle "basically has the same components as a netbook," says Bernstein's Lindsay. "There's no reason why a Kindle can't do e-mail or Web browsing." Amazon is keeping mum, but industry watchers are picking up signs that its Kindle ambitions are growing.
Kharif is a reporter for Bloomberg News and Bloomberg Businessweek in Portland, Ore.

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