NTCA's The New Edge » Amazon

Amazon’s Kindle Fire Pre-orders

Steve Fravel — Fri, 07 Oct 2011 14:51:54 +0000

From all reports Amazon continues to rack up large numbers of Kindle Fire pre-orders ahead of the November 15 release date. The Kindle Fire is a tablet device that incorporates wireless connectivity along with e-reader capabilities and other tablet functions in a 7-inch screen device. While there was a great deal of speculation after the initial unveiling as to the strength of the device against the established Apple iPad, in general analysts do not believe that the Kindle Fire is an iPad killer.

In an online poll, SodaHead.com is reporting that those ordering the Kindle Fire trend toward people over the age of 45, while those under 45 favor the Apple iPad. In addition, the SodaHead.com data notes an income level difference between those who purchase the Kindle Fire and those that buy iPads. Income levels above $100,ooo show a strong preference for the iPad, while those between $25,000-$100,000 are split, with 54% desiring the iPad and 46% waiting for the Kindle Fire.

The price difference is likely a primary differentiator for those who show a preference for the Kindle Fire, which is selling for $199 compared with the iPad which is priced at $499 and above, depending on how the tablet is optioned. Of those participating in the poll, 61% think that the iPad will maintain its dominance with 80% of the market.

Considering the continued pre-order growth, it’s likely that Kindle Fire will become the number two selling tablet.

Amazon Unveils Kindle Fire

Jesse Ward — Mon, 03 Oct 2011 16:43:09 +0000

Amazon launched its much anticipated tablet last week, dubbed the Kindle Fire. The new slogan says it all: “All the content. Ultra-fast web browsing.”

The 7-inch tablet provides a direct portal into the online retailer’s digital properties: Amazon Web Services, Instant Video, Kindle Books, Amazon’s MP3 music store and its Android app store. The Kindle Fire even comes equipped with free trials to its most popular digital content services, such as the Amazon Prime streaming video service. (Video after the jump.)

The Kindle Fire is not 3G enabled; instead, it uses WiFi. All the media is backed-up and synced wirelessly in the Amazon cloud. The Fire also comes equipped with 8 GB of internal memory, so the user can download and save files directly to the device.

In regard to browsing, the Fire boats a brand new mobile browser called Amazon Silk, which reportedly will enable Adobe Flash browsing on the Web, a key feature which the Apple iPad lacks. Finally and perhaps most importantly, at $199, the Kindle is positioned at a very attractive price point — undercutting the lowest priced iPad which retails for $499.

The iPad is clearly the dominant force in the tablet space, and so it’s easy to make comparisons and prophecies about the competitive implications of this new market entrant. However, with the Kindle Fire, Amazon has positioned its tablet as an alternative to the iPad rather than direct competitor. As John Gruber over at Daring Fireball puts it, Amazon and Apple are essentially targeting two different market segments:

“Apple’s primary business is selling devices for a healthy profit, and they back that up with a side business of selling digital content for those devices. Amazon’s primary business is as a retailer, including as a retailer of digital content. They back that up with a side business of low-cost digital devices that are optimized for on-the-fly purchasing of anything and everything Amazon sells. The Kindles are to Amazon what the printed catalog was to Sears a century ago.”

In essence, Amazon is subsidizing the cost of the device in exchange for future digital media revenue. Analysts have suggested that Amazon is taking a loss of around $50 per device in order to offer the Kindle Fire at such a low price point. But it’s a small price to pay if it enables and encourages users to purchase from their more profitable market offerings.

The Kindle Fire is available for U.S. pre-orders now, with a ship date of November 15. So, have you ordered one yet?

Leave a comment and let me know your thoughts on Amazon’s strategy.

Update: Hulu Bids

Steve Fravel — Tue, 27 Sep 2011 14:56:18 +0000

If the list of bidders in the proposed sale of Hulu are Google, Yahoo, Dish Network and Amazon, which company would you likely pick to have made the highest bid? If you selected Google you’d be correct, although there is a “but” after the price pledged. Google has placed conditions on the bid that may make it less attractive than the next largest bid.

