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Confirmed: Amazon tablet to have Unicorn skin case

I have now confirmed through a second that Amazon will indeed be shipping a case for the aTablet, and that case will be made from the hide of an unicorn.

Sorry, after reading an article in PCWorld yesterday I just had to lead with an equally absurd premise.The article discusses nuances of a business model that Amazon might use for a tablet Which Doesn’t Actually Exist Yet.

The idea of giving Amazon away an expensive item as a loss leader for cheap items has raised its ugly head again. There’s a small difference this time around, though.

The other interesting thing I have picked up suggests that Bezos and his team are thinking about deploying a radical new business model for their tablets. First, to make the tablet’s price really attractive to users, Amazon may actually sell it for as much as 20 to 25 percent below cost. In this situation, think of the tablet as a razor and the Android Appstore, UnBox movie service, and music service as the blades, which can be sold to users over and over again. As I understand it, the idea is to have users' purchases applied to the their tablet through a two-year amortized program that would cover any lost physical cost of the tablet as well as give Amazon some profit.

The first problem with this idea is that Gillette never actually used the razor-and-blade model in the way everyone assumes they did; it wasn’t until after their patents expired (and they lost the lock-in the patents provided) that they used anything even remotely similar.

But the bigger issue with this idea is that it doesn’t jibe with Amazon’s existing business model. They’ve positioned themselves as the place to get free and cheap stuff: ebooks, MP3s, and Android apps. Why do you suppose they have a free daily app? It’s because giving away someone elses content doesn’t cost them very much. Go look at their ebook pricing model, and how much control Amazon have over pricing. Surely that wasn’t an accident.

Amazon give away this digital content because it costs little to produce, but it also creates a mindset in some customers that you go to Amazon just for the free content (they’re called freegans). When the "free Kindle" rumor was last bandied about, freegans were my objection why it wouldn’t work. The objection stands, because it is just as applicable to tablets as it is to the Kindle.

It’s actually even more applicable. With the Kindle there is a degree of lock-in that you simply cannot achieve with an Android tablet. With a tablet, there’s really no reason not to buy your content elsewhere.

Sorry, but the captive audience argument just doesn’t work.

To put it simply, giving away the expensive to get people to buy the cheap won’t work. You won’t make it the difference in volume.

image by Taifighta

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Richard Adin August 9, 2011 um 9:57 am

Although I agree with you, Nate, we do need to remember that Amazon has a long history of selling goods at below cost to either increase market share or to lock customers into its eco system. Consequently, the suggested model is not beyond the realm of possibility for Amazon.

Nate Hoffelder August 9, 2011 um 10:13 am

I’m not sure that’s accurate.

Amazon’s early business model was to take a smaller margin on individual sales than they need to cover their costs.They didn’t price an item at a loss; it simply wasn’t priced high enough to cover their overhead. They eventually made up the deficiency in volume, yes, but only by selling an item 100 times instead of once.

The tablet as a loss leader for digital content is a different model, I think.

burger flipper August 9, 2011 um 10:48 am

I still expect to see the "free" Kindle– free to paid Prime members.

I think you’re dead on with the this, though.

aus August 9, 2011 um 12:09 pm

Nice image of a Unicorn! From the Stirling Tapestries at Stirling Castle in Scotland. Might be the originals, however, which are at the Metropolitan Museum of New York.

Syn August 9, 2011 um 1:57 pm

Does this mean Nate now believes their is a tablet? I haven’t read this blog since last April when you were dead sure there wouldn’t be one.

If you were wrong about that..(because Amazon had never done it before, I believe you said.) You may be wrong about this.

I don’t see why they wouldn’t do it. Apple has screwed with Amazon long enough, I think this would be perfect payback. Apple might have controlled ebook prices but they can’t control what Amazon sells their own tablet for.

This could get interesting.

Nate Hoffelder August 9, 2011 um 2:27 pm

I’m wavering, but most of the time I don’t believe in the aTab. i set aside that detail so i could discuss the business model proposed.

Syn August 9, 2011 um 6:00 pm

Not only do I think they will have one Nate, I think they are coming out swinging by building the App store and getting it stocked up first.

Plus, B&N has one, (well, its a tablet deguised as an ebook reader, but still!) Amazon can’t let them take the market share from people who have to have color.

HP August 9, 2011 um 5:20 pm


While the orig author’s "razor blade" premise is speculation (and reportedly based on "unnamed" sources) and is of course isn’t fact, your debunking of it isn’t wholly valid.

At issue are convenience and visibility. To illustrate, vendors are willing to pay Apple a 30% to be included in its app store, even though that they can simply set up a web shop w/o paying the surcharge. Why? Because of the convenience and discoverability that the app store confers for the app.

As a user, if you can get an app from the built-in Amazon app store, there is no reason to install any other app store. And like Apple, Amazon would have secured a lowest-price guarantee from app authors. It’s more convenient. There can be other benefits, such as transaction security. Amazon can offer in the future other features, like a curated selection, or better crowdsourced feedback, like with current Amazon products.

In short, Amazon can indeed achieve a "soft" lock-in with their app store, because they can do things other app stores can’t or won’t. But the first step to lock-in is still to offer a tablet that has their app store loaded by default. The razor blade model does work, once you examine it in detail.


Nate Hoffelder August 9, 2011 um 5:48 pm

I disagree. Developers put up with Apple’s lock-in because they have no choice. And those with in-app sales pay Apple 30% because, again, they’re not given a choice in the matter.

And you cannot achieve the same level of lock-in on an Android tablet without blocking 3rd party apps; there are too other content apps in the Amazon Appstore now. If Amazon blocked those apps then they would kill off their tablet before it was born.

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