All the talk in the past few days has been about Amazon’s Kindle Fire and how this will impact the Apple iPad and the 7 Dwarfs, which is what I call the other tablet products on the market (RIM Playbook, Motorola Xoom, Samsung Galaxy, HPTouchPad, etc.).
Many have been focusing on the product features – what it has or doesn’t have. Others have been focusing on the Price – the fact that the Kindle Fire is being listed at $199 – $300 below most of the others (with the exception of the Best Buy fire sale price of $99 on the HP TouchPad).
What is Amazon Really Doing?
However, the real issue is the fact that Amazon seems to be employing the Gillette product strategy of giving away the razor and selling the blades. In this case, the real objective is not the product or the price. It is distribution. The Kindle Fire is a device to drive business to Amazon’s store and away from other online stores, such as iTunes/iBooks, Google, etc. Of course there are differences in the stores. Amazon sells just about everything and Apple is more focused on digital entertainment and education (books, movies, TV shows, …). The Kindle fire is also not positioned directly at the iPad (at least for now) since just about everyone that has tried to overtake the iPad has gone down in flames, with the iPad taking about 80% of the market. Instead, the Kindle Fire is both an offensive and defensive move to drive digital business away from other stores and toward Amazon. Every purchase on iTunes and iBooks is a sale that Amazon does not get. Conversely, every sale on Amazon is money that does not go to Amazon’s competitors.
The Real Objective of the Gang of Four.
Eric Schmidt, Google’s Chairman, coined the phrase the Gang of Four in reference to Amazon, Apple, Facebook, and Google – the companies he believes will define the Internet economy from now into the future. Notice the word “economy” is used. If you really read between the lines, it appears that this “Gang” is really striving to turn themselves into a bank as Warren Buffet and IBM did with their businesses. Once you have a bank, you have the cash on which you can earn interest, invest, and do all sorts of wonderful things. This seems to be the real focus of these titans, and it will be interesting to observe all the moves they make to move toward this goal. Watch out Paypal. You had a good idea, but you don’t seem to have the content or the scale of the Gang of Four.
What do you think? What marketing and business strategies can you employ to turn your business into a bank?
Ira Kalb is president of Kalb & Associates, an international consulting and training firm, and professor of marketing at the Marshall School of Business at University of Southern California (USC). He has won numerous awards for marketing and teaching, authored ten books and over 60 published articles, created marketing inventions that have made clients and students more successful. Various media frequently interview him for his expertise in branding, crisis management and strategic marketing. Follow him on Twitter.