Monday, October 31, 2011

Product Positioning of Amazon Kindle Fire

Amazon recently released the Andriod based version of Kindle - Kindle Fire.

The world media went on the frenzy about Amazon's competition to Apple iPad. Well in one sense Amazon is a competition to iPad, but it creates a new segment for itself in the tablet space and avoids direct competition with iPad.

I got some questions on how Kindle Fire will fare against iPad2, and that question got me thinking and here is the results.

  1. Amazon Kindle is not a competition to iPad2. (atleast not in the current format).
    With a smaller screen & lesser memory, Kindle is more of a competition to iPod Touch than the iPad2.

  2. Kindle Fire is a direct competition to Nook, Kobo and other eBook readers.

    Amazon can easily leverage its enormous clout and cloud technology to strike direct deals with authors and kill competition from other standalone ebook readers.

  3. The success of Kindle fire & iPad will force other eBook readers out of business.

    Both Apple and Amazon are building a strong cloud platforms to deliver content directly to users. Use of technology to deliver content in multiple ways will create intense competition to Nook, Kobo and other standalone ebook readers and eventually forcing them out.

  4. Amazon will rake in Billions in sales of Music, Books & videos, making Amazon a competition to iTunes & iCloud

    Amazon Prime, AppStore & Amazon cloud offer streaming audio/video and data storage. This is a direct competition to Apple's offering in iCloud & iTunes store. For a long time iTune had no real competition & Amazon could easily become a 800 pound gorilla in this space.

  5. Biggest winner in this contest between iPad & Kindle Fire could be Samsung.

    Samsung also makes tablet computers, memory chips, CPU's etc. Success of Kindle would invariably create demand for tablet like devices in Asia, Africa & Europe - where Apple & Amazon do not have a strong market position and those markets will be captured by Samsung. In India & China, Samsung is already ahead of Apple in smart phones and tablets. Success of tablets will also bring in other hardware vendors - to whom Samsung can sell its chips and other hardware components. This Samsung could become a winner in this contest between Amazon & Apple

Product Positioning of Kindle

Amazon's Kindle is essentially a device designed for data consumption: Books, Movies, Music, Web and gaming. The Kindle is designed primarily for individual use. Kindle is not a family use device. It panders to individual consumption - just like iPad.

Amazon has cleverly positioned Kindle Fire away from headlong competition with iPad, and tied it tightly to its Amazon store. This is an attempt to create a new market segment for itself. Not that Amazon is afraid of competition, Amazon has taken the competition from Nook and Kobo headlong, but avoided direct competition to iPad. By having a smaller screen at 7 inches and smaller memory with 8 GB, Kindle is not in direct competition to iPad.

Amazon is building an ecosystem centered around its main online store to make Kindle an attractive product. Amazon is building a core cloud offerings to sell streaming audio & video content to Kindle devices (along with eBooks). This makes Amazon Kindle a major competition of every cable TV service company and to a lesser extent to iTunes/iCloud.

As a personal media player, Kindle is solving one big problem with cable TV - i.e., inability to watch any program at any time. Cable TV customers are forced to watch the program at a fixed time. Kindle cuts this time dependency and offers viewers to watch programs at their convenience.

Kindle Fire is also a direct threat to book publishers. The current books & eBooks are outdated. Tablet computers opens up the possibility of having interactive eBooks. Having a strong delivery platform will enable Amazon to become an eBook publisher and strike direct deals with authors for content, and in the process eliminate the traditional publishers and book distributors. Android is an open platform which supports multiple languages. This coupled with Amazon's global delivery with its cloud can create a global platform for publishing books in any language. If Amazon executes on becoming a ePublisher and leverages its cloud computing capabilities to help authors create interactive eBooks, Amazon can becomes a global leader in book publishing.

Amazon Fire, Prime, Appstore, Cloud Drive, and Games Center create an exciting ecosystem for personal entertainment delivery. Amazon has built a complete ecosystem and with that Amazon is now set to dominate a new market on a global scale.

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