Steve Kovach, Business Insider
There are moments when the line between the past and the future becomes so bright that you can see it right in front of you.Today is one of those days. Because today is the day that more than 5 million users will begin to get the Kindle Fire in their hands for the first time.
As a long time Apple loyalist, and the proud owner of an iPad 2, it didn’t take me more than three seconds to know that I needed to own a Kindle Fire.
And I’m hardly alone… sales have been brisk without the pre-launch frenzy that Apple so skillfully spins around their new magical devices. Which begs the question – what are the things driving the Kindle Fire pre-sales, and will they keep up, and even eclipse the iPad? I think they will, and there are six reasons driving the powerful trajectory of the Amazon device.
Here they are – Six Reasons the Kindle Fire is HOT HOT HOT.
The Kindle Fire is priced at $199.00, with a 30 day free trial of their Amazon Prime product. Presume that Amazon has a price cut planned into the release cycle of the device, that suggests that there is a $149.00 or even $129.00 price point just around the corner. Not that it matters.
At $199.00 the Kindle Fire is the first tablet device that is set at a guilt free price point. It is, as one person explained to me, so cheap, ‘You don’t have to ask your wife before you buy it.’ Indeed. So it will be a fast mover for holiday gifts – and Amazon’s massive holiday sales engine will make sure you’re reminded of it every time you visit the web e-tailer between now and December 31st. At $199.00 the Kindle Fire will be THE hit of the holiday consumer electronics season.
2. Form Factor.
The 7″ size makes it a very different device than the iPad. My iPad spends most of its time in my living room. When I see and iPad in the wild, it’s being used as a tablet computer – often with a keyboard and mouse. The Kindle Fire has no such aspiration. It is clearly a new category of device, the first of a series of devices in the PMT category.
Here Amazon is primed to be a category killer. But in order to understand the power of Amazon – you need to look not at books, video, music or TV – but more broadly at ‘media’ and Amazon’s ability to deliver media of all forms to a single device with a single login. In books, Amazon is clearly the winner. There isn’t an online competitor in sight. And here Apple is far behind, with the iBookstore hardly making a dent. Both companies have powerful micro-payment eco-systems, but Amazon has trained its customers to buy via their Amazon ID payment system outside of their products (much like a massive shopping mall) where Apple customers mostly buy music.
Already Amazon Prime Instant Video is growing, some say overtaking Netflix. Amazon has more than 100,000 titles available for rent in its streaming video-on-demand library, recently added about 2,000 titles from CBS 1,000 titles from NBCUniversal, and also recently announced a new content deal with Fox – bringing 24, Arrested Development, The X-Files, Ally McBeal, Buffy the Vampire Slayer, and The Wonder Years to Prime subscribers free of charge. The Fox content will join a wide selection of TV shows from Star Trek to Frasier, The Tudors and Doctor Who.
And in books, Amazon announced a book ‘lending’ program called the “Kindle Owner’s Lending Library” that will allow owners of Kindle devices who are “Prime” members to ‘check out’ and ‘return’ a book a month for free. Currently there are 5,000 titles in the lending library.
And in Music, Amazon is being aggressive as well, launching the Amazon Cloud Drive – to compete head on with Apple’s iCloud to store and stream music collections.
And finally, in Magazines – another place where Apple has had a battle with publishers, Amazon is poised to generate significant sales. Kindle Fire Newsstand will launch with access to over 400 popular magazines and newspapers, including Vanity Fair, Elle, O, The Oprah Magazine, and more. Amazon has done deals to offer 90 days of free subscriptios to select premier magazines–including Vanity Fair, GQ, and Glamour – exclusively to Kindle Fire customers. All other magazine and newspaper subscriptions will have a 14-day free trial.
4. Internet Access / Intelligent Cloud ‘Silk’ Browser.
While the iPad has focused on creating a curated environment for apps, Amazon is betting that the real hunger, and upside, for personal media tablets is content, not apps. So here Amazon made a calculated bet – and will allow only its proprietary browser, the new Amazon ‘Silk’ browsers, to access the web from the Kindle Fire. This decision means that Amazon can ‘know’ your web browsing behaviour, and therefore use the powerful AWS Web Services cloud to pre-load all of the content that you have historically explored. This promises to create a much faster browsing experience for many Kindle Fire users. It also could kick up a debate about privacy. But Kindle isn’t looking for advertising revenue, rather it’s looking to optimise your content and purchasing experiences. So here, they may have a huge win in the user experience. And, because it’s WiFi only (for now or maybe for ever?) you may not need to have a live web connection to have a good content experience.
5. Subscription Revenue
Amazon has figured out that getting users to pay $6.60 a month (that’s what Prime costs) gives them the power to have a whole collection of ‘free’ content available on the device. Of course it’s not free, any more than channels on your cable box are ‘free’ – but it’s a smart and powerful strategy. It’s less than what Netflix charges ($8 per month), and it offers more flavours (books, movies, magazines, etc.). It also allows members to get discounts on shipping of merchandise bought from Amazon.
Amazon has created a magical quadruple revenue stream, Subscriptions, Downloads, Products, and Devices. The ability to trade off one against the other – to bring new customers into the Amazon ecosystem – is likely to make them the new Wallmart of the digital world.
6. The OS.
While the the Apple iOS is, beyond question, elegant – Android has been growing market share in the mobile world for some time now. And Amazon’s decision to use its own branch of Android is a clue as to just how clearly Bezo’s sees the future of Amazon and his role in technology. By building the Kindle Fire on Android, he opens it to large and growing community of Android developers – and by creating an Android marketplace with Amazon quality control, they should theoretically get the reach of Android Apps and the quality of Amazon. This, of course, is one of the big unknowns.
The Kindle Fire is going to turn on new revenues for content creators, new outlets for Android App developers, and potentially cross-platform synergies for the emerging mobile media consumer. The 1.0 device has some bumps in the road, but those bumps will be ironed out with software updates as Amazon team works through the issues of format, speed, and minor software glitches.
There is no doubt that this price point, form factor, and user demand will make the Kindle Fire the tablet to watch this holiday season.
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