Amazon.com, Inc. (AMZN): Why’s The Company Making This Technology?

In addition, Amazon.com, Inc. (NASDAQ:AMZN) has been aggressively attempting to market its own Kindle Fire HD as a cheaper alternative to Apple’s iPad. The iPad (and the iPhone) both connect to Apple TV and allow owners to stream their device’s picture to the TV; an Amazon set-top box could offer similar functionality with the family of Kindle Fire devices.

Microsoft
announced Wednesday that it’s planning to reveal its next Xbox at an event on May 21. While video gamers everywhere are eagerly awaiting the event to see the future of gaming, it could ultimately prove to be more a demonstration of Microsoft’s TV ambitions.

As I’ve written previously, Microsoft Corporation (NASDAQ:MSFT) has made it pretty clear that they have hopes for the Xbox brand beyond just being a video game console. After it hired a former CBS Corporation (NYSE:CBS) executive to create original content, it seems obvious that Microsoft wants to compete against Netflix, Inc. (NASDAQ:NFLX) in Internet video, assuming it does not acquire the firm outright (something that’s been long rumored).

To go along with the next Xbox, Microsoft Corporation (NASDAQ:MSFT) could introduce its own set-top box. The company has been said to be planning an “Xbox Lite” — a cheaper device that would cater to the needs of people who want the Xbox’s media capabilities, but don’t want to pay extra for the console’s raw power.

A crowded market gets even more packed

As Amazon.com, Inc. (NASDAQ:AMZN) enters, the crowded market of set-top boxes is poised to get even more packed. Microsoft is already there to some extent with its Xbox 360, but May 21 could see the company expand further. Meanwhile, Apple has been in the space for years, but the Apple TV has never been a significant part the company’s business.

Investors should not view the introduction of a set-top box as having any significant effect on a company’s larger strategy. Yet, it does demonstrate that when it comes to defending one’s content ecosystem, a variety of hardware offerings are needed.

The article Why is Amazon Making a Set-Top Box? originally appeared on Fool.com.

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