With a bid of $1.9 billion, Dish Network is second runner-up in straight cash offers. So, what is next?

The owners of Hulu will have to take a good look at not only the money pledged but the conditions that potential buyers have set on the sale. They must consider the requirements that Google has set, keeping in mind that none of the bids is in-line with the money they had hoped to get for Hulu.

They also might reject the current round of bidding and re-tool the sale conditions for another round. The owners could determine that the best thing to do is nothing at all and keep Hulu.

Dish is thought to be willing to bid higher, with interest in both the content and the “back-end” technology in the Hulu service. It may come down to Google or Dish as the new owner. In this game it is now the owner’s move.

VOTW: Amazon to Launch Netflix-Like Book Service?

Jesse Ward — Mon, 12 Sep 2011 22:12:28 +0000

And last but not least, our video of the week (VOTW): today’s CNet roundup. HP launches the TopShot LaserJet Pro printer that can scan 3D objects, Netflix finally arrives on most Android phones — stating that 82% of Android users can now watch Netflix movies on their devices — and Amazon.com is rumored to be in talks with major publishers to launch a Netflix-like service for books.

Amazon and NBC Announce Streaming Deal

Steve Fravel — Fri, 29 Jul 2011 19:48:15 +0000

Just a week after announcing a similar arrangement with CBS, Amazon on Thursday announced that it had reached agreement with NBCUniversal. The arrangement provides for streaming rights and nonexclusive access to NBCUniversal’s film library.

The programming will be available through Amazon Prime, the annual membership service. For the price of $79, Amazon Prime members are allowed two-day shipping on purchases. The streaming service is available to the members at no additional cost.

Amazon Signs Streaming Deal with CBS

Jesse Ward — Mon, 25 Jul 2011 15:32:28 +0000

Last week, Amazon and CBS Corp. announced a non-exclusive licensing agreement that will enable Amazon customers to stream more than 2,000 titles from CBS’s library. Terms of the deal were not disclosed.

Amazon now counts more than 8,000 streaming movie and TV show titles available to its subscription OTT video service, and 90,000 on-demand titles available in its Amazon Instant Video service which is available on an a la carte basis. There are, of course, no in-season episodes available.

In comparison, the OTT market leader Netflix boasts about 20,000 titles.

“Amazon has created one of the most popular consumer marketplaces in the world, and we are very pleased to make these titles available to their Instant Video and Prime customers,” said Leslie Moonves, president and chief executive officer, CBS Corp. “This new agreement represents another meaningful way for us to realize incremental value for CBS’s content.”

Amazon Prime initially was launched as a $79-per-year service that gives subscribers unlimited two-day shipping. The retailer expanded the service back in February, providing users with access to streaming video at no additional cost.

The deal shows that broadcasters, even cautious ones like CBS, are engaging in the emerging world of OTT online video.

For more, see this release.

Hulu Up for Sale, 1M Paid Subs within Reach

Jesse Ward — Mon, 11 Jul 2011 17:41:52 +0000

For several weeks now, the trade press has been buzzing with rumors that Hulu is up for sale. Last week Disney CEO Bob Iger confirmed that the three media companies that own the online video portal — News Corp., Disney and Comcast’s NBCUniversal — are “committed to selling” the site. Iger did not reveal when a sale would occur, but predicted it was inevitable.

Nearly a dozen companies are rumored to be actively involved in discussions with Hulu, including Amazon, AT&T, Google, Microsoft, Netflix, Verizon and Yahoo.

Google is predicted to be a front-runner. Although the Internet giant already has a vested interest in video through its YouTube division, Hulu would provide the company with something it does not have — access to Hollywood contracts.

Amazon may be the most well-suited as a Hulu buyer since its business model is based on selling and distributing content. In addition, Hulu CEO Jason Kilar is a former Hulu exec, bringing a certain level of familiarity to the deal.

