AMAZON KINDLEPRODUCT PLANNING PORTFOLIOVAN VUONGMAYFIELD | SPRING 2010
COMPANY OVERVIEWTHE COMPANYBased in Seattle, Washington, Amazon is a global leader in onlineretail. The company started out in 1995 as an online bookseller but “Earth’s Most PRODUCT LEADERSHIPhas diversified their offerings to include other products ranging fromelectronics, clothing, jewelry to toys. Their core-competence is in online Customer-Centricretail and providing “consumer-centric” services. Amazon sells productsby third parties but also manufactures and sells the Kindle e-reader. TheKindle is the first and only consumer electronic device that carries the Company”Amazon brand. Amazon.comAmazon offers their customers a personalized shopping experiencewith their platform and features like Wish Lists and Listmania to helpcustomers find the right product. OPERATIONAL CUSTOMERPARTNERSHIP EXCELLENCE INTIMACYAmazon powers and operates retail web sites for Target, Sears Canada,Benefit Cosmetics, bebe Stores, Timex Corporation, Marks & Spencer,Mothercare, and Lacoste. They have also run in to legal problems withpartnerships in the past with Toysrus.com.Amazon provides customers with a wide selection of products andcustomized services with the partnership of individuals sellers, retailersand software developers.• rovides platform for retailers and individuals to sell products P• artners with big name retailers to offer technology services, P merchandising, customer service, and order fulfillment.• rovides platform for independent software developers to build P profitable applications and services for Amazon customers Van Vuong :: Portfolio Planing S2010 :: Mayfield
COMPANY OVERVIEWAmazon Kindle Strengths Amazon Kindle Weaknesses Threats Opportunities+ Amazon is the largest online retailer - ependence on partnerships D - ther classes of devices that have O - Amazon has opportunity to leverage + mazon has developed services that A sometimes presents a strategy same functionality with added features social networking with addition of personalizes the online shopping mismatch. Amazon relies on vendors - Cost of digital books are still too high Facebook and Twitter upgrades experiences. ie recommendations, to allow their prices to be low. As a - There is an opportunity to innovate the retailer they have run into a mismatch - ublishers refuse to lower prices. P reviews, wish lists and suggested There is a constant battle with keeping digital distribution model products of strategy with publishers who have resisted to lower digital book prices. prices low - Expand offering into other digital + artnerships: nation’s biggest book P - Other substitutes sold at lower prices markets like video, games and apps sellers, has been able to convince - esign and hardware design is not D developed - More partnerships with retailers and most major publishers to release businesses titles for the Kindle - on-availability of WiFi functionality N+ Kindle has brand recognition - rovide a large amount of geographical p+ ownloads content over d coverage, but also drives the price of “Whispernet”, a free EV-DO wireless the device up service on the Sprint Nextel network. - esign is ergonomic, but not very D Service does not require monthly fees elegant+ igh-contrast screen does a great job h - ricing for nearly all the content seems p of simulating a printed page too high, especially considering the+ l rge library of tens of thousands of a periodicals and blogs are available for e-books, newspapers, magazines, free online and blogs via Amazon’s familiar - lack-and-white screen is fine for b online store books, but less impressive for+ no PC needed; periodicals and Web content;+ eatures: built-in keyboard for notes; F - lacks a true Web browser SD card expansion slot; compatible - ncluded cover is clumsy and poorly i with Windows and Mac machines. designed+ sers could start reading on a Kindle u - dditional file formats need to be a device and continue from the same e-mailed to Amazon for conversion spot on their cellphones - indle DX, which has the same screen K+ -inch Kindle is substantially lighter 6 size as an iPad, is only $10 less while than the iPad, weighing two-thirds of lacking a majority of its rival’s features a pound rather than 1.5 pounds+ ses e-ink, much easier on the eyes u than an LCD and better for reading in sunlight Van Vuong :: Portfolio Planing S2010 :: Mayfield
