Amazon’s Three Difficult Choices

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    Posted: 30 September 2011 05:13 PM #31

    FalKirk - 30 September 2011 07:58 PM

    ... It’s more like the Fire is a bicycle and the iPad is a car ...

    Could you explain why it is not like micro-oven and oven?

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  • Posted: 30 September 2011 05:57 PM #32

    Mace - 30 September 2011 08:13 PM
    FalKirk - 30 September 2011 07:58 PM

    ... It’s more like the Fire is a bicycle and the iPad is a car ...

    Could you explain why it is not like micro-oven and oven?

    You’re probably mocking me, but it’s the very same idea. You don’t ask which is better or which is cheaper. You ask “What job was it hired to do?”. The Amazon Kindle Fire is hired to do an entirely different job than is the iPad. That’s why they can co-exist - people could choose to own both. That’s why they’re not competitors in a single category, they’re products in two competing categories.

    You don’t own two microwaves, but you might own a microwave and an oven. You (personally) don’t own two cars, but you might own a car and a bicycle. You don’t own two tablets, but you might own a tablet and a notebook/desktop computer. You don’t own two tablets, but you might own a Kindle Fire and an iPad.

    As I said, I don’t know whether the Kindle Fire will be successful at creating a new category or not. But I do know that it’s not a low cost iPad anymore than a bicycle is a low cost car or a microwave is a low cost oven.

         
  • Posted: 30 September 2011 07:17 PM #33

    Amazon has Palm in its shopping cart ? will it click Buy?

    (Blacklisted. Search for: Amazon has Palm in its shopping cart - will it click Buy?)

    This makes zero sense. While I think webOS may have been a perfect fit for Amazon BEFORE it developed its own fork of Android, it’s worse than useless now.

    The only way I could see this happening would bi if it was strictly for the Palm Patents.

         
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    Posted: 30 September 2011 09:45 PM #34

    FalKirk - 30 September 2011 07:58 PM
    ibuck - 30 September 2011 03:56 PM
    iOSWeekly - 28 September 2011 06:37 PM

      Bring on the 5”-7” ipod touch for $249!

    From your mouth to Tim Cook’s ear!

    I do not believe that Apple will be making a 7 inch tablet. If Apple were going to make a 7 inch tablet, then they would have done so already. But for the reasons spelled out by Steve Jobs, Apple does not think that the 7 inch form factor is suitable for the type of tablet that Apple wants to make.

    In fact, I think that Amazon’s tablet makes it LESS likely that Apple will go into the 7 inch tablet space. Amazon is not coming in with merely a low cost competitor.  The Fire is not a Kia and the iPad a Porsche. It’s more like the Fire is a bicycle and the iPad is a car.

    I mean no disrespect in the above comparison. I have often described the difference between an iPad and a notebook computer using the same analogy with the iPad playing the role of the bicycle. I’m not saying that the bicycle is inferior to the car. I’m saying the job a bicycle is hired to do is entirely DIFFERENT from that of a car.

    The Fire is not just a cheap version of the iPad. It’s trying to create an entirely new category. Whether it succeeds or does not succeed, I do not know. But it is not an iPad competitor. It is its own thing.

    Agreed - which is why I said a 5” or 7” iPod touch (which is a clear distinction from an iPad). Running iPad apps on a 5” screen is ridiculous and probably barely usable at 7”. However running iPod touch apps on a 5” screen would be great & on 7” would be usable but maybe a little pixelated. So I think a 5” iPod touch would be the sweet spot.

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    Posted: 01 October 2011 02:21 AM #35

    FalKirk - 30 September 2011 10:17 PM

    Amazon has Palm in its shopping cart ? will it click Buy?

    This makes zero sense. While I think webOS may have been a perfect fit for Amazon BEFORE it developed its own fork of Android, it’s worse than useless now.

    The only way I could see this happening would bi if it was strictly for the Palm Patents.

    Patents are no small thing, especially if Amazon is planning a larger tablet. They’re not going to be able to run Gingerbread on a 10” Fire without it looking like crap. I doubt Google is going to give them access to Ice Cream Sandwich if Amazon continues to fork Android.

    The problem remains that WebOS still needs great hardware to match. Amazon has little hardware experience outside of designing e-readers. They shopped the Fire design out to a ODM familiar with Android. No such company is available for WebOS. HP/Palm already blew it, so Amazon would be foolish to rely on them.

