Thursday, September 29, 2011

Amazon Fire: Media Mis-Fires on Announcement

Amazon Fire: Media Mis-Fires on Announcement - Part 1

Here are early media themes about the Amazon Fire:

Yahoo News: Kindle Fire may force Android tablet makers to cut prices.
"The pricing is critical to gain traction in the tablet market... Rival manufacturers have failed to attract consumers as they have matched the iPad's price point without matching its content offering," said Adam Leach, an analyst at research firm Ovum. "Amazon's retail-based business model allows the company to subsidize the device on the premise that consumers will buy more from Amazon, be that physical goods or its digital content."
Yahoo Finance Can Amazon Really Bruise Apple?
"However, the main focus of the day is the Kindle Fire. At a price of $199, it could present a real challenge to the iPad, something that past companies such as Motorola and Research in Motion have been unable to do. Microsoft is also preparing to re-enter the tablet market (after past failures) with its Windows 8 in the near future. Analysts were expecting a price of about $250 for the Kindle Fire. At a price of $199, analysts are now expecting Amazon to subsidize the low price tag. However, Amazon has an advantage that past tablet challengers were lacking, a massive library of digital and physical goods. The Kindle Fire will make it easier to buy Amazon’s products, including everything from books and movies to sports equipment.
Simit Patel of Seeking Alpha: Amazon's Tablet Marks Start Of Media Companies Disrupting Hardware Businesses
"Amazon is blazing the trail here. To minimize its costs, the firm's tablets will be built atop a forked version of the Android operating system. Indeed, building off existing open source software as a foundation will be a key part of how media companies create hardware products at minimal cost. On top of this, though, is the fact that Amazon is pricing its tablet at below cost; rather, the company is expecting media sales to make the venture profitable for shareholders. "
Eric Schonfeld of TechCrunch: The Kindle Fire Will Have A Whole New “Cloud Accelerated” Mobile Browser Called Amazon Silk.
“The so-called split browser essentially has two homes: on the Kindle Fire itself, and in Amazon’s EC2. Basically, when a user pulls up a webpage on their Kindle Fire, EC2 handles all the rendering to optimize it for the Fire’s screen. Images are resized on the fly, and what’s more, it tracks user’s behavior. Users who visit TechCrunch all the time, will notice quicker load times because Silk detects that pattern of activity and pre-caches the site.”
Sarah Kessler has poll results from Mashable Readers (whom feel empowered to judge the Fire with little hands on experience. Amazon Kindle Fire: iPad Killer or Ereader Substitute? [Poll]

Mash Poll

Why are these themes misplaced?
  1. Apple’s price point is not remotely critical to the other Android tablets. Users want content, and Apple and the iTunes eco-system provide content. Apple enjoys huge double-digit margins while other manufacturers are scrapping by in the low single digits. The Amazon Fire comes with Amazon content, but conversion of the Amazon “reading” and catalog retail audience into movie streaming, music playing and (most important) paying customers is still an unknown.
  2. Margins are less important to Amazon Fire. The “razor and blades” model is well established at Amazon. A more interesting question is how the $100 HP and the $200 Fire will impact the low end readers and Android tablets. After all, those users will still need to collect content. This same dynamic is playing out in the Apple iPod product line as prices continue to fall on products with more features. I predict that the iTouch and a new sports-oriented Shuffle (water proof and shock resistant) will be the lone survivors.
  3. Amazon Fire will likely impact readers and low end Androids. But, the better question to ask: Is there a viable Android market that remains to be tapped? I posit that the Enterprise Android (see the excellent Toshiba Thrive) and the “rugged” tablets will continue to be profitable at the $500+ price range. The first Android to be picked up by a major Corporation will take on gravity. In my opinion this is where the Dell Streak was supposed to play. And, until Microsoft gains traction this area is still open territory for Android.
  4. Silk and the split browser. Very cool, very slick. I predict that Silk will get much more press after the end user community can validate the experience. Content distribution and caching built a company called Akamai. The ability to offload the wait time of the dozens of TCIP calls required to render a page may prove more significant than price or content. The X-ms response delays needed to collect data from different servers linger for all users. As more content is seeded into the cloud and spread across servers, datacenters, and continents, Silk might be the moat that Amazon needs for its’ cloud strategy. Silk, even without link pre-cache or pre-fetch, might be the big winner in this release. 
  5. 42% iPad fanboys responded to the poll to support what hypothesis, that they still love their iPad?


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