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The Amazon Threat is Real -

The Amazon Threat is Real

I’ve been on a plane and offline for the last 16h and as a result I missed the reactions to Amazon’s mega announcement of the $199 Fire plus a $79 e-reader. However, I know there is an obvious question everyone is asking: is the Fire a legit threat for the iPad? The early reactions I read either left the question unanswered or dismissed the Fire as a contender in the “grown-up” tablet space. Let me say this upfront: the Kindle Fire is the biggest threat the iPad has faced (granted, the competition so far has set the bar pretty low) and I wouldn’t be surprised if the tablet war became a thing of two – Apple and Amazon.

Those who dismiss the Fire as a competitor because it’s a different type of device (smaller, cheaper, less features), I’d like to remind you Steve Ballmer’s words right after the iPhone launched. If you have no idea what I’m talking about, I strongly recommend you to watch the video. It’s one of those moments that would force most CEOs to resign, except apparently Steve Ballmer.

Let me elaborate on the last paragraph. The problem with looking at a market from a feature standpoint is that you’ll miss the next big threat. This is a statement, not a hypothesis. You know the famous Ford statement “if I’d ask customers what they wanted they would have said a faster horse”. Feature focus will have you looking at incremental innovation and will make you miss the fast train that will run over you. Recently examples show it: Netflix broke the video rental market, not Blockbuster (and Blockbuster didn’t see it), Zipcar is disrupting the rental car business (and the car industry?), not the low-cost rental car company, the iPad is disrupting Microsoft’s Windows/Office business, not OSX or Linux or some other OS, and the original example, the clunky reception-challenged unable-to-message iPhone changed the whole wireless communications business, not some feature-packed phone. Clients don’t really care about features, they care about their needs and how you’re helping them.

The Fire is a contender and a very serious threat, not just to Apple who has the quasi monopoly of the tablet market, but especially to all those trying to survive the whole tablet wave (hello Microsoft?). Here’s why.

1. Hardware/Content Integration. Apple showed the way – you know what beats free? Easy. Users weren’t willing to trade Naspter for expensive CDs but they embraced ¢99 songs as long as they were at the distance of a click and immediately available on their mp3 player. I’m not a fan of walled gardens but they work and Amazon is in a privileged position. The Fire comes with seamless integration with Amazon’s e-books (“Earth’s biggest bookstore”), songs, movies, series.  Plus, they already have you credit card, so all you need to do is to click on the “Buy” button and voila, you can immediately enjoy your purchase. Apple is ages away from being a contender in the e-book space and Amazon is on par or almost in the music and movie space.

2. The Ecosystem. The tablet app world is iPad’s kingdom – Android apps for tablets suck because so far the hardware hasn’t received any decent traction. How do you beat that? With a $199 device. At this price point, there is no question that the Fire will sell like crazy and that will lure developers to churn out apps for Android. A more attractive Android ecosystem will probably hurt Amazon but it will mostly hurt Apple as it will entice manufacturers  (what else are they going to do, webOS?) and create a reinforcing loop around the ecosystem. And by the way, Amazon App Store will be there to help you navigate an increasingly complex app world – with seamless integration with their hardware.

3. Vision. Everyone else’s strategy seems to be to copy whatever Apple is doing – with a 6-month to 2-year lag (4 years if you’re based in Finland). Ask RIM, Nokia, and Microsoft how that plays out. Amazon is so far the other visionary in this space. If you believe, as I do, that we’re entering a post-PC era, this is a huge advantage.

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