Kindle Fire HD Strategy vs iPad is too focused on where the puck is

Here are two quotes from Wayne Gretzky that are cliché-overload. However, they describe Amazon’s Kindle Fire HD strategy perfectly (in reverse) -

  1. “I skate to where the puck is going to be, not where it has been.”
  2. “A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be.”

These describe PERFECTLY what’s wrong, fundamentally, with Amazon’s Kindle Fire HD strategy. It’s too focused on what it should do to compete with the existing leader in a space AS THE LEADER IS RIGHT NOW.

Kindle Fire was too focused on Nook Color. Kindle Fire HD was too focused on being a mini-iPad, and never anticipated iPad Mini. Kindle Fire HD 2 looks like it’s too focused on iPad Mini, and might be unprepared for what Apple has in the works for Fall 2013.

The problem is that it’s a 9 to 12 month product cycle. If you keep targeting the current competitor models, you keep getting devices that are a year old by the time they ship. In one year, everything moves. If you don’t innovate and lead, then you are forever playing catch-up.

Is Kindle Fire HD 2 really going to be a year old when it arrives?

Let’s consider what writers are saying about the rumored new Kindle Fire HD 2 and Kindle Fire HD 8.9″ -

  1. Amazon Working To Bring Back Flash On Kindle Fire Tablets – Uber Gizmo
  2. Next Kindle Fire HD could rival the retina iPad in resolution – Ars technical.

Notice what Amazon is doing here. It’s targeting the iPad based on where the iPad currently is.

This Fall we’re going to see one or more of -

  1. iPad Mini getting retina resolution. That would blow away the Kindle Fire HD’s screen resolution advantage. Then the iPad Mini’s advantages like usability, larger app store, better build, and branding would kick in.
  2. iPad gets some big, new feature or a super high-resolution screen. That would make Kindle Fire HD 8.9″ 2’s jump in screen resolution pointless.
  3. [Perhaps] iWatch. This would add to the iPad/iPad Mini value proposition by providing a cool, new accessory that links with iPads

What will Amazon have, if the current rumors about Kindle Fire HD 2 are true?

It will have a Kindle Fire HD 2 that beats the first generation iPad Mini and a Kindle Fire HD 8.9″ 2 that ties with the iPad Retina Display.

Which is skating to where the puck is.

Amazon just doesn’t believe in innovating fast

Don’t know what’s wrong with Amazon’s strategy engine. It seems to be capable of only incremental evolution.

It’s almost as if Amazon thinks -

  1. How can we make something that is marginally better than the current leader?
  2. How can we then use low pricing and/or our advantages to beat it?
  3. A huge jump? No, let someone else take the risk.

Why not get out of the Incremental Overload box and try some real jumps and some real innovation?

Kindle Fire taking over the niche created by Nook Color was perhaps inevitable once you consider the cold hard facts -

  1. Amazon spent $240 million+ on advertising last year. There’s no way B&N can compete with that. My guess would be that B&N spent perhaps $20 to $50 million.
  2. Amazon has a much richer content ecosystem. It can offer things like movies and music. B&N only recently added movies.
  3. A lot more people shop online at Amazon.com. All those frontpage ads Amazon was using. They must be another $50 million or more of marketing.

Of course, the wrinkle was that iPad Mini arrived and took the #1 spot in the small tablet niche. Kindle Fire still did very well and got #2. The combination of iPad Mini’s success and Kindle Fire’s success destroyed the Nook HD and Nook HD+.

Now iPad Mini 2 and iPad Retina are slated to arrive. Amazon, instead of thinking about competing with them, is competing with the current iPad Mini and the current iPad.

Pretty sure Amazon hasn’t anticipated the impact of small Windows 8 Tablets either.

I think it’s a very fine distinction -

  1. Good companies start building a product that would be #1 in the market as it exists today.
  2. Great companies start building a product that will be #1 in the market that would have evolved and become something else when the product actually launches.
  3. The absolute best companies focus on and build a product that will change the market itself. So that all existing competitors are left adrift.

Exactly what Wayne Gretzky said – Great players skate to where the puck is going to be.

The distinction is very fine because it’s easy to get trapped into thinking that everyone else will be trapped in the TODAY’s MARKET mindset. Things change quickly once one or more companies start thinking about how to shift the entire market.

Where is the puck going to be in Tablets in 2 years?

I don’t know. However, we can take some educated guesses -

  1. Wearable computing replaces Tablets as the Hot New Market.
  2. 7″ Tablets with Projection Screens become the hot new thing.
  3. The current market stays as it is.
  4. The current market evolves incrementally and steadily.
  5. There’s a huge new shift in Tablets with some new screen technology like 3D screens.
  6. Phablets take over the Tablet Space.
  7. Something else entirely.

Which of these is the least likely? 3. The chances of the current market staying as it is, are ZERO.

Yet, that’s what Amazon is strategizing for. It’s improving the screen resolution and weight of its tablets. To the point that they beat the 2012 Tablets. But it won’t be competing with the 2012 Tablets. It has to take on the Fall 2013 Tablets.

In 2007, iPhone came out. Up to 2010, Blackberry was selling more than iPhone. It’s in the last 3 years that Blackberry’s mistakes from 2007 onwards have become evident. It keeps trying to fight the iPhone from 2-3 years back. Amazon is falling into a similar trap – skating to where the puck is and then finding that, on reaching the spot, the puck is gone.

Contrast that with what Apple did. It went into mp3 players to start creating a loyal customer base. Then Phones once it became clear to anyone reading the tea leaves that a big shift to mobile computing was happening. Then Tablets. Now it’s probably going to take a shot at Wearable Computing. It’s trying to anticipate where the next BIG market shift is going to be.

When it goes into a market, it doesn’t go in trying to match or incrementally improve on the existing devices. iPhone shocked existing smart phone makers because of how large the screen was. iPhone was basically a battery strapped to a screen with some components added in. It was also a complete shift to touch screens.

It was anti-incremental improvement. Because you can’t displace entrenched giants via incremental improvements. Remember, they are incrementally improving too. If they have the lead and both you and them keep improving incrementally, you’ll never catch-up.

Contrast Amazon’s strategy with what Samsung did. Samsung started spending $4 billion a year on marketing. It hit Apple right where it hurt – the Perception Wars (why do you think Apple is hiring the YSL CEO, it sure ain’t for his knowledge of semiconductors). That’s why Samsung took over global smartphone sales and dominates amongst Android Phones. Samsung’s huge victory was to understand the importance of huge marketing and partnerships with lots of carriers and a vast distribution network and to go all-out. It wasn’t incremental in any sense of the word. It took big risks and that’s why it’s making $8.2 billion in profits a quarter (approximately 210 times Amazon’s 2012 profits, except Amazon’s 2012 profits had a negative sign in front of them).

Amazon is trying incremental improvements when its competitors, including Apple and Samsung and Microsoft, are taking much bolder bets. Yes, there’s a 10% chance that an incremental, cheap device that slightly improves on the existing competition will win the Tablet Wars. However, the 90% chance is that the victor will be the company that skates to where the puck is going to be. With all due respect, that’s how it should be. You want the winner to be the person who invented fire, not the one who ran away screaming to his cave at the first spark.

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