Why Kindle Fire will torch everyone except Apple
Yes, they're late to the tablet market, but they used that time to create a strategically superior product to the tablets from Motorola, HP, Dell and the other iPad wannabes.
Unlike those brands, who looked at the market leader and asked, "how can we give iPad users more for a little less?" Amazon asked, "How can we give others exactly what they need at a price that radically realigns the category?"
At $199, the Kindle Fire is 60% cheaper than the least expensive iPad. Since most tablet usage is at home, it has only WiFi, gives you access to Amazon's huge catalogue of books, music, magazines and video, and offers a limited suite of the most popular Apps.
It only has 8 gigabytes of memory, so storage is limited, but that's part of the strategy to make users reliant on the Amazon cloud service, generating significant amounts of annuity revenue through purchase and storage of Amazon's content.
This is a classic disruption strategy. While everyone else is battling for the same customers at the top end of the category, Amazon found a way to open the market to a huge swath of people for whom a $500 tablet just doesn't make sense.
Very few people who "need" an iPad will trade down to get one of these. But those tablets stuck in the middle will see their volumes fall to a product that's just good enough but a whole lot cheaper. The fact that Amazon is being launched with an integrated multimedia ecosystem guarantees it.
Labels: kindle fire