Amazon's Bezos Fires Up Mobile Success
Once again, Amazon's CEO Jeff Bezos is looking like the smartest guy in the room. He can teach just about every company in any industry a few things about innovating for, connecting with and monetizing connected consumers.
Within days of The New York Times spotlighting widespread disgruntlement with the new Kindle Fire, Amazon’s founding CEO had his troops address the problems for a pending over-the-air update to existing devices and enhanced versions due out in 2012.
Complaints about slow to load Web pages, easily triggered off switches, the absence of privacy settings and awkward touch screen functionality were overshadowed by the online scramble for holiday gift giving that clearly includes Kindle Fire.
Forrester expects as many as 5 million Kindle Fires to be sold this holiday season -- despite that more than one-third of some 4,500 reviews of the device on Amazon’s site have been mixed (three or fewer stars), according to the NYT.
Availability of the Kindle Fire late last month boosted Black Friday sales for the Kindle family of devices four-fold from the prior year. Bezos continues to redeem himself with Kindle Fire’s stunningly low $199 price point and Amazon’s gushing deference to consumers seeking convenience. (It offers free second-day shipping and free entertainment downloads for Prime customers, and extended order deadlines for guaranteed Christmas delivery.)
The Kindle Fire is not going away.
Other companies from Apple to Toyota have survived far worse glitches. The tablet is a critical catalyst for broadening Amazon's core business lines from pure-play online retail to media, electronics and other merchandise in a global marketplace. And its ramping up its mobile presence.
At least two advanced connectivity versions of the Kindle Fire are expected in 2012, while remaining priced less than half Apple's most expensive iPad. Because it is the most functional and cost-effective tablet on the market, Amazon will be a major beneficiary of explosive growth forecast for ubiquitous mobile devices serviced from the cloud, which the company has pioneered.
Kindle products are projected to help boost Amazon earnings five-fold over the next three years to more than $27 billion or nearly $113 billion in sales by 2014. Media sales will double to $20 billion and electronics and other merchandise will more than triple to $47 billion in sales.
Global Kindle Fire sales could reach $22 million next year generating $4.4 billion in revenues, and 40 million in sales doubling revenues to $8 billion in 2013, according to Bernstein analyst Carlos Kirjner.
Bezos has baffled Wall Street with his willingness to take a financial hit on his hefty upfront investment in Kindle Fire, which will not be profitable until 2013, based on a rigorous global rollout. The life-cycle value of a Kindle Fire consumer nearly doubles to $212 on incremental consumption of more media and other goods and services over the connected device, reaching beyond e-books to other e-commerce, Kirjner estimates. It is why Bezos calls the Kindle a “media service” that is all about delivering e-books and publications, TV shows, music, movies and Internet access and transactions through cloud computing rather than the device.
By comparison, revenue per unique visitor on Facebook is 26 cents and $1.94 on Google. Facebook may be disrupting Google's external food chain access, 9% to 7.2%, according to latest estimates from Business Insider, but neither of the companies positioned for mobile e-commerce growth hold a candle to Amazon.
A combination of the Google Android-based open operating system and Amazon's masterful fulfillment and customer service could catapult the company to the center of the mobile transaction universe.
Bezos’ most recent ingenious strategies demonstrate his uncanny eagerness to appease connected consumers. Earlier this month, Amazon gave shoppers a Price Check app and an extra 5% off Web site purchases when they used it to comparison shop in stores. The move has been so successful some outraged retailers have blocked shoppers’ Wi-Fi access in their stores.
Bezos understands the fundamental attraction of a deal, how to empower consumers, and the impetus for spending even in an uncertain economy--which is why Amazon will likely outstrip even Wal-Mart in overall holiday-related revenues.
Another supreme example of Bezos' acute understanding of the connected consumer is the growing speculation that Amazon soon will open a handful of physical stores showcasing its branded merchandise, which customers will order on mobile devices and have delivered to their home or office.
No inventory on the premises means no sales tax--a fierce battle Amazon has just begun to fight state-by-state. It puts the largest online retailer squarely in the cross-hairs of brick-and-mortar giants.
It is more of the outlier tactics and innovative disruption that have characterized Amazon’s meteoric success. While there is a lot of fuss being made over the race between Google and Facebook for mobile advertising and transactions, as well as paid and free media and other services, Amazon is already entrenched in all of those potentially lucrative places.
The simple but pivotal lessons learned from Bezos and Amazon that should be embraced by all companies playing in the digital space:
*It’s all about invention and experimentation; fail, learn and move on
*It’s all about the consumer; individual relevance and convenience
*It’s all about adoption and ubiquitous access: anything, anywhere, anytime