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Daring Fireball: Amazon’s Play

September 12, 2012 Leave a comment Go to comments

I think Bezos’s best line at the event was this one: “We want to make money when people use our devices, not when they buy our devices.” That’s a compelling way to frame it for customers. We’re in the very early innings of the tablet game. The overwhelming number of Kindle Fires and iPads that are going to be sold in the next year will be to first-time tablet owners.

Bezos’s we want to make money only when you use it framing works two ways. First, it explains the Kindle Fires’ noticeably lower retail prices in a way that doesn’t make them seem cheaper, only less expensive. It frames Apple’s prices — and profit margins — as greedy. Second, it works as a sort of guarantee — if you don’t actually use it, we won’t even make any money on it.

Make no bones about it, Amazon is presenting the Kindle Fires specifically against the iPad, not “tablets” at large. In Bezos’s framing, it’s a race between two and only two tablet platforms. He explicitly dismissed all other existing Android tablets with the effective argument that no one is buying them. They’re mere gadgets, Bezos argued, and people today want services, not gadgets. (Eric Schmidt even admitted last week, at Motorola’s Droid event in New York, that only one half of one percent of Android “activations” are for tablets.)

The second-best line from Bezos was this one, which he repeated several times, regarding Kindle Fire features like the dual Wi-Fi antennas and laminated-to-the-glass IPS display: “Is it more expensive? Yes. Is it worth it? Yes.” The brilliance of this line was that when he eventually revealed the prices of the Kindle Fire HD models — particularly the 9-inch models — it made the contrast with the iPad’s higher prices all the more dramatic. The setup made it seem like the prices might be on par with the iPad’s; the reveal was that they’re in fact far lower.

via Daring Fireball: Amazon’s Play.

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