Monday, November 19, 2007
Research Note: Kindle - Product, Service, or Strategy?
We all know book publishing is a bloated, unresponsive, and, well, fairly depressing market.
So it's high time players stepped into the breach.
Let's think seriously about it for a sec.
We have to begin by ignoring the geeks. Technology alone doesn't solve economic problems. It's strategic and business model innovation that does.
So the fundamental question behind Kindle is: is it a product, service - or strategy?
As a product, Kindle's no great shakes. It doesn't have the disruptive value proposition that an iPod or iPhone did - in functional, aesthetic, or emotional terms. Yes, the screen is nice. But the storage is weak, and the aesthetics are...awful.
Amazon has managed to make something uglier than the godforsakenly hideous Zune, which is saying quite a bit. Boardrooms - set your designers free (or else).
But that's irrelevant for now - and let's not get wrapped up in it. Let's go a bit deeper.
As a service, details are sketchy. Apparently connectivity is free. Great.
But what's really available in the service? Just access to books, newspapers, etc - with a bit of Google on the side? That's not a great value proposition - not just for consumers, but more importantly, for authors and publishers.
See the problem here? Amazon sees the Kindle as just another distribution channel for the same old stuff. But distribution is not the problem in the edgeconomy - it's a commodity.
Or: the Kindle is just replicating the same old value chain - using technology to achieve marginal efficiency gains. Fine - but not groundbreaking, and (very) unlikely to offer enough value to get consumers to defect from other media.
Which explains why Amazon is buying into an obsolete pricing model. Mathew notes they want to charge for subs...to blogs. Loll. I suppose we can extend that to books, newspapers, etc.
Shades of Pressplay/lame video incumbent services? Yup. Like Amazon, record labels were and tv networks are thinking distribution - and that's their fatal error.
So the real question is: is there a strategy here?
That's what I'm not sure about. And that's why Amazon's valued not like Google - but kind of like a retail (slash e-commerce) players - because it lacks strategic coherence.
Let me explain for a second.
Kindle's real power is in radical strategic innovation - redesigning the value activities that make up the production and consumption of books almost totally, from the ground up.
If Amazon wants to get this right, they have to follow the principles of the edgeconomy - you know, open beats closed, good beats, evil, light beats, heavy, there are tons more - and apply them to today's assets, capabilities, value activities, value chain, etc.
But I don't see that level of thinking behind the Kindle. Just ask yourself: is Kindle good or evil? Is Kindle open or closed? Does Kindle suck the mass out of the books value chain?
It's hard to say - because Kindle isn't really a strategy: it's just a set of ancillary services wrapped around a product.
You can see it another way: forget product or service, the Kindle should be the hub of a thriving market, network, or community (or multiple ones) connecting every economic actor who even has a remote interest in producing or consuming print media.
The problem is it's none of the above. It's just economically and strategically connecting the same old players in the same old ways.
What does that mean? Contrast it with this foundation for truly radical strategic innovation from Google. Now that's the real thing.
Bezos revolutionized books once. But that was a long time ago, and Bezos, today, is no revolutionary. So is he up to the challenge? I'm not sure - and my gut is telling me (actually, shouting at me): nope.
Great post Umair! I'm reaching out again because I'm still hoping we might be able to do an interview for my blog one of these. I am trying to apply the principles of the edgeconomy to the "micromedia enterprises" with which I work, and the opportunity to discuss your views would be quite valuable for me and my blog readers. Let me know when we might find a time to chat. Thanks so much!