Amazon’s advantage

Amazon’s new Kindles don’t just show the online retailer is serious about playing in the hardware space but that this is a company that knows the value of patience. By Craig Wilson.

Online retailer Amazon.com has taken the wraps off its updated range of Kindle e-readers and tablets. Its rivals, especially Apple, should be paying close attention to what is arguably and crucially the only other company with as wide a content ecosystem backing it up.

Taking the fight more directly to Apple, with its iPad, Amazon CEO Jeff Bezos last week took the wraps off a new, larger, 16GB Kindle Fire tablet — costing US$300, $200 less than the entry-level third-generation iPad.

There’s also a 7-inch model going for $200 and a top-end 8,9-inch Fire with 32GB of storage and fast fourth-generation mobile network support that costs $500. (The original Fire’s price has dropped to $160. For a capable 7-inch tablet, that’s a steal, even if it does include advertising on the lock screen.)

Amazon is able to offer its tablets so cheaply because it’s using them as a platform for its vast catalogue of content, both digital and physical. Also, the devices are advertising supported, and users will reportedly have to pay an extra $15 for ad-free versions.

It’s not just movies, music and other content where Amazon competes. Unlike its rivals in the tablet market, the company bridges the physical and virtual divide. Really, the Kindle Fire is a personal, handheld storefront.

The new tablets’ gaming functionality includes options to purchase characters or items for games and have physical versions — which will be shipped to you — included in the purchase price. Even Apple can’t match that.

With the new Fires, there’s also support for some of the items missing from the first-generation tablet, including Microsoft Exchange e-mail, applications for Facebook and Skype, and a camera. But this is incidental. The Fire is, first and foremost, designed to sell Amazon media and products.

Like Apple, Amazon has long realised the need to not only sell hardware but an entire ecosystem around that hardware. Bezos is also renowned for his stomach for the long game. The tablet market may feel mature, but it isn’t — from from it. Apple set the bar, Android countered and is now gaining ground rapidly, BlackBerry and others have tried and floundered, and Microsoft’s campaign is not yet even out of the starting blocks.

Amazon will need to roll out its offerings, including virtual and physical content for sale, in markets other than the US if it’s serious about this game. There’s little reason to believe it won’t.

Amazon’s greatest strength is its diversity and its willingness to explore new terrain. From a start in online retail to hardware, cloud-based services and online storage solutions — and the distribution and supply chain network it’s built along the way — the company deserves as much attention as Google, Microsoft or Apple.

It’s not that this giant has suddenly awoken; it was merely biding its time.  — (c) 2012 NewsCentral Media