2. COMPANY OVERVIEW
THE COMPANY
Based in Seattle, Washington, Amazon is a global leader in online
retail. The company started out in 1995 as an online bookseller but “Earth’s Most PRODUCT
LEADERSHIP
has diversified their offerings to include other products ranging from
electronics, clothing, jewelry to toys. Their core-competence is in online Customer-Centric
retail and providing “consumer-centric” services. Amazon sells products
by third parties but also manufactures and sells the Kindle e-reader. The
Kindle is the first and only consumer electronic device that carries the
Company”
Amazon brand. Amazon.com
Amazon offers their customers a personalized shopping experience
with their platform and features like Wish Lists and Listmania to help
customers find the right product.
OPERATIONAL CUSTOMER
PARTNERSHIP EXCELLENCE INTIMACY
Amazon powers and operates retail web sites for Target, Sears Canada,
Benefit Cosmetics, bebe Stores, Timex Corporation, Marks & Spencer,
Mothercare, and Lacoste. They have also run in to legal problems with
partnerships in the past with Toysrus.com.
Amazon provides customers with a wide selection of products and
customized services with the partnership of individuals sellers, retailers
and software developers.
• rovides platform for retailers and individuals to sell products
P
• artners with big name retailers to offer technology services,
P
merchandising, customer service, and order fulfillment.
• rovides platform for independent software developers to build
P
profitable applications and services for Amazon customers
Van Vuong :: Portfolio Planing S2010 :: Mayfield
3. COMPANY OVERVIEW
Amazon Kindle Strengths Amazon Kindle Weaknesses Threats Opportunities
+ Amazon is the largest online retailer - ependence on partnerships
D - ther classes of devices that have
O - Amazon has opportunity to leverage
+ mazon has developed services that
A sometimes presents a strategy same functionality with added features social networking with addition of
personalizes the online shopping mismatch. Amazon relies on vendors - Cost of digital books are still too high Facebook and Twitter upgrades
experiences. ie recommendations, to allow their prices to be low. As a - There is an opportunity to innovate the
retailer they have run into a mismatch - ublishers refuse to lower prices.
P
reviews, wish lists and suggested There is a constant battle with keeping digital distribution model
products of strategy with publishers who have
resisted to lower digital book prices. prices low - Expand offering into other digital
+ artnerships: nation’s biggest book
P - Other substitutes sold at lower prices markets like video, games and apps
sellers, has been able to convince - esign and hardware design is not
D
developed - More partnerships with retailers and
most major publishers to release businesses
titles for the Kindle - on-availability of WiFi functionality
N
+ Kindle has brand recognition - rovide a large amount of geographical
p
+ ownloads content over
d coverage, but also drives the price of
“Whispernet”, a free EV-DO wireless the device up
service on the Sprint Nextel network. - esign is ergonomic, but not very
D
Service does not require monthly fees elegant
+ igh-contrast screen does a great job
h - ricing for nearly all the content seems
p
of simulating a printed page too high, especially considering the
+ l rge library of tens of thousands of
a periodicals and blogs are available for
e-books, newspapers, magazines, free online
and blogs via Amazon’s familiar - lack-and-white screen is fine for
b
online store books, but less impressive for
+ no PC needed; periodicals and Web content;
+ eatures: built-in keyboard for notes;
F - lacks a true Web browser
SD card expansion slot; compatible - ncluded cover is clumsy and poorly
i
with Windows and Mac machines. designed
+ sers could start reading on a Kindle
u - dditional file formats need to be
a
device and continue from the same e-mailed to Amazon for conversion
spot on their cellphones - indle DX, which has the same screen
K
+ -inch Kindle is substantially lighter
6 size as an iPad, is only $10 less while
than the iPad, weighing two-thirds of lacking a majority of its rival’s features
a pound rather than 1.5 pounds
+ ses e-ink, much easier on the eyes
u
than an LCD and better for reading
in sunlight
Van Vuong :: Portfolio Planing S2010 :: Mayfield
4. MARKET OVERVIEW
CONTEXT OF MARKET: COMPETITION
Amazon Kindle is a leader in the e-book market (devices dedicated to
reading). Electronic readers such as the Kindle, Barnes and Noble’s
Nook and Sony’s ebooks have risen in popularity in the past year and • oogle Android Operating System with
G • upports ebooks, images and audio files
S
have been a popular gift item in the recent holiday season. E-books touch screen color navigation but more from Barnes and Noble, Google Books,
allow consumers to download and carry multiple books, magazines complex user interface Fictionwise and eReader in EPUB,
and newspapers on a compact, convenient device. The price of PDB and PDF formats, as well as JPG,
• bility to lend and borrow books for free
A
GIF, PNG, BMP and MP3 formats from
e-books are generally lower than the physical books, which is an with LendMe. Allows book buyers to
additional sources.
