Amazon Shakes IT Markets

At a time when Apple is considering retiring its iPod, Amazon is shaking the whole IT industry to  its core. Amazon is doing a Google Android and Apple  selling software and hardware cheap to enable its online business to profit from many more tightly linked customers. Amazon is selling for cheaper than ever before a tablet and several e-Books that will replace the iPod thank you very much and supply Amazon with a steady stream of content customers who will more than make up the difference for the deep discount pricing on the new Kindles. And the key to all this is Amazon’s Cloud prowess as evidenced in new book X-ray, Silk Browser, and “free-anywhere-in-the-world as long as your connecting to Amazon” 3G services. And the cheekiness of the announcement is as savory as a succulent bite into a delicious apple:

Now first, consider that Kindle the device provides 10% of Amazons revenues. Next consider that the Kindle Store Ecosystem  is not identical to but very much like the Apple AppStore and iTunes, it capture a healthy chunk of all sales for content that is used on all those Kindles. Now consider what Amazon did today:

1)Announced the Kindle Touch for $139 without advertisng [$99 with advertising];
2)Announced Kindle refresh at $79 with advertising [$109 without] in new form factor: lighter weight, but same screen size;
3)Announced the Kindle Fire at $199 with :
+ 7.5″ x 4.7″ screen 1024 x 600 pixel resolution at 169 ppi, 16 million colors.
+ TI OMAP dual core processor at 1.2Ghz
+ 8GB of stoage plus Amazon EC2 storage for all Amazon content
+ one USB2 Connector
+ 3.5 mm stereo audio jack, top-mounted stereo speakers.
+ complete set of WiFi connectivity options
+ fast SILK browser which takes advantage of Cloud Processing
+ Amazon UI interface with simplified gestures/touch screen operations
-No HDMI output

-No  camera either front or back
-No GPS capabilities
-No BlueRay support
-No 3G or 4G connectivity
-No memory expansion with SD-Card
+ One month of Free Amazon Prime service for  free TV, movie downloads
+$199 Price with no online advertising

The Kindle Fire pricing at 40% of 32GB iPad 2 sets a dramatic  new price point for tablets given the quality of the processor, the RIM Playbook  caliber screen, solid WiFi connectivity, free cloud storage, and speed of the new Silk browser. Yes, the giveaways are not trivial with no HDMI, no memory expansion and no cameras. Still, the Amazon price point will set the price  bar for any contemplated iPad 2S and many other new entry tablets.

But the Amazon IT Shake-up is not confined to price alone. Amazon’s Silk Browser becomes a new and impressive  entrant to the Browser Wars. Can Silk have creamed Google Chrome’s performance clock[and using technology easily within Google’s reach]? Likewise the Amazon EC2 connect sets a high bar for Apple and Microsoft, which are due on the Cloud “Real Soon Now”. And Microsoft must be really shaking in its boots about missing the whole tablet  market window. And Google and Apple now have competition for the cross subsidy financing for their operations [Apple through AppStore, iTunes, plus carrier subsidies and Google through its advertising revenue streams].NetFlix has a competitor for its streaming services[Amazon has a lower price and more services but NetFlix has a big advantage in number of media[Netflix =9900 movie versus  Amazon=2200 movies; NetFlix=35,000 TV episodes versus  Amazon=9,600 TV episode]. Plus the new Kindles put pricing and feature pressure [especially  Amazon’s new book X-Ray feature] on Kobo, Nook, and the many other e-readers in the market. And the list goes on and on – especially if Amazon buys Palm from HP.

Talk about Joseph Schumpeter full earthquake shaking and disruption in Consumer IT!

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