First Friday Book Synopsis

"…like CliffNotes on steroids…"

Amazon, the Company That Ate the World

Illustration by Mackenzie Stroh

Here is an excerpt from an article featured by Bloomberg Businessweek online (October 3, 2011) in which Brad Stone points out that Jeff Bezos’ new tablet, the Kindle Fire, is cheap, pretty, and puts Amazon in perfect position to take a bite out of Apple—and every online transaction we make. To read the complete article, please click here.

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Jeff Bezos (in photo left) is channeling Steve Jobs. It’s mid-September and the wiry billionaire founder of Amazon.com (AMZN) is at his brand-new corporate headquarters in Seattle, in a building named Day One South after his conviction that 17-year-old Amazon is still in its infancy. Almost giddy with excitement, Bezos retrieves one by one the new crop of dirt-cheap Kindle e-readers—they start at $79—from a hidden perch on a chair tucked into a conference room table. When he’s done showing them off, he stands up, and, for an audience of a single journalist, announces, “Now, I’ve got one more thing to show you.” He waits a half-beat to make sure the reference to Jobs’s famous line from Apple (AAPL) presentations hasn’t been missed, then gives his notorious barking laugh. With that, Bezos pulls out the Kindle Fire, Amazon’s long-anticipated tablet computer—and the first credible response to the Apple iPad.

Unlike a wave of other tablets that have emerged hopefully only to flop, such as the HP TouchPad, the Motorola Xoom, and the RIM PlayBook, the Kindle Fire has a good shot at turning the newest theater of war in high-tech into a two-tablet battle. With a 7-inch display, the Fire is about half the size of the iPad. At $199, it’s also less than half the price of the cheapest Apple model. Amazon has painted over the rough surfaces of Google’s (GOOG) Android operating system with a fresh and easy-to-use interface and tied the device closely to its own large and growing content library. Kindle Fire owners can watch the film Rio, scroll through magazines such as The New Yorker or Esquire, and access their music collection on Amazon’s servers.

“What we are doing is offering premium products at non-premium prices,” Bezos says. Other tablet contenders “have not been competitive on price” and “have just sold a piece of hardware. We don’t think of the Kindle Fire as a tablet. We think of it as a service.”

To demonstrate the Kindle Fire, Bezos pulls up a chair. He proudly shows off a lightning-fast Web browser that runs on Amazon’s EC2 cloud computing engine and Amazon’s version of the Android app store, with over 10,000 games, e-mail programs, shopping guides, and the like. Bezos pauses briefly to exhibit his dexterity at a game called Fruit Ninja, zapping watermelons and kiwis that fly across the screen, and appears to momentarily lose himself in the effort. “I do find it strangely therapeutic, uncomfortably therapeutic,” he says.

There are some limitations to the Kindle Fire. Unlike the iPad 2, it doesn’t have embedded cameras or a microphone, and there’s no 3G cellular connection, only Wi-Fi. Its diminutive size, which makes it so handy for stashing in a coat pocket, also makes it unlikely to satisfy more than one antsy kid on a long car ride. The versatile iPad 2, with its video chatting capabilities and exquisite screen resolution, is a lifestyle-defining objet d’art. The stripped-down Fire is more of a sit-back-on-the-sofa-and-shop device. It crystallizes the difference between Apple, which tends to keep prices (and profit margins) high, and Amazon, which likes to start low and drive lower in an effort to knee-cap the competition. The tablet is symbolic of Amazon’s remarkable ability to adapt and reluctance to cede the future to anyone. If the Fire and its inevitable sequels are successful, they will add even more might to one of the fastest-growing retail operations the world has ever seen.

Amazon’s 1990s slogan—”Earth’s largest bookstore”—stood for an ambition that now seems cute. Amazon boasted of its unlimited selection of books, even though in most cases it was simply having them shipped directly from distributors. Today, Amazon sells millions of goods and services, from toys and high-definition televisions to server space for other Internet companies and digital reading devices for book lovers. Borders found it impossible to match Amazon’s selection and went out of business earlier this year. Best Buy (BBY) has watched Amazon undercut it and commoditize whole product categories, and is now trying to shrink the square footage of its superstores. Wal-Mart Stores (WMT) has struggled to match the ease and reliability of Amazon’s shipping network, and posted nine straight quarters of declining same-store sales. Websites that have matched Amazon in selection, price, and customer service —  Zappos, Diapers.com — Bezos has quickly acquired.

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To read the complete article, please click here.

Brad Stone is a senior writer for Bloomberg Businessweek and is grateful for the assistance of Danielle Kucera and Andrew Fixmer when writing this article.

 


Saturday, October 1, 2011 Posted by | Bob's blog entries | , , , , , , , , , , , , , , , , , | Leave a comment

   

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