         
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    Posted: 01 October 2011 03:23 AM #36

    FalKirk - 30 September 2011 10:17 PM

    Amazon has Palm in its shopping cart ? will it click Buy?

    (Blacklisted. Search for: Amazon has Palm in its shopping cart - will it click Buy?)

    This makes zero sense. While I think webOS may have been a perfect fit for Amazon BEFORE it developed its own fork of Android, it’s worse than useless now.

    The only way I could see this happening would bi if it was strictly for the Palm Patents.

    Blacklist shmacklist!

    http://venturebeat.com/2011/09/29/amazon-buy-palm/

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    Posted: 01 October 2011 11:35 AM #37

    FalKirk - 30 September 2011 08:57 PM

    The Amazon Kindle Fire is hired to do an entirely different job than is the iPad. That’s why they can co-exist - people could choose to own both. That’s w hy they’re not competitors in a single category, they’re products in two competing categories.

    I agree with the last sentence, which is why I also agree they can co-exist. I’m not so sure about the first sentence, which is why I’m also not so sure many people will choose to buy both.

    The KFire has one main advantage over the iPad: it’s cheaper. Some people may find the slightly better portability important, but I think many more will find the size a limiting factor for tablet use. The KF is cheaper than the iPad because it does a poorer job of a small subset of tasks.

    A microwave is better than an oven because it is faster. A bike is better than a car because it can go places that a car cannot. What can the KF do better than an iPad? Maybe 1/3 lb. weight advantage makes it a slightly better e-reader, but I think heavy readers of ebooks will use either a Retina display or a Kindle.

    I think Apple has rightly divided mobile computers into two categories. The iPhone and iPod touch represent the bring-it-with-you-everywhere category. The iPad represents the new paradigm of a mainstream computer. The former needs to be small enough for most people to want to carry it with them all the time. The latter needs enough screen real estate to comfortably and effectively accomplish the majority of computing tasks.

         
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    Posted: 01 October 2011 01:43 PM #38

    FalKirk - 30 September 2011 08:57 PM
    Mace - 30 September 2011 08:13 PM
    FalKirk - 30 September 2011 07:58 PM

    ... It’s more like the Fire is a bicycle and the iPad is a car ...

    Could you explain why it is not like micro-oven and oven?

    You’re probably mocking me, but it’s the very same idea ...

    Thousand apologies, thought there is a subtlety between the two.  Bicycles tend to be single seater, no passenger and personal while micro-oven and oven are usually used by multi-parties.

    [ Edited: 01 October 2011 01:47 PM by Mace ]

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  • Posted: 01 October 2011 10:48 PM #39

    FalKirk - 30 September 2011 10:17 PM

    Amazon has Palm in its shopping cart ? will it click Buy?

    (Blacklisted. Search for: Amazon has Palm in its shopping cart - will it click Buy?)

    This makes zero sense. While I think webOS may have been a perfect fit for Amazon BEFORE it developed its own fork of Android, it’s worse than useless now.

    The only way I could see this happening would bi if it was strictly for the Palm Patents.

    I listened to John Siricusa’s Hypercritical podcast this afternoon. He seemed to feel that Amazon MIGHT consider buying webOS. I have a lot of respect for Siracusa’s well-founded opinions, so I’m backing off my statements, above. It might be that my initial position was based a poor understanding of the underlying technology. I thought that once the Android based Fire had sailed, that webOS was forevermore left standing at the dock. Siricusa seems to feel that the current Android OS could be migrated to webOS in future Amazon tablets.

    By the way, the last two thirds and particularly the last third of Siricusa’s podcast is extremely good if you’re interested in the Amazon tablet. There is one especially enlightening segment where Siricusa discusses and dissects Horace Dediu’s thoughts on why the Kindle Fire will not be a low cost disruptor. I was struggling with Horace’s piece, but after listening to Siricusa, the “scales fell from my eyes”.

         
  • Posted: 01 October 2011 11:04 PM #40

    Drew Bear - 01 October 2011 02:35 PM

    A microwave is better than an oven because it is faster. A bike is better than a car because it can go places that a car cannot. What can the KF do better than an iPad? Maybe 1/3 lb. weight advantage makes it a slightly better e-reader, but I think heavy readers of ebooks will use either a Retina display or a Kindle.

