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Posted by James McQuivey on September 25, 2013
Watching Amazon.com cut the prices of last year’s Kindle Fire devices shortly after they debuted, you may have concluded that Amazon’s tablets weren’t performing well. You may have further speculated, as I did earlier this year, that maybe Amazon didn’t need to commit to the tablet strategy. After all, Amazon has a great relationship with its customers whether they’re on PCs, mobile devices, or iPads. You (and I) would be wrong. Today Amazon doubled down on a tablet strategy, announcing three new devices for sale later this year. A new 7-inch Kindle Fire HD (starting at $139), a 7-inch Kindle Fire HDX (from $229), and an ultra-skinny 8.9-inch Kindle Fire HDX (from $379). In one fell swoop, Amazon:
This is a much bigger announcement than it at first appears. It may seem overkill to create a 24x7 customer service model just for a tablet. But if the Amazon people are as smart as they seem, helping you get the most out of your tablet is only the first step. The real value of having this customer relationship is being able to apply it to any aspect of Amazon’s service. Having trouble with a purchase decision on Amazon? Why not try your Mayday rep? Carry this out far enough and Amazon will one day be using personal assistants to help you buy cars, book elaborate travel, and manage your healthcare decisions (all with the help of your Kindle pedometer, heart monitor, and home scale). None of this is written in the press release, but if people at Amazon aren’t thinking this through, then they’re missing the point: The company already has a largely self-service relationship with tens of millions of customers; now it can connect to them more deeply than anyone else, because it can pay for the interactions with retail transactions, something Apple and Google can't ever do. For those who think Amazon should get into physical retail, this move effectively provides a more compelling — and scalable — model for delivering in-person value without a physical presence.
It’s a bold move, one that Amazon would never want to launch as part of the Web store but one that can be easily tested inside of the confines of the Kindle Fire relationship and then scaled up to meet the needs of millions.
James McQuivey, Ph.D., is a VP, principal analyst at Forrester Research and the author of the book Digital Disruption. For more information, see forrester.com/disruption.