MARKET OVERVIEWCONTEXT OF MARKET: COMPETITIONAmazon Kindle is a leader in the e-book market (devices dedicated toreading). Electronic readers such as the Kindle, Barnes and Noble’sNook and Sony’s ebooks have risen in popularity in the past year and • oogle Android Operating System with G • upports ebooks, images and audio files Shave been a popular gift item in the recent holiday season. E-books touch screen color navigation but more from Barnes and Noble, Google Books,allow consumers to download and carry multiple books, magazines complex user interface Fictionwise and eReader in EPUB,and newspapers on a compact, convenient device. The price of PDB and PDF formats, as well as JPG, • bility to lend and borrow books for free A GIF, PNG, BMP and MP3 formats frome-books are generally lower than the physical books, which is an with LendMe. Allows book buyers to additional sources.incentive for avid readers. Many e-book devices use e-ink which allow loan downloads to friends for 2 weeks – accessible via smartphone or computerthe interface to be less stressful on the eyes. • ffer both 3G and Wi-Fi, supports O retail price: $259 downloads via both connections, Wi-FiRecently with the introduction of the iPad, many experts suggest the is currently limited to Barnes and Nobleprice of e-readers may be a major contributor to whether they survive stores.or not. To compete with the competition, e-reader companies arestarting to increase channels of distribution. Amazon is starting to sellKindles at brick-and-mortar stores, beginning with Target stores andthe Nook will be sold at Best Buy stores. • Sleek design and touch screen interface • upports Microsoft Word documents, S Adobe PDF documents and a few other • ses E-Ink but still has glare because it U text document formats is touch screen- text is not as crisp and poor contrast • upports MP3 and MP4 audio files so S you can carry along some music or • ouch screen interaction requires more T audio books pressure and also utilizes a stylus • as the ability to hold 350 books with H ability to expand with sd card retail price: $199-399 • he iPad is in a different class of devices T • ike other Apple devices, the iPad has L CURRENT POSITION than e-readers. It is a personal computer multi-touch screen technology allows and multi-functioning device. users to zoom, flick and navigate with accuracy • easures 9.7 inches, the iPad is larger M than most e-readers and supports full • upports Wi-Fi, Bluetooth and 3G S color photos and web pages connectivity • ses an LCD screen and LED U • omes with 16G, 32G, or 64G storage C backlighting so this produces a glare and • ses iBooks app to purchase books U is less comfortable to use than e-readers directly to your iPad from the iBookstore. with e-ink technology Amazon also has an application for the iPad INTRO GROWTH MATURITY DECLINE retail price: $499 Van Vuong :: Portfolio Planing S2010 :: Mayfield
PRODUCT PORTFOLIO Large format- ideal for newspaper displayPRODUCT PORTFOLIOAmazon began as an online $ 500 Kindle DXbookseller and they continue to Price: $489.00 Display: 9.7” diagonal E Inkprovide customers with the best Size: 10.4” x 7.2” x 0.38”costumer reading experience. Their Storage: 3,500 booksportfolio covers multiple platforms $ 400to help readers search, buy and read Regular format-books with a very personalized buying booksexperience. Along with their online Kindle 2retail bookstore, customers can also $ 300 Price: $259.00purchase and read Kindle books Display: 6” diagonal E-Ink Size: 8” x 5.3” x .36”through the free reading apps for Storage: 1,500 bookspersonal computers, mobile devices, Kindletablet computers and e-readers. $ 200 (First generation resale only) Price: $199.00 used Display: 6” diagonal E-Ink Size: 7.5” x 5.3” x 0.7”CHARACTERISTICS+ Lightweight design $ 100+ Paper-like displays+ nstant access to large I collection of e-books+ pplications available for a A $0 range of devices Personal computerTHEMES platform On-line retail+ Multiple platforms platform+ Mobility (physical books) Mobile device platforms+ Simplicity+ Access Kindle on tablet/iPad Kindle on iPhone Kindle on PC Physical books though Web Portal for online retail Kindle on Kindle on Mac Blackberry Online retail Platform for Kindle Books (software) Amazon Products (hardware) Van Vuong :: Portfolio Planing S2010 :: Mayfield
