Some of you may have read an excellent article recently in Fast Company magazine titled “Amazon Taps Its Inner Apple” (http://www.fastcompany.com/magazine/137/the-evolution-of-amazon.html). This is an excellent read, partly because of the likely competitive response from Apple to Amazon’s “Kindle”, but also because it provides an opportunity to discuss three key considerations when evaluating new product opportunities: a company’s core competency, access to suppliers, and having a first-mover advantage. Here’s my perspective:
1. Core competency: Amazon is a book re-seller, it’s not a hardware company. Apple, however, is a hardware company and Kindle, or any e-book, is a piece of hardware. This plays to Apple’s strength; Apple’s objective is to get as many of its hardware devices, whether it be the iPhone, iTouch, iPod, computers, etc., into the hands of as many consumers as possible. That’s Apple’s business model and how it generates its revenue. Apple knows how to make gadgets that are consumer preferred, and they have the brand equity to extend into many information/content driven segments via their devices.
2. Sourcing content. Although this plays to Amazon’s strength, the company does not have a lock on the content and Apple I’m sure could gain access to content in relatively short order. Apple could quickly change the game here by securing exclusive rights to a new blockbuster book, which could be made available only on a new Apple Kindle-like product (eg. Harry Potter!?!)
3. First mover advantage. Amazon wasn’t the first to the market, but Kindle’s proven to be the only product to ever really establish a significant beachhead with consumers. Amazon has, in essence, established a first-mover advantage that is supported by readily available content (again, a strength). So, despite the point made in #1, above, regarding core competencies, Amazon has capitalized on this important “first” push into a new segment and, regardless of Apple’s response, will likely, at a minimum, continue to be a key player for several years to come. That’s the dividend payout of first-mover advantage.
It’ll be interesting to see how this emerging category plays out between Apple, Amazon and whoever else chooses to enter (perhaps a publisher? Disney? ). I’d love to hear your thoughts on this matter!