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Wired Top Stories

Wired Top Stories

Wired Top Stories

Under the stewardship of Jeff Bezos, Amazon is very much like Apple. It is not afraid to experiment (Amazon Web Services), disrupt (Kindle) and be ruthless (Amazon Prime). And like Apple, Amazon is a company with infinite patience. As Bezos once said, what makes his company different is its comfort with being wrong.

But before I get too far ahead, let me recap the news for you. Today Amazon announced that sometime later this year you can buy one or more of these devices:

• A 9 Kindle Fire tablet
• A Kindle eReader
• A Kindle Touch eReader
• A 9 Kindle Touch 3G eReader

The key device to be announced today is the Kindle Fire tablet. Writing for the Guardian, my friend Dan Gillmor sums it up best:

…this device, at just under 0, is to the iPad (about 0 in its least expensive version) as a cheap sedan is to a Lexus SUV: functional and useful, but nowhere near as elegant or powerful.

And just because it looks like a tablet doesn’t mean it is an iPad-killer, as some would have you believe. Just on the basis of features, it looks more like a competitive reaction to Barnes & Noble’s Nook and less like competition to the iPad. However, one has to take a step back and think of the strategic importance of the device.

As we learned from folks like Erick Tseng of Facebook and Michael Abbott of Twitter at our recently concluded Mobilize 2011 conference, the Internet is increasingly becoming a mobile-first experience. Our online behaviors are changing from browsing on the web to browsing on the go, whether on tablets or smartphones. If Amazon has to stay relevant, it needs to embrace this new world. It has chosen to do so by building an Amazon experience.

Fire sale

“What we are doing is offering premium products at non-premium prices,” Bezos told BusinessWeek magazine. “We don’t think of the Kindle Fire as a tablet. We think of it as a service . . . Certainly this is a for-profit business . . . Let’s put it this way. We are and always have been very comfortable at operating at extremely low margins.”

A few months ago, while appearing on Leo Laporte’s TwiT Internet TV show, I argued that sometime in the future, Amazon will create a physical retail space, mostly as a means for the company to extend its virtual franchise into the real world. Unfortunately, I was limited in imagining what could be a physical retail presence in our always-on, always-connected future.

With the new Kindles, Amazon has been able to define the hybrid retail environment. In fact, this reinvention of the retail experience will help the company not only keep fighting with newer competitors such as Apple but also take on today’s leviathans like Wal-Mart.

If you look at the price points of these devices, Amazon is willing to take deep losses in order to build market share and get people using its devices — fast. It needs to do so in order to ensure one thing and only one thing: that people keep buying from it what they need. Amazon has traditionally made money by selling physical goods: books, music and movies.

Given that we are increasingly shifting away from buying physical media and are instead opting for digital goods, Amazon is smart in its introducing the new Kindle tablet. The presence of these outlets allows us to buy more things more often and more easily. And that includes everyday stuff like toilet paper, soap, shoes and toys. Given that we have a new generation of children growing up using tablets, the very idea of “toys” for them might be quite different from what you and I experienced as tiny tots.

When I think of the new Kindle Fire (and whatever comes next), I see a strategic move the mirrors the introduction of Amazon Prime, the unlimited shipping plan that made it easy for us to buy more from the Seattle-based e-commerce giant. Morgan Stanley estimates that Amazon Prime customers annually spend about to four to five times the amount of non-Prime customers. There are about 12 million global Prime customers, versus a total of 144 million active users. My colleague Erica Ogg in a post earlier this month wrote:

should Amazon do a decent job selling tablets, it’s not necessarily going to be at the expense of Apple selling a lot of iPads. And that’s because the two are coming at the business from two different angles, and their customers have different expectations.

My colleague Ryan Kim, who was at the Kindle launch event in New York, had this to say about the device:

The Kindle Fire seems geared to not only help people play their content but shop for new things. The top option is a search field that can pull up stuff from Amazon store. Also, on the various media options below, users are able to get at their own magazines, books, videos and apps but a “store” button is usually present so people can quickly add to their library. There’s also going to be a shopping application, one of four main apps included in the Kindle Fire along with contacts, gallery and email.

By bundling a free one-month trial of the Amazon Prime service (that costs a year and gives you access to over 11,000 videos and thousands of music tracks via streaming) and automatically subscribing Kindle Fire owners (unless they opt out), it’s clear that Amazon is thinking correctly about the money-making potential of the tablets.

The asymmetrical war

Amazon’s primary business is selling us things  — lots of them — and getting them to us as cheaply as possible. And that includes physical and digital goods and services. That is its corporate DNA, and that DNA is going to influence all of its decisions — whether it is redesigning its website or defining new tablets.

Amazon’s revenues and profits come from selling goods and services. For Amazon, the tablet is the lure and e-commerce is the catch. Apple, on the other hand, makes money by selling hardware, lots of it. Apps and digital goods and services are a way to attract people to its hardware platform.

Apple makes a lot of money — as in real dollars — from its hardware. Amazon is going to lose a lot of money on this hardware-based reinvention of its core commerce business for a long time. This move should worry those who are already worried about Amazon’s minuscule profit margins. “At 9, we view the device as loss-making or neutral at best based purely on hardware,” JP Morgan analyst Doug Anmuth writes in a note to his clients.

The bottom line is that Amazon will be successful — at least more successful than Motorola or HTC — but it won’t come at the expense of Apple’s iPad or Samsung’s Android-based tablets. Or as John Gruber puts it:

Motorola, Samsung, RIM — they seem to be chasing the iPad on specs, building the best tablet they can manage at the same starting price of around 0. But they have no clear message telling people what you can do with them.

Photo courtesy of Flickr user Catchpenny

Related research and analysis from GigaOM Pro:
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• Tablets wars: Apple is from Venus, Amazon is from Mars
• Tablets wars: Apple is from Venus, Amazon is from Mars
• Tablets wars: Apple is from Venus, Amazon is from Mars

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Question by Mars: How Do You Make Your Own Electronic Gadget?
I have loads of ideas for little handheld gadgets from toys to more useful things…I know how to do the programing for the programs I want to put on the gadget but I have no idea how to create the…gadget? Aside from hiring a factory I have no idea…I mean, people make prototypes right? How do I make the cover casing and get the right innards and…ugh help me T_T

Best answer:

Answer by gilphilloz
Check out the website below.

Give your answer to this question below!

What is the coolest gadget for you?

Best answer:

Answer by cakes4africa
A double question, great ! I have to opt for a kettle. Or maybe microwave? I think kettle.

Give your answer to this question below!