It Only Takes A Spark

28 09 2011

It’s amazing how a price can drop in three years.

Take, for example, the Amazon Kindle. Today CEO Jeff Bezos announced the latest base-model Kindle will open at $79. Not bad for something that launched at $399 in November 2007. At this rate it won’t be long before they’re paying me to take one off their hands.

Along with the new entry model come the Kindle Touch for $99, the Kindle Touch 3g (with free connectivity) for $149, and the Kindle Fire tablet for $199.

And it’s that latter model that has everyone abuzz (if not ablaze). You see, them’s fightin’ words to Apple, who has held firm to $500 as the starting point for iPads. Heck, the Fire is a more-or-less fully functioning tablet running Android, costs 50% less than the original Kindle, and 60% less than an iPad.

Do you think they’re nervous in Cupertino today?

Sure, we can argue that the Fire and iPad are two very different devices aimed at very different crowds. Remember, all other Kindle models are strictly for e-books. The Fire is an amped-up Kindle and the primary feature is that it is seamlessly linked with Amazon’s enormous e-commerce site. It’s almost like giving people a private entrance to the store. If you think that Amazon’s 1-Click shopping was convenient, this will make that feature look clunky.

It can also be argued that Amazon is following the pricing model established years ago by Gillette and Kodak. Give them the razor or camera cheaply, and they’ll be buying blades and film forever. If you are a reader and own a Kindle, from who else do you think you’re going to be buying your books anyway?

But as we head into the holiday shopping season, I can see these new bargain basement prices (and product improvements) catching the fancy of many buyers. We are well beyond that fashion-forward group known as Innovators; the Early Adopters already own one, too. It’s possible that some of the Early Majority have already bought in. But the remainder of that group and the Late Majority are next.

This is no small group of people. It is when a product category becomes mainstreamed. While the majority of the economic profit has been squeezed out by now, there is still money to be made on blades, film and books.

The big question, though, is if Apple will respond. Is it threatened by a tablet device at less than one-half the price? Or is Apple content with its coolness factor, thousands of apps, and overall greater functionality? And how will arch rival Barnes & Noble respond? Its Nook is a very similar and capable product, but Amazon just raised the bar on lower prices.

As for me, I am not only loyal to Apple, I crave that added functionality (I do much more than just read and surf the web on my iPad). I not only love the plethora of apps and app categories, I need them. My lifestyle needs them. My workstyle demands them. And guess what? I still buy a ton of stuff from Amazon…from my iPad. Including most of my e-books.

But if all I needed were a sleek e-reader and tablet with basic functionalities, the Fire would be my choice. Because for $200, this baby’s hot.

Dr “By The Book” Gerlich



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