Amazon Should Get Out of Hardware, and Other Bad Ideas
Fast Company sparked the flurry of coverage with its detailed look into the Fire Phone fizzle and the news that Lab126 was being reorganized. This has led to an excess of stories on Amazon, including one in Forbes which argues that Amazon should get out of hardware entirely.
In a post titled Out Of Focus: Amazon’s Hardware Obsession Is Distracting Bezos From The Big Picture, Mark Rogowsky assumes that Amazon has an obsession with hardware which is detrimental to Amazon’s success.
This post came across my desk a couple days ago, and I was initially stumped as to how I should respond; there are simply too many things wrong with the piece and I did not know where to begin.
It’s not just that Rogowsky doesn’t understand Amazon’s motives; he also doesn’t understand Apple’s motives or consumer behavior,and he doesn’t know recent history, either.
Try not to laugh when you read this:
… There’ll be no compromise on Kindle book buying inside the iOS app so long as Amazon sells phones and tablets.
Speaking of which, the Fire tablets are surely the albatross Bezos finds it difficult to shed. The illusion of success makes it difficult to just stop selling them, but again the reality is there is no important opportunity for Amazon to pursue. Tablet sales aren’t likely to grow robustly again anytime soon, especially among U.S. and U.K. consumers, who represent nearly all Kindle Fire buyers. And there is nothing about owning a Fire tablet that is especially compelling for an Amazon customer such that they’ll switch from an iPad. It’s a nice product with some clever features that Apple might be wise to copy, but like the Fire Phone, Amazon’s tablets haven’t proved they have any reason to exist.
Rogowsky would have you believe that the reason Apple took away the in-app sales was because Amazon sells hardware. This premise conveniently ignores the fact that Apple’s decision occurred nearly a year before the original Kindle Fire launched, and impacted tech companies across a spectrum of industries ranging from ebooks to music to video.
Rogowsky would also have you believe that a $99 Fire HD 6 appeals to the same type of customer who might buy an iPad. (There’s overlap, yes, but still … )
What’s more, Rogowsky is not just wrong in his supporting arguments; his very premise is based on a flawed understanding of Amazon’s motivations.
Rogowsky thinks Amazon has an obsession with hardware.
As any long time Amazon customer can tell you, Amazon has an obsession with the customer experience; hardware is just a means to that end.
Amazon released the original Kindle because they needed a 3G equipped device in order to make the ebook delivery process as painless as possible. Similarly, Amazon released the Fire tablet in order to offer the best video experience possible at the cheapest price possible (and also to sell content).
Sure, the iPad does great video, but the Fire tablets cost a heck of a lot less. And I will concede the point that the Fire Phone was a mistake, but the jury is still out on the Fire TV while customers are happy with the Fire tablets and with the Kindle.
To put it simply, Amazon’s hardware efforts are far from a failure; people are happy. And that is something Amazon could not guarantee if they did not develop their own hardware.
In short, Rogowsky is arguing that Amazon should no longer try to offer the best customer experience.
Why exactly would Amazon do that?