incentive for avid readers. Many e-book devices use e-ink which allow loan downloads to friends for 2 weeks –
accessible via smartphone or computer
the interface to be less stressful on the eyes.
• ffer both 3G and Wi-Fi, supports
O retail price: $259
downloads via both connections, Wi-Fi
Recently with the introduction of the iPad, many experts suggest the
is currently limited to Barnes and Noble
price of e-readers may be a major contributor to whether they survive stores.
or not. To compete with the competition, e-reader companies are
starting to increase channels of distribution. Amazon is starting to sell
Kindles at brick-and-mortar stores, beginning with Target stores and
the Nook will be sold at Best Buy stores. • Sleek design and touch screen interface • upports Microsoft Word documents,
S
Adobe PDF documents and a few other
• ses E-Ink but still has glare because it
U
text document formats
is touch screen- text is not as crisp and
poor contrast • upports MP3 and MP4 audio files so
S
you can carry along some music or
• ouch screen interaction requires more
T
audio books
pressure and also utilizes a stylus
• as the ability to hold 350 books with
H
ability to expand with sd card retail price: $199-399
• he iPad is in a different class of devices
T • ike other Apple devices, the iPad has
L
CURRENT POSITION than e-readers. It is a personal computer multi-touch screen technology allows
and multi-functioning device. users to zoom, flick and navigate with
accuracy
• easures 9.7 inches, the iPad is larger
M
than most e-readers and supports full • upports Wi-Fi, Bluetooth and 3G
S
color photos and web pages connectivity
• ses an LCD screen and LED
U • omes with 16G, 32G, or 64G storage
C
backlighting so this produces a glare and • ses iBooks app to purchase books
U
is less comfortable to use than e-readers directly to your iPad from the iBookstore.
with e-ink technology Amazon also has an application for the
iPad
INTRO GROWTH MATURITY DECLINE
retail price: $499
Van Vuong :: Portfolio Planing S2010 :: Mayfield
5. PRODUCT PORTFOLIO Large format-
ideal for newspaper
display
PRODUCT PORTFOLIO
Amazon began as an online $ 500 Kindle DX
bookseller and they continue to Price: $489.00
Display: 9.7” diagonal E Ink
provide customers with the best Size: 10.4” x 7.2” x 0.38”
costumer reading experience. Their Storage: 3,500 books
portfolio covers multiple platforms $ 400
to help readers search, buy and read Regular format-
books with a very personalized buying books
experience. Along with their online
Kindle 2
retail bookstore, customers can also $ 300 Price: $259.00
purchase and read Kindle books Display: 6” diagonal E-Ink
Size: 8” x 5.3” x .36”
through the free reading apps for Storage: 1,500 books
personal computers, mobile devices,
Kindle
tablet computers and e-readers. $ 200 (First generation
resale only)
Price: $199.00 used
Display: 6” diagonal E-Ink
Size: 7.5” x 5.3” x 0.7”
CHARACTERISTICS
+ Lightweight design $ 100
+ Paper-like displays
+ nstant access to large
I
collection of e-books
+ pplications available for a
A $0
range of devices
Personal computer
THEMES platform
On-line retail
+ Multiple platforms platform
+ Mobility (physical books) Mobile device
platforms
+ Simplicity
+ Access
Kindle on
tablet/iPad
Kindle on
iPhone
Kindle on PC
Physical books
though Web
Portal for
online retail
Kindle on
Kindle on Mac Blackberry
Online retail Platform for Kindle Books (software) Amazon Products (hardware)
Van Vuong :: Portfolio Planing S2010 :: Mayfield
6. CUSTOMER SEGMENTATION
ABOUT THE CONSUMERS
The Kindle is a niche device, but this small market loves their books. A large percentage of the kindle
books are bought by a small number of readers. “The Kindle must have an enormous penetration of
what is a very distinctive, and for Amazon, quite lucrative, segment: very heavy buyers of books.”
