Amazon’s exclusive event in Los Angeles Thursday saw CEO Jeff Bezos unveil a number of new devices. He kicked off by talking about the fact that a lot of Android tablets have come out, but no one bought them. Why? Because, “People don’t want gadgets anymore, they want services.” Amazon spent last year proving that: The Kindle Fire has accounted for 22 percent of tablet sales in the US since it was released.
Bezos contends that the Kindle Fire is so great because it’s ultimately more of a service than a device. This is the key to Amazon’s offerings. It’s not just about producing great hardware – it’s about creating a whole ecosystem that serves the customer every step of the way. And because this is Amazon we’re talking about, it can do so at incredibly competitive price points. So, while Samsung wants to take on Apple by trying (and mostly failing) to convince us that tablets should be productivity devices, Amazon is not only churning out pure consumption devices … it’s betting it can beat Apple at the consumption game. By getting affordable hardware into the hands of consumers in each price bracket, Amazon can focus on selling content. The proposition it is offering as a complete service is straightforward, easy to grasp, and very attractive.
Three devices to rule them all
Thursday’s presentation included the Kindle Paperwhite, an updated Kindle Fire, and the Kindle Fire HD in 7-inch and 8.9-inch form. Each one credibly takes on all comers in its respective market tier, beginning with the e-reader tier that Kindle essentially created way back when it seemed like Amazon was happy to cede the top end of the tablet market to Apple. The new Kindle Paperwhite is lighter and thinner than previous devices, with a patented light guide feature, which sheds an even LED light on the screen for reading in the dark. That helps Amazon to compete with the Nook GlowLight. This new Kindle also has amazing battery life and it looks like a great device for $119. There’s also a version with international 3G for $179, and that means the entry-level Kindle without the touchscreen will drop to just $69.
The original Kindle Fire has been upgraded with a faster processor, a bigger battery, and more RAM. It’s supposed to be 40 percent faster than its predecessor and it will cost just $159. That’s a clear shot over Google’s bow, as the Nexus 7 went on sale at $199.
The biggest news is the Kindle Fire HD, which comes in two sizes. There’s a 7-inch device and an 8.9-inch device. The larger tablet looks like competition for the iPad. The 7-inch 16GB version of the Kindle Fire HD goes head-to-head with the Nexus 7 at $199. The 16GB version of the 8.9-inch Kindle Fire HD is an attractive $299. Then there’s the 32GB 8.9-inch Kindle Fire HD with support for 4G LTE, which will cost $499.
These are extremely aggressive prices and Amazon knows it. “We want to make money when people use our devices, not when they buy our devices,” Bezos said.
Content is king
Amazon is in a strong position when it comes to content. Amazon Prime has over 25,000 movies and TV shows. The Kindle store has 1.5 million e-books. The curated Amazon Android App Store boasts over 50,000 apps now and over 30,000 of them are compatible with the Kindle Fire. Meanwhile, iTunes has about 4,500 movies, 2,000 TV shows, and iBooks carried only 150,000 titles in March 2010 — Apple hasn’t released any figures since then. Apple’s App Store does notably outsize Amazon’s with more than 725,000 apps, and more than 100,000 specifically for the iPad.
When it comes to pricing, Amazon Prime looks like a real winner. Prime started off as simply a way to get free two-day shipping on anything Amazon sold, but with the Kindle it’s evolved into something far more impressive: instant access to streaming video with no ads, and access to thousands of books through the Kindle Owners’ Lending Library, all for a flat $79 per year fee. You can share that membership with your family, and there’s a free one-month trial.
That’s a lot of content and it’s seamlessly integrated through Amazon’s Android interface. It gives people access to movies, books, games, and apps from a brand they already know and trust. If Apple has always been about keeping things simple and having services “just work” across devices, then it could learn a thing or two from Amazon’s approach to content. To get the same content through iTunes would necessitate multiple purchases and be a lot more expensive.
And usability is queen
All this focus on service doesn’t overshadow the fact that the Kindles are evolving quickly in the features department. Front-facing HD cameras with pre-installed Skype, as well as improved email syncing and exchange integration on the Fire HDs provide the communication functions consumers expect from tablets. Whispersync is enhanced with audiobooks and can now sync your place between devices – a function that works for games as well. The X-Ray search feature now works not only with books, but also movies, and Amazon’s ownership of IMDB further enhances movies by integrating actor and actress information into pop ups that can display as you watch. Support for multiple profiles and a set of parental controls round off a thoughtful feature list that’s sure to be a hit with a wide audience. That mix of features and an enticing content deal hits a real sweet spot for families.
It’s a space that’s really been heating up in the last few months and with rumors of that Apple iPad mini still on the horizon there’s plenty of fighting left to be done. All of this competition is great for consumers. Amazon has released an impressive line-up here that represents real value for money. From the basic Kindle up to the Kindle Fire HD, Amazon has a device for every budget. It wants to make sure that there’s a device for every kind of buyer, that those devices are as affordable as possible, and that they are always connected to the content pipeline. Whether through higher speed Wi-Fi or the latest 4G LTE, Amazon is equipping customers with affordable windows to its content store.
As a complete ecosystem, a one-stop, all-you-can-eat, content buffet, Amazon’s offering is a very real threat to Apple. It doesn’t feel the same pressure to turn a profit on hardware because the hardware is just a vehicle for the content, and that’s where the battle for customer loyalty and the rolling profits kick in.