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Amazon’s gadget as a service strategy

By September 7, 2012 One Comment

As you’ve probably seen Amazon announced a slew of new devices yesterday, no smartphone, but their four new Kindles have been well received in the blogoshpere, particularly the Kindle Paperwhite and the new Kindle HD, both of which have got me excited.

Perhaps most interesting though is that once again Amazon is playing the price and volume game – they aim to win against Apple and Google by leveraging their scale to offer cheaper prices. The strategy to achieve this is to bundle hardware with content as a service. This slide from Bezos’ presentation says it all. (See ZDNet for more on this.)

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Also interesting is that Bezos announced a $50 4G data plan and chose to play up the total cost of owning a KindleFire HD with total cost of owning an iPad. The combined cost of data and hardware for the KindleFire HD comes in $410 cheaper in the first year than for the 32GB iPad.

This news evidences the continuation of a couple of big trends that we’ve talked about before:

  • Amazon, Google and Apple are converging on the same business model to compete across the consumer tech value chain from devices through services to content.
  • These same companies are increasingly control access to consumers. They are the new gatekeepers, and digital media startups will increasingly have to play nice with them. I don’t see this as good news.