Last week I provided an estimate of the implied revenue Amazon expects to earn in advertising from the newly discounted Kindle with Special Offers. I happened to catch MG Siegler’s post on TechCrunch on the same topic.  Siegler takes an approach I heard frequently immediately following the announcement, namely that $25 isn’t a strong enough discount.  Amazon should have been more aggressive and marked the device down to $99 – then we’d be talkin’.

I agree with Siegler that this is part of a broader pricing experiment for Amazon.  Amazon loves to experiment with pricing (among other things) and by so doing they can more accurately estimate demand elasticity (among other things). Thus, the recent price cut could have simply been an info gathering exercise. On the other hand, Amazon has on several previous occasions cut the Kindle price so I imagine they have a good handle on the shape of the demand curve as well as demand for ebooks (additional books sold) as a result of additional devices moving into circulation. As I wrote, Amazon could have arbitrarily picked $25 – it is after-all a very round number.  In this spirit, I don’t agree with Siegler where he suggests Amazon “must have looked over the potential numbers from advertising and determined that $114 was as low as they could go.” They could have gone lower, but opted not to. And I don’t think that decision was heavily influenced by per unit revenue loss rates.  

this was previously published in March 2008 in Dealerscope Magazine:

Ten years ago, consumers bought consumer electronics devices largely independent of the services and content they would eventually use in conjunction with those devices. Those times are gone.

As opposed to piecing together an a la carte experience by coupling hardware, software and services, today’s consumer is in search of a more robust, 360 experience. This 360 experience focuses less on what the devices, services and content can do in isolation and more on how they come together to provide the consumer with the experience they are seeking straight out of the box. This change is driving an important shift within the consumer electronics industry, as content owners, service providers and hardware manufacturers come together to create and provide a 360 solution.

Amazon recently announced they would sell a new Kindle with “Special Offers”version.  Kindle with “Special Offers” has the same specs as their WiFi-only Kindle but will include advertisements as the screen saver and on the home screen bar.  In exchange, Amazon will only change $114. 

In all likelihood Kindle hardware will one day be free (or close to free) because of cross subsidization (give away the hardware and monetize the content). The Kindle app for other devices is logically already free.  And of course, this go-to-market approach is common for other technology categories like gaming.  Gaming hardware doesn’t drop to zero likely in part because of the retail relationships that must be maintained by the OEM, but it isn’t uncommon to see it sold below cost at different times. With Amazon’s Kindle in other retail channels, this might be the approach Kindle takes.  You also don’t want consumers taking more than they’ll use.  With a registered Kindle account this becomes less of a concern.  I won’t be surprised if the Kindle with “Special Offers” remains exclusively available through Amazon because of the confusion it might cause in other retail chains which might help drive volume back through Amazon. 

In October I said I expected 80+ tablet launches at 2011 CES.  AS CES approached it was clear 2011 was going to be the year of the tablet and a few days before the show I said that my 80+ estimate was looking conservative.  I updated my expectations and said I wouldn’t be surprised by 100+ tablet launches at CES and by my count we saw over one hundred launches. Here is a draft list of the launches we saw:

What apps are downloaded (or conversely not downloaded) tell us much about a given individual’s tastes and preferences. These metrics in aggregate tell us even more about the desired use-case scenarios of hardware.

Last week Apple released their iTunes Rewind 2010 where they highlight the top performing apps for 2010. They did this in 2009, but with the release of the iPad earlier this year there is a new richness to the data that provides several insights into what the masses are trying to accomplish with a suite of devices largely differing only in form-factor…..

 

 

 

 

On Monday Amazon premiered a new Kindle commercial during Good Morning America. The ad (above) portrays two individuals trying to read poolside – one on an iPad and one on the new Kindle.  The essence of the commercial touts the relative readability of Kindle’s e-ink display in direct sunlight.    

Commentary (for example: here and here) on the new ad suggests a Kindle v. iPad strike. But the pundits miss the quintessential goal (and subsequent achievement) of the marketing spot. The Kindle ad isn’t about besting the iPad, it is about showing the consumer a discernible value. In the past brands created a value proposition, but moving forward they will increasingly create what I refer to as a value position…..

Last week I spoke at that the Digital Media Conference where I shared some of the following thoughts on connectivity and Internet accessible devices.

The number of devices connecting to the Web via cellular, wireless, or wired connections continues to proliferate. But many of these devices frame the value of connection within a historical context. More connection in an ambiguous sense means more data. Adding connectivity to these devices is intended to drive more data to the device. Or at least the option of more. But more needs meaning. Tomorrow’s connectivity needs to be more than just greater options and greater flexibility for the end-user. Connectivity needs to be about choice with meaning and context.

Take for example the mobile phone. When we originally brought the Web to the mobile phone it was largely about browsing the Web from the phone. This was the historical context of the time. At this time we largely understood Internet access from the context of a computer browser. The focus at the time was on a better browser experience. A mobile Web experience needed to make it easier for users to get to and between the websites they were most interested in visiting. Websites even got involved by building sites optimized for mobile viewing. During these early years of Internet access on the phone the primary story was still about the phone. Browsing the Web on the phone was secondary to using the phone as a phone….