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The audience at the Kindle Fire press event yesterday erupted into a froth of mechanical action the instant Amazon CEO Jeff Bezos walked onstage.  

Clicking, snapping, tapping; several hundred silent announcers began telegraphing details to the folks back home. A day later, and those details have been spread all over the mediasphere.

But what's happening from a broader industry perspective?

Bezos in the Cloud

Unlike an Apple-style release, many of the details about the latest top of the line Kindle were leaked before the date. Amazon’s devices are high-profile best sellers, but without a little pre-seeding they don’t inspire quite as much hysteria as Apple’s devices. Yet. That could change.

First, Bezos pointed out of the park: "Four years ago, we set out to improve upon the book, and when you decide you're going to reinvent something that has been around for five centuries you are gonna rightly receive some skepticism."

He then showed off a graph of Kindle ebook sales growing exponentially, and skyrocketing past physical book sales.

What happened next? A product release, with positioning and price points that surpassed the expectations of most. A new line of Kindles, starting at a door-buster price of $79, and topping out at $199 for the Kindle Fire, a 7” color touch tablet which features wireless access to movies, TV shows, music, books, magazines, apps, games, and web browsing, all stored within and streamlined by Amazon’s cloud service.

As Bezos said, they are going to sell many millions of these.

Here are three big strategic plays that will change the industry: 

1. Fast fashion hardware 

The focal point of Amazon’s devices isn’t the quality of the hardware itself - it’s the media you can access with it. So far Amazon products have been delight to use, until they break.  Device construction has been somewhat chintzy, as one might fairly expect from low-cost high-tech. 

But that doesn’t matter - though Amazon’s slogan here is, “Premium Products, Non-Premium Prices,” pricing is really what Amazon gets right, and it enables consumers to have a different relationship with their device than what Apple’s costs permit: rapid replacement. 

This isn’t to say that Amazon devices are disposable, but they are cost-accessible enough to be more casually replaced, functioning as an obtainable status symbol for some, and a functional object for others.  

Is this trend great for the environment? No. But Amazon’s positioning as “End to End” can and should grow to include planetary considerations.

2. Use is Controlled

Apple famously removes ports and disk drives, and abstained from secondary mouse buttons. Amazon has focused with a similar paring instinct, taking advantage of time spent learning from other tablet devices that were rushed to market.

The Kindle Fire delivers what a critical mass of tablet users will really want: an easy to use inexpensive device that delivers content, excellently. The Wall Street Journal reports that tablet wielders looking at products are more likely to make purchases than users of PCs, and tend also to spend 20% more on checkout. 

All the action takes place within Amazon’s uniquely tailored (digital libertarians might scream, “crippled!”) version of Android.  

Perhaps most significantly is the service that Amazon built called Silk, which uses the EC2 cloud to process and optimize the internet on the back end, before forwarding it to Kindle Fire users. 

This is an utterly novel approach, and one that would seem to leave open any possible number of yet-to-be-determined advertising interventions. 

3. Would-be monopolists will compete for marketers

Amazon didn’t just throw the gauntlet down with Apple yesterday - with Amazon Local, Groupon and Google’s newly launched local deals services are being targeted as well. 

At the release, Bezos mentioned that the discounted Kindle advertising editions are the best-sellers. This is an intriguing new channel, and one that can potentially be leveraged powerfully in conjunction with the new Amazon Local deals business. 

Amazon is, like many other tech players, interested in controlling the underlying system - or in the careful phrasing of yesterday, “End to End”.  

With Amazon, Facebook, Google, Apple, Microsoft and to a lesser extant entities like Groupon and Gilt all squaring off against one another for that position, digital marketers will have plenty of options. 

 Kindle Going Up

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Published 29 September, 2011 by Sam Dwyer

Sam Dwyer is an Analyst based in Econsultancy's New York office. He can be followed on Twitter @sammydwyer.

24 more posts from this author

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Rodeo Bill

Thanks for a useful, and understandable review. I now understand what all the hoopla is about.

almost 5 years ago

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Headshots Los Angeles

Amazon is doing it right. They are not going head to head with the iPad. They're device is different. It's cheaper with a different plan for use. It's more of a content player and view. Amazon is the content provider so they will make money that way. All the Andoid tablets that cost the same as the iPad and do the same thing as the iPad don't stand a chance. the blackberry playbook will be dead before thanksgiving.

almost 5 years ago

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Alethea Vandell

I can't help but thinking Amazon doesn't care how much money they make on this. They just want to get it in as many hands as possible for their continued data gathering. Remember, that WE are the product.

almost 5 years ago

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Sam Dwyer, Analyst at Econsultancy

Alethea - well, it's not that Amazon don't *care* how much money they make, per se. Yes, they are selling them at a loss in order to enter the market at an advantage (following the successful route Microsoft took with the xbox, which had superior hardware to the PS2).

But remember that every kindle sold means amazon e-content purchased.

I haven't seen numbers on how much the average kindle user spends on content, but I am certain that it's sufficient to make up closer to the cost of the device, if not surpassing it. And, heretofore Amazon has only been able to deliver ebooks - which they sell more of than they do physical books, all without having to carry physical inventory.

Now with the Fire, they have an entire marketplace of movies, games, magazines, etc.

AND the data. AND the advertising/local deals business.

almost 5 years ago

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Nicholas Marshi

Very interesting insight into what's happening with Amazon. Was intrigued to find out that the advertising subsidized Kindles are the best sellers. However, are the users as likely to buy Amazon content as full freight Kindle buyers ?
Anyway, great overview.

almost 5 years ago

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Easton

Hi there colleagues, nice paragraph and fastidious urging commented here, I am in fact
enjoying by these.

about 4 years ago

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