What makes Amazon such a potentially strong hardware maker is it isn’t primarily a hardware maker. Whereas the likes of Samsung, Motorola, RIM and HTC make their money from margins on their devices, Amazon’s main source of income is the content it sells. If the Fire loses money, but helps significantly boost sales of eBooks, music and video Amazon wins. It is an advantage Apple shares courtesy of iTunes and similarly it should allow Amazon to beat Apple’s rivals all ends up.
There is a further upside to Amazon’s massive online space too: its online footprint. Apple invested $1bn building the data centre required to support iCloud, but Amazon already has the infrastructure in place having lived in the Cloud since day one. This allows it to jump ahead in the game, easily introducing services such as Whispersync and Silk without excessive further investment. Again Amazon isn’t looking to out-Apple Apple, it is looking to offer Apple-esque services to wage war against rivals in a sector Apple isn’t interested: price.
So should Apple rivals be quaking in their boots? Absolutely. Is Amazon set to rule wherever Apple doesn’t care to step? Not necessarily. Amazon still faces a number of challenges. Like netbooks, whose low price did little to placate customers disappointed in the overall experience, the Kindle Fire will fall flat if it fails to impress – regardless of price.
Meanwhile Amazon may have heavily customised Android on the Fire, but it makes the company potentially just another Google pawn (Android wasn’t acknowledged once in Bezos’ presentation). The only solution to break free would be for Amazon to have its own operating system, which is why rumours it is keen to buy webOS from HP make so much sense. Amazon has famously cut out the middleman since day one and it won’t want to stop now.
So ultimately what Amazon launched this week was not an iPad killer, but the first mainstream, mass market alternative. The Fire is a simple, stylish product capable of being bought on impulse – an emotion which will strike a chord with many who fail to value tablets more highly. The Fire revealed Jeff Bezos has no immediate plans to make his crusade for affordability clash with Apple’s aspirational dominance. Instead it showed he wants to target those who allowed Apple to reach such lofty status, and make them pay.