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:
Amazon
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.