Amazon.com's Jeff Bezos explains the company's strategy at its media event in Santa Monica, California on September 6, 2012.
Before Amazon.com held its Kindle event in Santa Monica, California on Thursday, the big questions involved what sort of products it would announce. Now we know: CEO Jeff Bezos single-handedly introduced and demoed a new e-reader (the Kindle Paperwhite) and two new tablets (the Kindle Fire HD, which comes in 7″ and 8.9″ versions).
And while all three debutantes are interesting, the event turned out to matter for reasons that go beyond the specific product announcements in question. For five years now, Amazon’s been a company that’s dabbled in hardware; it’s built good products, but not great ones, and it’s carved off niches (e-readers and budget-priced tablets) rather than taking on Apple directly.
(MORE: Amazon Unveils New, Larger Kindle Fire Models)
Now the stakes are higher. Amazon is building more devices than ever. They’re more ambitious than their predecessors. And the company, more than any Apple competitor to date, has a strategy for taking on the iPad which…well, it doesn’t sound hopeless.
So — as is my wont — I came out of the event asking myself lots of questions. Such as:
1. Might the Kindle Fire HD, in either or both of its variations, actually be the best tablet at any price? Some of the gazillions of tablets that have been released in the wake of the iPad have been okay, or the right device for a particular type of person. A few, like Google’s Nexus 7, have actually been good. But by nearly any reasonable definition, the iPad has remained the best tablet on the market.
Bezos said that Amazon’s goal for the Kindle Fire HD is to usurp that title. If the company pulls it off — or even comes close — it’ll be an industry-changing achievement.
2. Will the specs deliver? Bezos started his presentation by explaining that people don’t want to buy gadgets — they want to buy wonderful services that happen to be delivered via a hardware device. But then he went on to talk about the new Kindle Fires in rather gadget-like fashion, bragging about their potent processors, advanced displays and super-fast wi-fi.
Among the many lessons which the tablet market has taught us is that a device which has impressive specs can be thoroughly unimpressive. And the iPad is more zippy and fluid than most of the competition even though it’s generally not at the top of the category when it comes to speeds and feeds.
It’s entirely possible that the new Kindle Fires will benefit big-time from their cutting-edge technology; we just can’t make any assumptions. To quote Ronald Reagan quoting an old Russian proverb: “Trust, but verify.”
3. Will the new models be good from the get-go? When the first Kindle Fire shipped, it was so buggy and sluggish that the New York Times‘ David Streitfeld wrote about disgruntled Kindle Fire owners. Amazon eventually released software updates that solved the most glaring issues. Still, one hopes that its successors will work well out of the box on day one.
4. Is the 8.9″ Fire HD a direct iPad competitor? It’s $200 cheaper than the cheapest new iPad (and $100 cheaper than the iPad 2). Its screen is smaller, but the resolution, in pixels-per-inch, is close. It’s got some cool features which the iPad doesn’t, like the way it can synchronize your place in both a Kindle e-book and its Audible audiobook equivalent. And if you do have $499 to spend on a tablet, you can get a Fire HD with 32GB and 4G broadband, a configuration which costs $729 on the iPad. Will millions of people compare what Apple has and what Amazon has and opt for the Kindle HD for reasons other than its lower starting pricetag?
5. Will actual real people think that a $299 8.9″ tablet is a great deal? The price seems pretty darn aggressive to me. But a few of the people who commented on it when I live-tweeted the Amazon event said it sounded far too pricey. I presume that what they’re arguing is that the $100 premium over $199 7″ tablets is too steep. Is that going to be a common viewpoint?
6. How about the iPad Mini? Yes, the one which Apple hasn’t announced yet. The one which, if it does exist, might have a 7.85″ display. That would make it bigger than the $199 7″ Kindle Fire and smaller than the $299 8.9″ one — and it seems a reasonable guess that its price might fall in the middle, too. Would it thrash both Kindles in the marketplace, or would Amazon fare well by having one tablet that’s a bit lower end and one that’s a bit fancier?
7. Will the 8.9″ model legitimize that screen size? For awhile, it looked as if 7″ tablets might not amount to much of a market. Between the 7″ Kindle Fire, Google’s Nexus 7, Samsung’s Galaxy Tab, Barnes & Noble’s Nook Tablet and other contenders, it now seems to be a pretty popular category. The only existing 8.9″ tablet which springs to mind is from Samsung, and as we know, there isn’t a screen size which Samsung won’t try. Assuming the 8.9″ Fire HD is a hit, will other companies dive in?
8. Will the Fire HD line max out at 8.9″? Or might that version become the middle Kindle, with a 10.1″ version joining it at some point? (My guess: No. Amazon isn’t Samsung.)
9. Is there a new category: $159 tablets? Rather than killing the original Kindle Fire, Amazon kept it in the lineup, with a few upgrades: a faster processor, double the RAM and better battery life. It also knocked $40 off the pricetag, which acknowledges that it believes there are people who won’t buy a $199 tablet but will buy a $159 one. That’s not a landmark price: Barnes & Noble’s Nook Color is already $149. But I do wonder if other tablet companies will be forced to match it.
