September 28, 2011
First Thoughts On The Kindle Fire
Pundits are calling Amazon’s new Kindle Fire tablet a serious contender to the Apple iPad. I agree that it is a contender, but not because it matches the amenities that Apple offers in their product. The basics of the Kindle Fire is that it is WiFi only, smaller than the iPad with a 7 inch screen, and runs on the Android operating system with a custom interface. It also happens to sell for $199, which is less expensive by more than half compared to the least expensive iPad. Amazon is counting on the Kindle Fire to be the front end to its considerable store. Want movies, music, games, newspapers, magazines, or books in your pocket? Amazon has them in abundance, if not with the elegance of an Apple product. I think Amazon is counting people who want a mainstream tablet experience without overpaying for it much like people who shop at Wal-Mart and Target rather than Macy’s. There are a lot of them.
There is a long article in Bloomberg Business Week that takes this angle and does a good analysis on how Amazon intends to position the Kindle Fire (hint: it’s not as a productivity device) along with its impact on the market. There are even references to how Amazon is disrupting the brick and mortar world. Borders Books is one example of a company who couldn’t compete in the book business, though I believe the Border’s demise was exacerbated by its bad management. Barnes & Noble is surviving, but even that company has suffered through management control issues in the last year or so. But Amazon’s foray into the general catalog business, with the Kindle Fire as a window into it, has disrupted established business such as Best Buy to the point where that company is cutting back the size of its stores and/or they types of products on display.
I have a personal example of this type of disruption. I was looking for a mini-HDMI cable to connect my digital camcorder to my flat screen TV. The cable on display at Best Buy was priced at $79. I happened to be at a Wal-Mart that same afternoon where I found the equivalent cable for $15. I understand that the cable cost even less on Amazon. Shipping would be an additional cost, sure, but buy something else and that cost goes away. Advantage, Amazon. And that is what the company is counting on with the Kindle Fire. I predict that unless Best Buy changes its business model (the company’s web site offers little or no price advantage alternative to its stores) it will go the way of Circuit City, or worse, turn into something akin to Radio Shack.
While we’re on the subject of Amazon’s vast tentacles into marketing, there was another story on the company that caught my eye. CNN Money has an interesting article detailing Amazon as a publisher with its own imprint. Both Amazon and Barnes & Noble each have a self-publishing division for e-books. That’s not news. What is news is that Amazon is signing major authors to its own label with a better deal than traditional publishers offer. The story notes how author Barry Eisler turned down a book deal with St. Martin’s Press worth $500,000 to sign with Amazon. His books will appear in e-book and print form, at his schedule (e-book out first), with creative control that traditional publishers tend to keep for themselves, and with more financial return to the author from sales. There are other major author examples in the article.
Traditional publishers are not thrilled at this. Oren Teicher, CEO of the American Booksellers Association, is quoted as saying “Amazon is holding the entire book industry hostage.” I suppose it is Amazon’s response to Apple forcing the Agency Model of e-book pricing on the world. Amazon can cut its own deal with the talent. In fact, Amazon has the advantage of distribution that allows it to cut its own deal with authors, effectively cherry-picking the best authors from the publishers and turning them into the farm team for Amazon’s major league play for pay.
I won’t speculate as to whether this move on Amazon’s part would extend to academic publishing as that market is limited. However, textbooks may be another matter. There’s a definite market there, otherwise West, Lexis, McGraw-Hill, et al. wouldn’t be there. Academic writers could have a worse master than Amazon (see my post A Bit More On The Rudovsky Case and earlier posts it cites).
One other point worth making on the Kindle Fire is that, for a change, it isn’t Google (or Facebook) eating into the popular conscience and credit card with this product. Maybe Google will when it has something significant to sell besides ads. Should Google create Google Stores, at least give me credit for the idea. [MG]