Kindle Fire Tablet: The Non-Competitor

Kindle Fire Tablet | BCBusiness
On September 28, 2011, Amazon unveiled its Kindle Fire tablet computer (pictured above).

Amazon’s new Kindle Fire Tablet computer isn’t an iPad competitor. It represents a business model innovation that’s going to change the face of retail in America and, eventually, Canada.

So, Amazon releases a new tablet computer – the Kindle Fire – and the world (or at least the United States) goes gaga trying to figure out if this is the iPad killer. Debate rages ad nauseam in the (virtual) streets over things like capacity, design, etc.

Let them rage. What’s really going on is an innovation of the tablet computing business model.

While techies like to think products are the innovations, they aren’t. Most innovation in the world involves business model innovation that combines new “products” with new ways of selling them (think software as a service – or renting software instead of buying it outright – or Cirque du Soleil in the “show event” space).

Apple’s business model – a gated, controlled system of technology and the apps that run on it – has already been disrupted somewhat by Google, with its Android systems and apps.

Now that business model innovation is disrupted even further by price and segmentation.

The recent sale by HP of its Touchpads was the pointer to this new segmentation – it put the usual $499 tablet up for $99 because it was “getting out of the business.” Thousands upon thousands rushed to get their hands on one.

This validated a market: tablets had gone beyond the early adopter phase, and many ordinary people wanted them, but at a decent price. RIM has started testing this market by discounting its Blackberry Playbook to as low as $200, which is about what it costs to make it, in selected sub-markets.

The Kindle Fire is keying on this phenomenon with its low price. But this is not a commoditization of the tablet just yet.

Amazon’s real innovation is that it’s going to make the Fire a “media consumption” device that also acts as a portal to its online service that sells everything from wholesale online space (the cloud) to books and food and toilet paper.

It has created an online entrance to what will soon become America’s virtual Wal-Mart, a gateway to a vast online department store that sells goods and services. 

Now that’s disruptive.