10. How useful is that 250MB 4G plan? It’s $49.99 a year for the same amount of data that costs $14.99 a month (or $179.88 a year) on an AT&T 4G iPad. But Bezos, as he discussed the Fire HD’s wi-fi, rightly explained that you want as much bandwidth as possible for HD content. 250MB isn’t as much data as possible; it’s a miserly allotment which is useful for people who don’t plan to use their tablet all that much on the go. (Higher-capacity AT&T plans are available for the Fire HD. but they cost the same as their iPad equivalents.)
Worst-case scenario: A lot of people buy 4G Kindle Fire HDs, then discover they can’t afford to pay for as much data as they need.
11. Is an Amazon-consumption-centric tablet as appealing at $299 or $499 as it is at $199? As Bezos explained, the whole idea of the Kindle line is to induce consumers to be happy customers for Amazon content. Amazon’s custom version of Android reflects that: It emphasizes your Amazon stuff and the storefronts for buying more of it in a manner that’s distinctly different from stock Android and iOS. At $199, that makes sense. But I wonder if people who buy pricier Fires will be pleased with the approach — or whether they’ll want something more app-centric and less commerce-oriented.
12. How compelling are Amazon’s inventive new software features? The original Kindle Fire had the features it needed to get in the game, and not a whole lot more. But the new ones have plenty of imaginative touches, such as FreeTime, an option which lets parents specify how much time their kids can spend using the Fire and what they can do with it. We’ll know these items are a success if other tablet makers start ripping them off.
13. What about Silk? At Amazon’s first Kindle Fire event in September of 2011, one of the biggest news tidbits was the Fire’s browser. It used a technology called Silk, which offloads a lot of the heavy lifting of rendering pages pages onto Amazon’s servers, thus speeding things up on the tablet itself. Bezos made it sound amazing, but it’s just not that exciting in real life. The new Fires have Silk, too: Will it be a bigger selling point this time around?
14. How big a problem is Android? The new Kindle Fires are based on Amazon’s own heavily tweaked version of Android 4.0, and the company has worked with Facebook and Skype to build custom apps. It also has its own AppStore. But the Fires — especially the larger-screen variant — may be hamstrung by the situation with third-party Android apps. They’re getting better, but they’re still not as good as iPad apps, and remarkably few of them have been written with tablets in mind. I’m not sure if a tablet can be the best tablet at any price if the app selection isn’t first-rate.
15. How big a deal is the Kindle Paperwhite? I kind of thought there were no more major innovations left in the world of monochrome, E Ink-based e-readers. But the Paperwhite is a genuine breakthrough: It’s the first monochrome e-reader with a screen that actually delivers black text on a white background, even in a dark room, and without making you turn the illumination on and off. And if Amazon’s claim of eight weeks of battery life is accurate, there’s no downside. It may be the most impressive single thing Amazon showed today, and could convert people who have resisted digtal books until now into e-reading fans.
Barnes & Noble’s $139 Nook With GlowLight, which debuted back in April, is a fine product. But the Paperwhite, which is $20 cheaper, seems to blow it out of the water. Can B&N bounce back with something that’s in the same class as the new Kindle?
16. Will there ever be a free Kindle? The first model, back in 2008, cost $399. The cheapest new Kindle, which is much better than the original in most respects, is $69. Not bad! But people (such as Slate’s Farhad Manjoo) keep predicting that Amazon will start giving away Kindles at some point, possibly to customers who spring for its $79-a-year Prime membership.
Amazon didn’t do that today. And Bezos seemed to allude to the reason why not when he said that the company likes to price its hardware aggressively — but doesn’t want to lose money on it in hopes of making it up later in content sales. A free Kindle would be a big money loser by definition, so it may not be in the cards.
17. Does Amazon make money off Kindles sold in stores? Bezos also said that Amazon wants to do well when its products get used — when people purchase movies, music, books, apps and other stuff. That’s why it’s happy enough even if it doesn’t make much money on the initial hardware sale. But he said that it doesn’t want to lose money on devices.
When Amazon sells Kindles on its website, it can deal with a razor-thin margin. But how about the ones it sells at retailers such as Best Buy and Staples? Those companies aren’t going to reap any rewards from content that Amazon sells later, and so presumably want to make a decent amount of dough on the device sale itself. Where does their profit come from?, and if they make one, does that mean that Amazon takes a bath
18. Are in-game purchases of real-world products such a fabulous idea? One of the few moments in the presentation which seemed a tad off-key was a demo of a game with an embedded offer for a related physical toy which players could buy — from Amazon, of course. Bezos seemed pleased. But I’m not sure whether such offers would come off as a welcome convenience or an obnoxious marketing tactic in the real world.
19. Will there be a Kindle phone? Despite the last-minute scuttlebutt, I didn’t think one would be announced this week; I figured that if one comes along, it’ll get its own marketing blitz. But the fact that there was no FirePhone at this event doesn’t mean there won’t be one, sooner or later. I still want one.
20. Will there be a Kindle TV box? Some wondered if one might be a surprise announcement at the event involving video streaming — hey, Santa Monica is near Hollywood! Nope. But a totally Amazon-centric box for use in the living room might still make sense. It would be startling if the company wasn’t thinking about one, at least.
21. Could Amazon end up being Apple’s greatest rival? It would be silly to give it that title right now. It’ll probably be silly to do so in a year. But I can’t think of a company that’s in a better position to meld content, services, software and hardware into the sort of experiences which Apple does so well and which so many hardware makers don’t understand at all.
And those are all the Kindle questions I have at the moment. Got any answers — or additional questions of your own?