Hulu reported in a blog post last week that is now has more than 875,000 paid subscribers, and it expects to exceed 1 million users for its $7.99 per-month service by the end of the summer season, earlier than the year-end goal the company initially set. Management expects total revenue of approximately $500 million in 2011.

In comparison, Netflix has 23 million customers and, according to Bloomberg, may generate $3.25 billion in revenue this year.

For more, see this All Things D blog post.

VOTW: Amazon’s Cloud Services Outage

Jesse Ward — Mon, 25 Apr 2011 19:35:58 +0000

And last but not least, our video of the week (VOTW). Keith Shaw of IDG Enterprise chats with Network World’s Jon Brodkin about the Amazon EC2 cloud service outage that brought down some high-profile websites last Thursday. This is a black eye for Amazon and for the cloud services industry as a whole, leading some analysts to question if companies will think twice about relying on the cloud in the future. For more, see this PC World post.

Could Netflix Lose Subscribers?

Steve Fravel — Mon, 28 Feb 2011 18:38:05 +0000

A poll conducted by The Diffusion Group indicates that if the Amazon Prime movie streaming product is comparable, roughly 32% of the Netflix subscriber base would choose Amazon.

Amazon has indicated that it will make approximately 5,000 titles available for streaming and would include them with no additional fee in the Amazon Prime program. Amazon Prime requires a $79 annual fee.

Two thousand Internet households were included in the survey which consisted of two questions concerning Netflix and Amazon. Of the Netflix subscribers who also have Amazon Prim memberships, 36.2% indicated they would drop Netflix while 32.6% indicated a willingness to use both services.

While most of the attraction to the Amazon product may be the perception that it is going to be less expensive, Netflix could be looking at a substantial loss in its subscriber count.

Amazon Officially Launches Unlimited, Streaming Video Service

Jesse Ward — Tue, 22 Feb 2011 19:33:16 +0000

Amazon officially launched its much anticipated over-the-top (OTT) video service this morning. The service is free for Amazon Prime members and includes access to unlimited, commercial-free, instant streaming of more than 5,000 movies and TV shows.

Amazon Prime is a membership program that offers customers unlimited free two-day shipping with no minimum purchase requirement for $79 a year. Movies and TV shows included with an Amazon Prime membership can be watched instantly on Macs, PCs and nearly 200 models of Internet-connected TVs, Blu-ray players and set-top boxes.

“Millions of Amazon Prime members already enjoy the convenience of free two-day shipping,” said Robbie Schwietzer, vice president of Amazon Prime. “Adding unlimited instant access to thousands of movies and TV shows at no additional cost is a great way to give members even more value for their $79 annual Amazon Prime membership.”

In addition to this new Prime streaming video package, Amazon offers a complementary service: Amazon Instant Video. Through Instant Video customers have access to more than 90,000 commercial-free movies and television shows to buy or rent on an a la carte basis. The key differences between the two services is that Instant Video is available on an a la carte basis; Prime Videos is an unlimited, streaming service for one flat fee which offers a much narrower selection of content.

Naysayers will point out that Amazon has a large hill to climb if it wants to compete with the big boys in OTT, unlimited subscription video. Netflix is without a doubt the market leader, with its software embedded in countless media devices and more than 20,000 titles in its online library. In comparison to Amazon Prime’s $79 price tag, Netflix’s Watch Instantly unlimited streaming package costs $95.88 per year ($7.99/month).

However, it’s interesting to note that Amazon is trying a new method: bundling its OTT video service with free, two-day shipping on thousands of retail products. It’s an interesting business model that might give the online retailer a foothold — and perhaps a new advantage – in this burgeoning market. The bundle strategy is one Amazon’s video competitors will be watching closely.

For more information on Amazon Prime and Prime instant videos, see this release, or visit www.amazon.com/primevideos.