    The Kindle Fire may be a better reader than the iPad because of its size; it’s more portable, can do some simple task admirably, may even scan the internet faster using the new Silk technology and, as you said, it’s significantly cheaper.

    The toaster oven is nothing as compared to the oven or the microwave. But it can do a few tasks extraordinarily well and it is significantly cheaper than either an oven or a microwave. You can tell that a toaster oven, a microwave and an oven are in different categories because many people have two or even all three of them in their homes. Similarly, some may own a Kindle, some may own an iPad and some may own both.

    The Kindle Fire will appeal to people who want less and want to pay less. I doubt it will take sales from the ipad, but it may take market share. Imagine that in 2012 there were 100,000 tablets sold and that 80,000 of them were iPads. Obviously, in this simple example, Apple would have 80% market share. Now imagine that Amazon sold 40,000 Kindle Fire’s (it’s just a hypothetical - don’t get hung up on the numbers.) In that case, even though Apple sold the exact same number of iPad’s, their market share would “shrink” by 13%. Expect to see a lot of Apple naysayers talking about how the iPad is doooooomed because its market share is “plunging”.

         
  • Posted: 01 October 2011 11:15 PM #41

    Mace - 01 October 2011 04:43 PM
    FalKirk - 30 September 2011 08:57 PM
    Mace - 30 September 2011 08:13 PM
    FalKirk - 30 September 2011 07:58 PM

    ... It’s more like the Fire is a bicycle and the iPad is a car ...

    Could you explain why it is not like micro-oven and oven?

    You’re probably mocking me, but it’s the very same idea ...

    Thousand apologies, thought there is a subtlety between the two.  Bicycles tend to be single seater, no passenger and personal while micro-oven and oven are usually used by multi-parties.

    First, it is probably I who should apologize for misconstruing your question.

    Second, no apology on your part was ever needed. I thought that you were gently chiding me for switching analogies in the middle of an argument - a very just criticism that I thought you had gracefully administered and that I tried, but failed, to accept with equal grace.

    Returning to your initial question, no, I didn’t mean to make a distinction between the microwave and the bicycle analogy. There may well be a distinction, but it was unintended.

         
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    Posted: 01 October 2011 11:45 PM #42

    FalKirk - 02 October 2011 02:04 AM

    The Kindle Fire will appeal to people who want less and want to pay less. I doubt it will take sales from the ipad, but it may take market share.

    I think there are already tablets out there that offer less capability for less money. And by the time the KF hits the shelves there will be plenty more.

    Let’s assume the iPad currently has a 70% market share of the tablet market. Apple reported sales of 9.25 million iPads last quarter. That means ~4 million other tablets were sold that quarter representing the remaining 30% of the tablet market. (BTW, I find that 2nd number hard to believe.)

    But let’s assume the percentages hold true for the December quarter and Apple sells 15 million iPads. That would translate to over 6 million other tablets being sold. It’s that theoretical 6 million non-iPad market that the KF will be trying to conquer. I don’t think that it will affect the iPad’s 70% market share one bit.

    I’m beginning to wonder if the Fire will actually dominate the non-iPad market. It’s only October 1st and prices for non-iPads have already dropped to $299. Black Friday this year is less than 2 weeks after the Fire hits the shelves. How many 7” tablets with cameras and full access to the Android market will be priced at $199 by that time? Remember that all of Amazon’s vaunted content will also be accessible by those tablets.

    The Top 6 Alternatives To The Kindle Fire

         
  • Posted: 02 October 2011 01:03 AM #43

    Drew, your posts are always thought provoking.

    Drew Bear - 02 October 2011 02:45 AM

    I think there are already tablets out there that offer less capability for less money. And by the time the KF hits the shelves there will be plenty more.

    I think the difference is that most of those other tablets are pale imitations of the iPad while the Kindle Fire is the best of its class.

    Drew Bear - 02 October 2011 02:45 AM

    Let’s assume the iPad currently has a 70% market share of the tablet market. Apple reported sales of 9.25 million iPads last quarter. That means ~4 million other tablets were sold that quarter representing the remaining 30% of the tablet market. (BTW, I find that 2nd number hard to believe.)

    But let’s assume the percentages hold true for the December quarter and Apple sells 15 million iPads. That would translate to over 6 million other tablets being sold. It’s that theoretical 6 million non-iPad market that the KF will be trying to conquer. I don’t think that it will affect the iPad’s 70% market share one bit.

