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Posted by Sarah Rotman Epps on September 6, 2012
At its event in Los Angeles today, Amazon announced five new Kindle models: an ultracheap E Ink Kindle; a new "paperwhite" Kindle with a touchscreen and LED light to compete with Barnes & Noble's Nook with Glowlight; an update of its 7-inch Kindle Fire with improved hardware and software; and two "HD" models, with 7-inch and 8.9-inch screen options. Amazon also announced that it would offer its own basic data plan (through AT&T) for its 4G Fire--a very disruptive move that puts pressure on OEMs and carriers to offer their own lower-price plans, and sets the stage for an expected Amazon smartphone launch next year.
With these products, Amazon is:
This is an important launch for Amazon, as it continues to evolve its strategy of service syndication: pushing Kindle, Prime, Instant Video, Cloud Drive, and now its data plan to as many touchpoints as possible, making it more convenient and pleasurable for consumers to buy Amazon stuff. Amazon's services are the core of its devices, and the devices enhance Amazon's service: A virtuous cycle where Amazon gains an increasing share of consumers' wallets. Amazon reports that in 2011, consumers that bought a Kindle read 4x the books (print and digital) they did before they bought a Kindle; that's up from 2.8x in 2008. The device-service synergy is working.
And Amazon isn't finished. In a Forrester survey of 4,650 US consumers conducted online in August 2012, 31% reported that they had a credit card on file with Amazon, compared with 18% that have one stored with Apple, and 5% with Google. That payment connection enables Amazon to roll out more subscription services -- which we see as key to Amazon's future success -- and to offer new products like smartphones, which 23% of consumers we surveyed said they'd be interested in purchasing if it were available. What it means: In the post-PC era, services rule, and Amazon is getting quite good at offering services that consumers want. Like Google before it, Amazon is methodically disrupting adjacent industries. If your product strategy hasn't been in its line of fire yet, it may be just a matter of time.