CUSTOMER SEGMENTATION ABOUT THE CONSUMERS The Kindle is a niche device, but this small market loves their books. A large percentage of the kindle books are bought by a small number of readers. “The Kindle must have an enormous penetration of what is a very distinctive, and for Amazon, quite lucrative, segment: very heavy buyers of books.” The kindle especially appeals to heavy readers who like to travel or just move around town without the weight of several books. Their consumers are also students and news fans, both of whom value different functions, such as design and connectivity more than book readers. Currently princes for the Kindle and Kindle electronic text books remain too expensive for many college students. LEISURE READERS UNIVERSITY STUDENTS TRAVELERS AND COMMUTERS NEWS FANSPROFILE Adult male or female Adult male or female Adult male or female Adult male or female 35 - 45 18 - 25 30 - 45 30 - 60 mid to high income low income mid to high income mid to high incomeNEEDS AND VALUES The leisure reader enjoys Students need books for specific The business traveler reads They love to be on top of the collecting books and reading as occasions - when course require when they are waiting during latest news. The ability to search many books that they have time them. Physical textbooks are travel. They need access to for news that is relevant to them for. Being able to carry many expensive but allow them to reading material in a wide range is very important. books around is a plus. return them and get some cash of locations and sometimes at - Availability of news selections back. unexpected times. - arge selection of books and L - Searchability of relevant news immediacy of new books - bility to run on different A - bility to connect at all locations A and personal interest platforms and file format is - A lot of storage space - Speed of access important - Speed of access - ow prices so they can L - Lightweight - ccess to textbooks and course A - Lightweight purchase many materials - arge selection of periodicals L - Large format of device - ustomized search to match C and news - Lightweight personal interests - Low prices - Style and design - Speed of accessOCCASIONS Leisure time During school years During travel periods Travel time and Leisure time Van Vuong :: Portfolio Planing S2010 :: Mayfield
COMPETITIVE LANDSCAPE Entertainment and FunA NICHE MARKET WITH DVDsOPPORTUNITIES NetflixCurrently the Amazon Kindle Theatre CDsprovides products and services Wii Playstationfor a very niche market, heavyreaders, but the platform could Cable television Nintento 360potentially reach a wider market in mp3 playerdigital content retail. Amazon has iphonebeen a leader in online retailing Magazines Booksand have provided customers ipad Personal Nook HDTVwith customized online shopping ipods Growth Newspaperexperience. With the capabilities Kindle electronic and Interestsof the Kindle as mobile platform, dictionaries Sony e-reader Public radioAmazon has opportunities to Desktop computers portable dvd playersreach wider markets than justbooks, including products in cell phones blackberry News televisionentertainment, personal interests,education and work. Similar to Librariesthe way Amazon’s online retail laptopsplatform has evolved into various Projectormarkets, their hardware platformsmay follow in this path. Text books Research Acedemic Software Programs Publications Journals ie. Turbo Tax, Quicken Work and Education FORM CATEGORY GENERIC BUDGET Electronic readers Hand held computers Digital entertainment Media and Electronic books make it possible Handheld devices such as smart The technology in digital communication providers to carry a large collection of books phones and tablet computers entertainment has increased in the Media comes in various formats. in a compact mobile device and are in a class of there own and past years and the ability for them They ability to receive information also be connected to a book multipurpose devices, but they to be wireless and connected to for entertainment, personal retailer for easy access to a great have become direct competitors the internet has also changed the growth, work and education selection of digital content. to the e-book market. way users receive digital content. comes in traditional forms of books and physical content. Van Vuong :: Portfolio Planing S2010 :: Mayfield
