With the introduction of the $499 8.9-inch Kindle HD with LTE, Amazon now has a device with the same price tag as the new iPad. Of course, the devices are very different when it comes to capacity, connectivity and screen size but the consumers will have no choice but to compare them.
Yet, contrarily to what many have said, Amazon is not trying to be yet another Apple wannabe. The Kindle announcements were not a message for Apple. In reality, Amazon has found its own way in the hardware business by staying true to its identity. And it is doing it at full speed.
There are 203 job openings on its website for its fabled Lab126 R&D center. They’re serious about hardware, but on their own terms.
Cheap prices without important usage numbers are useless
Amazon’s strategy has been clear for a few years. Ever since the prices of the Kindle e-readers started to go down until hitting the sweet $99 spot, it was clear that Amazon was selling and subsidizing hardware devices in order to sell content.
At first it was just e-books, now it is movies and MP3s as well, through the Amazon Prime subscription or with a more traditional per-item purchase. In order to drive prices down, Amazon started selling all of its devices with ads — euphemistically called special offers — on the lock screen.
Now all devices from the $69 entry-level Kindle to the $499 Kindle HD are bundled with ads. Users slowly but surely accepted those lock screen wallpapers. Amazon has to be careful not to annoy users too much even if it means lower prices.
Indeed, Amazon has to foster a great experience because it is what matters to the company. If Kindle Fire buyers stop using their devices a month after acquiring them, then it means that the company has lost its bet.
That is the reason why Amazon is hiring a lot of people on its hardware projects. The company needs good hardware in order to attract customers, and, even more important, to keep them in the Amazon ecosystem. The worse scenario is when Kindle Fire buyers find that a Nexus tablet would be much better for their needs and start abandoning their devices.
Building good devices now is important so that the vendor lock-in effect can kick in for the years to come. But Amazon’s lock-in is very different from Apple’s or Google’s.
Amazon builds excitement by hinting at new stuff, not by being secretive
Apple is known for being very secretive about its plans for new products. Even Apple employees don’t know what the other teams are working on and security measures are implemented to drastically protect access to buildings on Apple campus.
But Amazon is not taking the same approach. Even though Amazon employees tend to spoil the fun by sending too much information to tech blogs, Amazon has adopted a very novel strategy in the days prior to the Kindle Fire HD unveiling. For example, they got all the tech press’ attention by stating that the original Kindle Fire was sold out on August 30. They made sure that everyone knew that new models were coming up — it was purely a communication move as devices can’t sell out, except if the company stops production.
Another interesting move is the Amazon ad that featured the new Kindle devices the day before the press conference. People talk about a new iPhone or iPad months before their announcements. Amazon cannot expect the same kind of anticipation and excitement.
Instead of adopting the same strategy as Apple without the same results, they found their own way and it has worked well. The coverage of the new Kindle devices was much more important than the coverage of Motorola’s or Nokia’s press conference — even in mainstream media outlets.
DNA difference: Amazon has a unique approach to hardware and content
One of the major difference in style from other companies comes from Amazon’s CEO, Jeff Bezos. At the press conference, he delivered a solid presentation that showcased what makes Amazon so different from other companies. He is both a charismatic and focused leader, proud of his company’s products when he unveiled them to the public. If Bezos’ original idea with Amazon was to sell all the books in the world through the Internet, he clearly believes in its Kindle devices as well.
Successful tech companies have a strong identity that separates them from the others — from Facebook’s hacker culture to Apple at the intersection of liberal arts and technology. “One thing I should tell you is that our approach is our approach, and we don’t even claim it’s the right approach,” Bezos said to AllThingsD.
Amazon is first and foremost a retail company and it understands that well by, for example, bundling movie streaming with two-day delivery in Amazon Prime or putting Kindle ads everywhere on Amazon.com so that it is only a click away if you want to add it to your cart.
But something odd happened. Amazon became one of the most technology-focused company due to its infrastructure needs to power the tenth most popular website in the world. With Amazon Web Services, the company started providing to other websites one of the most powerful and most used platforms. Instagram, Netflix, Foursquare, Pinterest, Heroku and countless other services rely on the platform.
Being the go-to platform is one of the inspirations behind Amazon’s content strategy. Instead of thinking about putting stores together to please their users like Google does, Amazon is trying to build a coherent content platform with many ways to consume content — subscriptions, rentals, Kindle Singles, Kindle Serials, etc. — and believes in that goal. They have the resources to be present on every front, contrarily to Netflix.
People won’t buy Amazon devices because they like the operating system or the hardware. They will buy an Amazon device because they find it so much easier to watch movies or read books using Amazon’s content platform. It comes with a few conditions: the hardware needs to be on par with other manufacturers, Amazon should keep hardware prices low without bothering the user too much with ads and the company should stay focused on making the best content platform in the world. That is why Amazon’s DNA is unique and totally different from every other tablet or e-reader manufacturers — especially Apple.
Amazon Prime offers free two-day shipping on millions of Amazon items, no minimum order size, unlimited instant streaming of movies and TV shows, and a Kindle book to borrow every month for free. For $79 a year, it’s a pretty good offer. But the deal could get even better. That’s because a few Amazon users are now beginning to see a new pricing scheme for an Amazon Prime subscription. Instead of $79 per year, some Amazon customers are seeing a $7.99 monthly subscription pricing scheme that offers the same perks.
