Amazon Kindle Fire - The Truth: Why It"s Priced "Low"
Amazon's legendary head, Jeff Bezos, unveiled a 7-inch tablet he called Amazon "Kindle Fire", in a much publicised press conference on September 28, 2011 in New York City.
Of all the bells and whistles that accompanied what Bezos narrated, the one thing that struck me was its price.
It was priced at $199.
The cheapest Apple iPad is at $499 (that is, if you can get it at that price, brand new).
The first exclamation point in my mind was -- wow! Could this be an iPad "killer"? When my excitement died down, my rationale mind took over.
Of course, it's not an Apple-to-apple (pun unintended) comparison.
The Amazon Kindle Fire is an "orange", while the Apple Ipad, is well, an "apple".
For one, the size of the Ipad is about 10-inches, while the Kindle Fire is about 7-inches.
But...
the price, oh, the price.
At $199, they are deeply undercutting the pc tablet competition.
Even Archos, the cheapest Ipad wannabee is lost at around $250.
The others (Sony, Asus, Samsung), have priced theirs, at or near the Ipad's price...
as if they have the apps, and the brand-trust that go with it.
So, let me explain why Amazon Kindle Fire can be priced low.
It's not that Bezos has suddenly become philantropic.
It's just that the marketing genius behind his ears is gearing up full throttle.
Let me explain by way of analogies.
1.
The Razor Blade Business Model In the early 1900s, Gillete company (founded by another legend, King Camp Gillette), invented the marketing model now taught in business schools as the "razor blades" business model.
In brief, it sold razor blades so cheap, that one would be an idiotic conservative if he did not consider switching to cheap dispensable razor blades rather than sticking to his long, inconvenient, but trusty razor, that would require a safety sheath, and regular sharpening.
Gillete priced the razor blades so low that it created a new, lucrative, huge, and expanding market, for razor blades...
A market place that Gillete created with all its "first-entry" and brand recognition advantages.
2.
The Printer Market HP sells its printers cheap.
Why? Because, they will regain their losses on the printer ink that you must buy (from them) for you to use their HP printer.
Do you realize that at the price of 2-3 HP ink cartridges, you could already buy a new HP printer? 3.
The Diabetes Glucometer Market My wife is a diabetic.
She tests her "blood sugar" almost 3-4 times daily using a "test strip" which a machine called "glucometer" reads.
The price of the glucometer? "Too low to display" (as Amazon says), even given free as a promotional by the sales agents.
But the price of the test strip? Almost $1 per strip! 4.
The Camera Film Market (Before the Digital "Killed" It) Remember the time in the 1980s through early 2000s, when pictures were taken using 35-mm film cameras? Do you recall the film brands "Kodak" and "Fuji"...
they sold their cameras cheap.
But they profit immensely from the sale of their camera films.
(Until, the digital "film" came, gate-crashed the party, and ate all the food...
well, that's another story.
) So...
why then can Amazon Kindle Fire sell so cheap compared to the competition? If you do not know the answer by now, go to the Amazon website kindle department, and be amazed at the infinite products from books, movies, music, and games that you can upload (and buy) once you get your hands on the Amazon Kindle Fire.
Of all the bells and whistles that accompanied what Bezos narrated, the one thing that struck me was its price.
It was priced at $199.
The cheapest Apple iPad is at $499 (that is, if you can get it at that price, brand new).
The first exclamation point in my mind was -- wow! Could this be an iPad "killer"? When my excitement died down, my rationale mind took over.
Of course, it's not an Apple-to-apple (pun unintended) comparison.
The Amazon Kindle Fire is an "orange", while the Apple Ipad, is well, an "apple".
For one, the size of the Ipad is about 10-inches, while the Kindle Fire is about 7-inches.
But...
the price, oh, the price.
At $199, they are deeply undercutting the pc tablet competition.
Even Archos, the cheapest Ipad wannabee is lost at around $250.
The others (Sony, Asus, Samsung), have priced theirs, at or near the Ipad's price...
as if they have the apps, and the brand-trust that go with it.
So, let me explain why Amazon Kindle Fire can be priced low.
It's not that Bezos has suddenly become philantropic.
It's just that the marketing genius behind his ears is gearing up full throttle.
Let me explain by way of analogies.
1.
The Razor Blade Business Model In the early 1900s, Gillete company (founded by another legend, King Camp Gillette), invented the marketing model now taught in business schools as the "razor blades" business model.
In brief, it sold razor blades so cheap, that one would be an idiotic conservative if he did not consider switching to cheap dispensable razor blades rather than sticking to his long, inconvenient, but trusty razor, that would require a safety sheath, and regular sharpening.
Gillete priced the razor blades so low that it created a new, lucrative, huge, and expanding market, for razor blades...
A market place that Gillete created with all its "first-entry" and brand recognition advantages.
2.
The Printer Market HP sells its printers cheap.
Why? Because, they will regain their losses on the printer ink that you must buy (from them) for you to use their HP printer.
Do you realize that at the price of 2-3 HP ink cartridges, you could already buy a new HP printer? 3.
The Diabetes Glucometer Market My wife is a diabetic.
She tests her "blood sugar" almost 3-4 times daily using a "test strip" which a machine called "glucometer" reads.
The price of the glucometer? "Too low to display" (as Amazon says), even given free as a promotional by the sales agents.
But the price of the test strip? Almost $1 per strip! 4.
The Camera Film Market (Before the Digital "Killed" It) Remember the time in the 1980s through early 2000s, when pictures were taken using 35-mm film cameras? Do you recall the film brands "Kodak" and "Fuji"...
they sold their cameras cheap.
But they profit immensely from the sale of their camera films.
(Until, the digital "film" came, gate-crashed the party, and ate all the food...
well, that's another story.
) So...
why then can Amazon Kindle Fire sell so cheap compared to the competition? If you do not know the answer by now, go to the Amazon website kindle department, and be amazed at the infinite products from books, movies, music, and games that you can upload (and buy) once you get your hands on the Amazon Kindle Fire.
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