PORTFOLIO OPTIONSEXTEND EXPAND G ibrary Loan System - With membership fee, allow L A Children’s Line - develop kindle version for children’s EXTEND INNOVATE New Markets access to select collection of reference books through books with tools to help children read (might require kindle color) M HS hareable and Sellable e-books - create exchangeB ducator’s Tool - create system for educators to curate E accounts for users to buy and sell e-books to each content for students and allow students to purchase A other (might require them to modify file security B L Educators packaged books and materials technology of e-book files and other digital files) CC leeker Style - Design more attractive electronic S I artnership with other services - With the ability to P reader and target style conscious users who care use Facebook and Twitter, Amazon might partner with PENETRATE EXPAND about aesthetics. other online services to expand their social networking E G services on the Kindle HPENETRATE I Existing Market J J xpand platform to other devices- Currently the kindle ED dd WiFi - Currently the 3G browser has limited A platform is available on multiple devices, but by going D F connection to a select few websites. Allowing wifi K beyond just digital books, they may be able to expand and developing a robust browser with e-ink could be into other devices such as tvs and game consoles. valuable and very desirable to existing markets KA dd color features Existing Products New ProductsE ower price of Kindles - current competition of other L to be competitive with other devices with similar devices with similar attributes but also additional price points add color interface to display full color functionality may be a threat to the Kindle because publications and colorful images they are at similar price points, by lowering their prices Kindles could help make Kindle the desirable choice INNOVATEF ncentive Program - for frequent readers, offer I L igital shopping companion D incentive programs that give users discounts or free use to instantly purchase products user might see offers with frequent purchases to maintain loyalty on tv, magazine, or at a friends house. Use context awareness and visual recognition technologies to search and buy products M ablet computer with e-ink display T basic functions of tablet computer, internet applications with friendly display Van Vuong :: Portfolio Planing S2010 :: Mayfield
OPTION EVALUATION s c ie en ty g e s t b ili ce ta es pe asi an n en m t va iv Co Fe d or Ad t e ly ar p ac or al w Im i ve tr C ic Re ic tit At ge lo g al te g pe ke t a o ci RE ra ar er hn n K m v c na O N St Co M Le Te Fi SC RAEXTEND EXTEND INNOVATE New MarketsA) Childrens Line 1 1 4 1 7 4 18 11B) Educators tool 4 7 4 4 7 4 30 8 MC) Sleeker Style 9 7 7 1 9 4 37 5 A B L CPENETRATED) Add WiFi 9 9 9 7 9 4 47 2 PENETRATE EXPANDE) Lower price of Kindles 9 7 9 7 9 9 50 1 GF) Reader Incetive Program 4 4 7 7 7 4 33 7 E H I Existing Market JEXPAND D F KG) Library Loan System 4 7 4 4 4 1 24 10 Existing Products New ProductsH) Shareable and Sellable e-books 7 4 7 7 1 9 35 6I) Partnership with other services 7 7 7 9 4 4 38 4J) Expand platform to other devices 7 7 4 9 4 7 38 4K) Add color features 9 7 9 7 9 4 45 3INNOVATEL) Digital Shopping companion 7 7 4 9 1 7 35 6M) Tablet computer with E-ink display 4 4 7 4 1 7 27 9 Van Vuong :: Portfolio Planing S2010 :: Mayfield
OPTION EVALUATIONGOAL:Maintain leadership in the Kindle retail platformby improving user experience, lowering barriersto digital retail channels and increasing optionsfor purchasing digital products, with the goal ofincreasing Kindle platform retail sales by 30%. Van Vuong :: Portfolio Planing S2010 :: Mayfield
RECOMMENDATIONSRECOMMENDATION #1 New format withLower prices and expand $ 500 color and wifiproduct offerings Kindle 3 Price: $359.00Currently new products like the iPad poses a threat to Display: Color touch screen Size: 8” x 5.3” x .36”the Amazon Kindle. Although these products might be $ 400 Storage: 2,000 booksin a different class of devices, they still have the samefunctionality as the Kindle with additional attributes thatthe kindle lacks like color and wifi. Even though the Large format- $ 300 ideal forKindle is the best in the class of digital reading devices, newspaper display Kindle DX Price: $489.00the iPad and other readers have added features and Display: 9.7” diagonal E Inkfunctions at not that much of a price difference. Regular format- Size: 10.4” x 7.2” x 0.38” books Storage: 3,500 booksAdding a new product to the portfolio with competitive $ 200attributes and added functionality and also lowering the Kindle 2 Price: $259.00prices of the current devices could help the Amazon Display: 6” diagonal E-Ink Size: 8” x 5.3” x .36”Kindle stay ahead of the game. By