    Not so sure about that. I think you can add whatever sales the Kindle Fire acquires right on top of the number of current projected tablet sales because most of the Kindle Fire sales will come from people who weren’t going to buy a tablet anyway.

    Drew Bear - 02 October 2011 02:45 AM

    I’m beginning to wonder if the Fire will actually dominate the non-iPad market.

    If you divide tablets into ~10 inch and ~7 inch models, I believe the Kindle Tablets may eventually dominate the 7 inch form factor the same way that the iPad dominates the 10 inch form factor now.

    As you know, Dediu explained why the Kindle will not be a low cost disruptor. But we’re still awaiting his article explaining why he thinks it may be an innovative disruptor.

    As I mentioned elsewhere, I highly recommend the last third of Siracusa’s most recent Hypercritical podcast. He analysis of Dediu’s most recent post was extremely helpful to me.

         
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    Posted: 02 October 2011 01:48 AM #44

    FalKirk - 02 October 2011 04:03 AM

    Drew, your posts are always thought provoking.

    Thanks, FalKirk. It’s your fault. You provoked my thoughts first.

    I think you can add whatever sales the Kindle Fire acquires right on top of the number of current projected tablet sales because most of the Kindle Fire sales will come from people who weren’t going to buy a tablet anyway.

    If you divide tablets into ~10 inch and ~7 inch models, I believe the Kindle Tablets may eventually dominate the 7 inch form factor the same way that the iPad dominates the 10 inch form factor now.

    Maybe. It depends how many unsold tablets are sitting in warehouses tonight, ready to flood the market. I think people “who weren’t going to buy a tablet anyway” may be drawn out by anything in the $199 price range. What if Samsung drops the price of the original Tab (7”) to $199? What about the Dell Streak 7 (1GHz dual-core Tegra processor, 1.3 megapixel front facing camera, 5 megapixel lens on the rear and 16GB of internal memory) or the PlayBook? The KFire may have stiff competition in a few weeks.

    As you know, Dediu explained why the Kindle will not be a low cost disruptor. But we’re still awaiting his article explaining why he thinks it may be an innovative disruptor.

    My impression was that he was talking about the Amazon Silk browser rather than the Fire. That’s what Ihnatko thought was most significant. (BTW, Andy started the 5by5 podcast this week. It covers a broad range of topics, most not Apple related. I’ll probably be using the “skip forward 2 min.” button a lot.)

    As I mentioned elsewhere, I highly recommend the last third of Siracusa’s most recent Hypercritical podcast. He analysis of Dediu’s most recent post was extremely helpful to me.

    I’ve got it loaded on my iPod touch and will listen to it tonight & tomorrow.

         
  • Posted: 02 October 2011 03:05 AM #45

    Drew Bear - 02 October 2011 04:48 AM

    I think people “who weren’t going to buy a tablet anyway” may be drawn out by anything in the $199 price range. What if Samsung drops the price of the original Tab (7”) to $199? What about the Dell Streak 7 (1GHz dual-core Tegra processor, 1.3 megapixel front facing camera, 5 megapixel lens on the rear and 16GB of internal memory) or the PlayBook? The KFire may have stiff competition in a few weeks.

    I’m not so sure. Amazon is clearly working on the “give away the razors, make your money on the razor blades” model. It’s rumored that Amazon may be losing $50 per Kindle Fire sold. The other tablet makers are trying to make their money on the “razors” (their hardware). They don’t have any razor blades (content) to speak of. If they sell their tablets for $200, they’ll be out of the business in six months.

    I had originally opined that Amazon couldn’t afford to use the razor/razor blade model because their margins on goods sold were razor (no pun intended) thin. But its clear that Amazon is all in. Even if I was right - and I’m not sure I was - Amazon could hang in there for years before they bled enough red ink to make them reconsider their position in the tablet space.

    Dediu seems to agree, although his analysis is brilliant and mine is trite. But even though Amazon can’t make it on the razor/razor blade model, Dediu seems to think that there is another model that might fit the bill.

    As you know, Dediu explained why the Kindle will not be a low cost disruptor. But we’re still awaiting his article explaining why he thinks it may be an innovative disruptor.

    Drew Bear - 02 October 2011 04:48 AM

    My impression was that he was talking about the Amazon Silk browser rather than the Fire.

    Agreed. I’ll be very interested in what Dediu has to say on that matter.