Amazon's Kindle - From threat to opportunity

I remember when Apple launched iPad everyone, from tech gurus to market analysts, was wondering how Apple would sell this product in a market flooded by smartphones and laptops. But iPad caught everyone’s attention and one of Steve Jobs’ babies sold more units than anyone expected. It was pretty clear that tablets had a separate market space among other new tech gadgets. However it was not clear who will compete with iPad. Eyes were mostly on traditional software/hardware/electronics giants such as RIM, Google, Nokia, Microsoft, Samsung, Sony, etc.

Looking at today’s tablet market it is clear that iPad is still a front runner. However what is surprising is that the second most popular/sold tablet is from Amazon. Who would have thought that Amazon, an e-commerce giant, would jump into tablet market and become successful? Amazon’s Kindle is on fire and today they launched next generation Kindle. Looking at the product it is clear that Kindle is no more a rushed up and nervously made product. Amazon has made sure that the new Kindle Fire has best features at the lowest price. Moreover they have a few versions that have similar features and price range as iPad and may become a potential threat to iPad’s next generations.

Amazon did a great job in positioning first generation Kindle. It was simple, affordable and easy to carry. Those who did not want to spend too much money on iPad bought Kindle and they had a great experience using this device. It was great to see that Amazon did not go with “me too” product strategy unlike Samsung and RIM. The message was clear – Kindle was a different product for specific customer segment.

It is amazing to see how Amazon has forced its competitors to follow the path it has created. Google came up with Nexus following Kindle’s success having same features and almost same price range. Apple is planning to launch mini iPad targeting the customer segment created by Amazon. It will be interesting to see how Amazon will respond when this segment will become crowded (Remember cheaper products are easier to create and sell). Plus side is that Amazon is planning to make money by offering services on Kindle such as books and other apps rather than having thick margins on tablet itself. Apple may fight on this battleground as iTunes and Apple’s app store have a loyal customer base. But for others, the road will be full of obstacles.

Kindle is a classic example of how a threat can become an opportunity. Amazon read the trend earlier that users prefer to read books on electronic gadgets and Apple may take away Amazon’s market share. Threat of losing market share to Apple forced Amazon to come up with a product that is redefining a new market completely.