Can Google, Amazon Gang up on iPhone?

Is Amazon the next big mobile device threat to Apple, Google and the also-rans such as Microsoft and Hewlett-Packard? It just might be, after a series of interesting launches in recent weeks.

The online retailer debuted a curated third-party Android app store in late March. Then a week later, the company made a surprise launch of a new online music storage service, called Cloud Drive, complete with a Web-based jukebox, Cloud Player, that is specifically targeted to Android devices and ignores Apple’s iPhone.

On top of its new services, Amazon already has a premium video streaming service, and a large digital music store. With all these pieces in place, it sure looks like Amazon is interested in launching a set of mobile devices. In fact, rumour has it the company is hard at work right now on an Android-based tablet to compete with the iPad. No word on an Android phone — the Amazon Blaze was just an April Fools’ joke — but with the Appstore for Android up and running, a phone makes a lot of sense too.

But instead of being a threat to Google, Amazon’s stealth intrusion into the mobile world could be an opportunity for a Google-Amazon alliance to threaten Apple’s dominance with the iPhone. Sure, there may be more Android than iOS devices in the wild, but Android is still missing the unified iTunes experience of the iPhone. Google has apps, but nothing to compare with the iTunes Store’s selection of music and video, e-books and podcasts. Amazon, on the other hand, has almost all of this ready to go, short of a large podcasting library. Instead of trying to slug it out with Amazon by launching its own music store and other services, Google could leave all the peripheral stuff to Amazon and just focus on creating a great Android OS experience.

Amazon Needs Hardware

If you doubt Amazon is interested in developing mobile hardware, just look at the current installation process for Amazon’s Appstore for Android. The procedure involves eight steps that include messing around in your phone’s settings, clicking “OK” on a scary warning screen and then downloading the app from an email or SMS. This is not, by any means, a one-click, stress-free process for non-technical users who just want their phones to work right out of the box.

The only way past this problem is for Amazon to create its own hardware, partner with a hardware manufacturer that will install the app on the phone, or work with a manufacturer through Google — a company that already has experience with phone development. Amazon may still want to create its own hardware eventually, as some pundits suggest. But partnering with Google to create, for example, an HTC-made, Google-Amazon branded phone would give Amazon a jumpstart into phones with a device sporting two recognizable names.

Google Doesn’t Get Retail

Google may do a great job at producing the Android operating system, but the company is not great at providing a customer-driven retail experience.

You only have to take a look at Google’s laissez-faire approach to the Android Market to understand this. About 50 malicious Android applications were recently found in the Market thanks in part to the app store’s lack of oversight. Many routinely complain about how hard it is to surface quality apps on the Market with so much substandard fare available. Finally, Google’s failures at customer support with the Nexus One made it pretty clear this company is not a retailer.

Amazon Needs Early Access

If Amazon is going to use Android to compete with Apple then it needs the same kind of special access Motorola had with Android 3.0, Honeycomb. Early access is why Motorola was the first company out of the gate with an Android 3.0 tablet, the Xoom. Amazon would need the same kind access to new builds of Android, and a Google-Amazon partnership would help with that.

Google has the Android Market and it plans to open an online music store similar to Amazon’s new Cloud Drive, but why bother?

Amazon already has this infrastructure in place, and there are reports that Google Music is bogged down in negotiations with the major labels. Since Amazon has already stuck its neck out by launching Cloud Drive and Cloud Player without licensing deals from the record labels, why not let Amazon handle the headache?

To compete with iTunes, Google also needs video, which means more negotiations with movie and television studios. Plus, if Google gets into the content-selling business and surfaces Google Music and Video at the top of its search results, this could provoke even more accusations of anticompetitive behavior from lawmakers and interest groups. Google would be better off leaving the content business to Amazon and focusing on making Android a great mobile OS instead.

Google Has the Web

Amazon may have a curated app store, videos, music, and e-books, but Google has a host of Web-based services Amazon doesn’t have — at least not yet. A Google-Amazon phone would have the wealth of Amazon’s apps and entertainment content, and the power of Google’s Web products such as Maps, Navigation, Gmail, Google Docs, and Search.

The problem is many of these products are only available to Android phones under special arrangement with Google. So an Amazon-Google partnership might ease the search giant’s concerns when that awkward conversation comes up about what to do with the Android Market on the new “AmazoGoogle” phones.

A Google-Amazon phone would make a lot of sense and would create an alliance that could match Apple in terms of quality hardware and content. But who knows whether either company would be interested in working with each other and making the sacrifices required for the partnership to work.

Connect with Ian Paul (@ianpaul).

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