First, after a year away I am back to blogging. More to come on what I have been up to for the last year, but until then, please read on…
After reading tons of stories on the recent Fire launch and why we should “thank Amazon”, I found myself asking a different question: What is the innovation rationale for each product and will the Fire win or lose?
Well it is hard to say for certain, but I will take some leaps to explain one view. It would seem that Apple had been eyeing the tablet space for some time and watched as other companies from HP to Toshiba had tried. In 2005, I was party to meetings where Intel and Asus were shopping 7-9″ screen devices to all manufacturers trying to drum up support for the form factor and their respective piece parts. What makes Apple’s story seemingly unique is that the consumer and the experience seemed to be at the heart of innovation as oppose to the previous attempts that were PCs made to look like a tablet (See picture of early HP design).
Why is this important? Well knowing the rationale for the innovation may give us all a window into how successful each will be. If Apple was starting with consumers and trying to build a better experience that was neither satisfied by the line of computers or new iPhone, what was Amazon’s rationale?
Amazon’s rationale seems to be more focused on a retail-dominate strategy, trying to increase the points of purchase (or store fronts). This is to say that Amazon as a e-commerce retailer has dominated its channel as the Best Buys and Circuit City’s of yesteryear did in physical stores. With increasing consumption and purchase occuring in mobile platforms versus on a computer, Amazon’s business model is under attack, especially in digital consumption. The primary competition in mobile purchase is Apples iTunes and App Store and with well over 100 million iPhones on the global market and 25 million iPads, Amazon has a lot of ground to make up.
To be fair, Amazon may feel that price conscious consumers will flock to the device. This is probably true for a mass market approach that make great holiday gifts, but will they still be happy with the device 6 months from now? As their recent earnings announcement and great analysis points to lower margins for some time to come and the company alludes to a “razor-razor blade” approach to making money, the strategy will only work if consumers continue to use the device and purchase at or above those that purchase the iPad and other devices. Is Kindle Fire really going to attract the most valuable consumers of digital content?
As a final rap up, the innovation rationale has delivered two different approaches to business that will make a great case study over the next year. Keep watching as consumers cast their votes (purchases). My bet is Apple wins and the Fire may turn out to be the next Zune.