Amazon 2012: What the Future May Hold for the Webs Largest Retailer

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For Amazon, its going to be hard to top 2011. After all, this was the year the gargantuan online retailer launched a cloud storage service, opened the doors on its own Appstore, and released a tablet, the Kindle Fire, that happens to be selling like crazy.

Looking at the bigger picture, this was the year Amazon moved to unify its several disparate services into a full-fledged platform in its own right. The site though its not just a site anymore, is it? already has a massive user base, and now its services are slowly turning more and more of the! m into s omething resembling loyal customers, or if Amazons lucky, members.

Although the company has momentum, its in danger of tripping over obstacles on the road ahead. Amazon has a presence in so many digital markets now, its easy to lose count, which means its competing in one form or another with pretty much every major technology company. From Google and Apple to Barnes & Noble and Netflix, Amazon has a lot of top-caliber enemies, which says a lot about how far the company has come.

What does 2012 hold for the company that businesses turn to for cheap cloud services, writers turn to for self-publishing, and everyone turns to for a cheap gift for mom? Here are Mashables predictions for Amazon in 2012.

1. The Kindle Fire Evolves

There have been many unconfirmed reports about a bigger-screen Kindle Fire coming in the new year. Although the perseverance of the rumor makes it hard to argue, a big-screen Kindle tablet feels like a bad move for the company. A larger screen robs the Kindle Fire of its most attractive quality: the cheap price. Plus, Amazon got burned a couple of years ago with biggie size gadgets like the E Ink Kindle DX.

The smart money says a big-screen Kindle will come early in the new year, though, probably within a month or so of the iPad 3. More nebulous is what the Kindle Fire will evolve into toward the end of 2012. If Amazon learned any lessons from the early reviews of its market-upsetting tablet, it will focus more on hardware this time around, and go for a design thats optimized for its services and software more like the Nook than the PlayBook.

2. Amazons Appstore Cha! llenges Google

In an embarrassing consequence for Google, the Amazon Appstore will become the biggest purveyor of Android tablet apps. This is an inevitable result from the Kindle Fires unprecedented grab of market share, something no other Android tablet has been able to do. Basically, if youre an Android developer, youll want to be on the Kindle Fire, and that means you have to prioritize the Appstore over the Android Market.

This is unfortunate for Google, which has invested much time and effort into optimizing Android for tablets with its ridiculously named Honeycomb, Ice Cream Sandwich versions. The Kindle Fire runs Android 2.3 Gingerbread, although Amazons tweaked it to look nothing like other Android interfaces. With the red-hot Fire, though, Amazon will have a lot of influence among consumers and developers, and its mutant ecosystem is on track to become the dominant species among Android tablets.

3. Amazon Prime Explodes

Fueled by spiking market penetration of the Kindle Fire, Amazon Prime the service that bestows free two-day shipping, Netflix-like access to some movies and TV shows, and a few free books will really take off. In turn, Amazon will enhance the program with more premium services, possibly things like free access to select apps, music or magazine subscriptions.

The rise of Amazon Prime, fed by the Kindle line, will be a key way Amazon extends its platform and changes its customers into users. Itll definitely need more incentives beyond some lousy videos, but as Netflix stumbles over its attempts to separate DVD rentals from streaming, now is the perfect time.

4. Cloud Music, Done Properly

When Amazon launched its cloud locker and music player earlier this year, it did so without the approval of the music labels, and as a result, the service doesnt work a! nywhere near as well as Apples iTunes Match. Googles recent big move into Music also gained massive label participation.

Both companies spent a truckload of money getting the labels on board, but it gives their platforms an edge. Amazon will need to remove that edge in the new year. This is another opportunity to leverage Amazon Prime, though the company will probably need to consider different payment options besides the $79 annual fee, since those labels dont come cheap.

5. The Sales Tax Issue Gets Resolved

Say what you will about Amazons recent tactics against brick-and-mortar retailers; the fact is its prices are often cheaper. A big factor, Amazon is typically exempt from charging sales tax since it doesnt have the physical presence the law requires in many states.

Retailers have long complained about the unbalanced playing field, and this past year various state governments in dire need of more revenue began moving to close the loophole. Amazon fought with the state of California over the issue before reaching a compromise.

Amazon says it supports a broad revamping of sales tax law at the federal level, and it looks like it may get its wish in 2012. The Senate has already introduced the Marketplace Fairness Act, supported by Amazon, Best Buy, Wal-Mart and Home Depot, and theres a good chance itll pass next year. The new law will have wide-ranging consequences for all businesses who sell goods online, including eBay, who opposes it.

Overall: Following Apple

Its often said that with the Kindle line, Amazon is taking its cues from Apple, usually in the way the two companies launch and market their gadgets, but the comparison is more apt than that. Although Jeff Bezos is no Steve Jobs, the vision hes given to Amazon is meant to elevate the brand beyond simply a place people go to buy stuff.

Amazon is leveraging its platform to create an overall experience for customers to interact with the company and its services. With Amazon Prime, the Kindle line and its music and video services, the company is turning mere customers into Amazon users. In a recent open thread on Mashable, most Kindle Fire owners had good things to say about the device, despite its well-documented flaws. Thats real brand loyalty.

In the longer term, Amazon could even unify its store, services and customers into something resembling a social network. Of course, then Amazon would pick up yet another chief rival, Facebook, so the company is probably not in a hurry to do that. After all, Bezos needs to leave something for 2013.

More About: 2012, amazon, amazon prime, features, kindle fire


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