lowering prices of $ 100 Storage: 1,500 booksthe devices, they might become more affordable and Kindlepenetrate the student segment of the e-book market. In (First generation resale only)addition to lowering prices and adding an offering with Price: $199.00 used Display: 6” diagonal E-Inkadvanced features, Amazon should continue to stay on $0 Size: 7.5” x 5.3” x 0.7”top of software updates and added features that otherdevices may or may not have, but also create unique Personal computer Regular format- platform booksofferings for the Kindle. Free 3G service does set them On-line retail platformapart from other devices and they should leverage this (physical books) Mobile deviceand other partnerships with online services and retail platformsoutlets to make this a more desirable feature. Kindle onSTRATEGIES tablet/iPad1) Add new product with added features- color and wifi Kindle on iPhone2) Lower prices of current black and white Kindle on PC Physical books3) ontinue to upgrade services and increase C though Web Portal for partnerships with online services online retail Kindle on Kindle on Mac Blackberry4) dd unique capabilities to new product to set A precedence for the retail of digital content (Possibly leveraging free 3G services). Online retail Platform for Kindle Books (software) Amazon Products (hardware) Van Vuong :: Portfolio Planing S2010 :: Mayfield
RECOMMENDATIONS Large format-RECOMMENDATION #2 ideal for newspaper displayFocus on expanding platformsand customize retail experience $ 500 Kindle DX Price: $489.00 Display: 9.7” diagonal E InkAmazon has revolutionized online retail services and Size: 10.4” x 7.2” x 0.38” Storage: 3,500 booksis currently a leader in this industry. Device platformslike the Kindle is an opportunity for Amazon to flex $ 400its innovative muscles and transform the way people Regular format- booksbuy and possible sell digital content. Their strength incustomizing consumer’s experience could be leveraged $ 300 Kindle 2 Price: $259.00to create product and service platforms on more digital Display: 6” diagonal E-Ink Size: 8” x 5.3” x .36”devices. Their current and future partnerships with Storage: 1,500 booksother services and products could also be valuable Kindlein the development of these platforms. Currently $ 200 (First generation resale only)they have expanded the kindle e-book platforms to Price: $199.00 used Display: 6” diagonal E-Inkblackberries and other smart phones, laptops, ipods Size: 7.5” x 5.3” x 0.7”and tablet PCs. They are also on their way to integrate $ 100social networking services like Facebook and Twitter onthe Kindle. This is just the start. Focusing on expandingdevice platforms and customizing the retail experienceby developing products and services for more hardware $0devices and leveraging their partnerships could help thegrowth Amazon. Personal computer platform additional device On-line retail platformsSTRATEGIES platform (physical books) Mobile device platforms1) everage social networking features and L expand services Kindle on2) ntegrate Amazon software into more device I tablet/iPad platforms (tvs and game consoles?) Kindle on iPhone3) Increase partnerships with online services Kindle on PC4) evelop profitable models for retail of digital D Physical books though Web products and services that might be desireable for Portal for online retail buyers and sellers Kindle on Kindle on Mac Blackberry Online retail Platform for Kindle Books (software) Amazon Products (hardware) Van Vuong :: Portfolio Planing S2010 :: Mayfield
REFERENCEShttp://www.amazon.comhttp://reviews.cnet.com/e-book-readers/amazon-kindle/4505-3508_7-32751890.htmlhttp://www.electronista.com/articles/10/04/13/amazon.may.need.major.changes.to.compete/http://www.marketwatch.com/story/amazon-shares-could-be-busy-in-late-trades-2010-04-01?reflink=MW_news_stmphttp://bits.blogs.nytimes.com/2009/05/06/how-the-kindle-let-amazon-make-a-lot-from-the-few/http://topics.nytimes.com/top/reference/timestopics/subjects/k/kindle/index.html?scp=1-spotsq=kindlest=csehttp://abclocal.go.com/wls/story?section=news/consumerid=7378445http://blogs.zdnet.com/BTL/?p=32201http://www.businessweek.com/technology/content/may2009/tc2009054_280910.htmhttp://www.businessweek.com/investor/content/feb2010/pi2010028_121302.htmhttp://blogs.forbes.com/velocity/2010/03/26/forget-apples-ipad-amazons-kindle-will-have-a-great-year/ Van Vuong :: Portfolio Planing S2010 :: Mayfield
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