The kindle especially appeals to heavy readers who like to travel or just move around town without
the weight of several books. Their consumers are also students and news fans, both of whom value
different functions, such as design and connectivity more than book readers. Currently princes for the
Kindle and Kindle electronic text books remain too expensive for many college students.
LEISURE READERS UNIVERSITY STUDENTS TRAVELERS AND COMMUTERS NEWS FANS
PROFILE Adult male or female Adult male or female Adult male or female Adult male or female
35 - 45 18 - 25 30 - 45 30 - 60
mid to high income low income mid to high income mid to high income
NEEDS AND VALUES The leisure reader enjoys Students need books for specific The business traveler reads They love to be on top of the
collecting books and reading as occasions - when course require when they are waiting during latest news. The ability to search
many books that they have time them. Physical textbooks are travel. They need access to for news that is relevant to them
for. Being able to carry many expensive but allow them to reading material in a wide range is very important.
books around is a plus. return them and get some cash of locations and sometimes at
- Availability of news selections
back. unexpected times.
- arge selection of books and
L
- Searchability of relevant news
immediacy of new books - bility to run on different
A - bility to connect at all locations
A
and personal interest
platforms and file format is
- A lot of storage space - Speed of access
important - Speed of access
- ow prices so they can
L - Lightweight
- ccess to textbooks and course
A - Lightweight
purchase many
materials - arge selection of periodicals
L
- Large format of device
- ustomized search to match
C and news
- Lightweight
personal interests
- Low prices
- Style and design
- Speed of access
OCCASIONS Leisure time During school years During travel periods Travel time and Leisure time
Van Vuong :: Portfolio Planing S2010 :: Mayfield
7. COMPETITIVE LANDSCAPE
Entertainment and Fun
A NICHE MARKET WITH DVDs
OPPORTUNITIES Netflix
Currently the Amazon Kindle Theatre CDs
provides products and services
Wii Playstation
for a very niche market, heavy
readers, but the platform could Cable television
Nintento 360
potentially reach a wider market in
mp3 player
digital content retail. Amazon has
iphone
been a leader in online retailing Magazines
Books
and have provided customers ipad Personal
Nook HDTV
with customized online shopping ipods Growth
Newspaper
experience. With the capabilities Kindle
electronic and Interests
of the Kindle as mobile platform, dictionaries
Sony e-reader Public radio
Amazon has opportunities to Desktop computers
portable dvd players
reach wider markets than just
books, including products in cell phones blackberry News television
entertainment, personal interests,
education and work. Similar to Libraries
the way Amazon’s online retail laptops
platform has evolved into various Projector
markets, their hardware platforms
may follow in this path. Text books
Research
Acedemic Software Programs Publications
Journals ie. Turbo Tax, Quicken
Work and Education
FORM CATEGORY GENERIC BUDGET
Electronic readers Hand held computers Digital entertainment Media and
Electronic books make it possible Handheld devices such as smart The technology in digital communication providers
to carry a large collection of books phones and tablet computers entertainment has increased in the Media comes in various formats.
in a compact mobile device and are in a class of there own and past years and the ability for them They ability to receive information
also be connected to a book multipurpose devices, but they to be wireless and connected to for entertainment, personal
retailer for easy access to a great have become direct competitors the internet has also changed the growth, work and education
selection of digital content. to the e-book market. way users receive digital content. comes in traditional forms of
books and physical content.
Van Vuong :: Portfolio Planing S2010 :: Mayfield
8. PORTFOLIO OPTIONS
EXTEND EXPAND
G ibrary Loan System - With membership fee, allow
L
A Children’s Line - develop kindle version for children’s EXTEND INNOVATE
New Markets
access to select collection of reference books through
books with tools to help children read (might require kindle
color)
M
HS
hareable and Sellable e-books - create exchange
B ducator’s Tool - create system for educators to curate
E accounts for users to buy and sell e-books to each
content for students and allow students to purchase A
other (might require them to modify file security B L
Educators packaged books and materials technology of e-book files and other digital files)
C
C leeker Style - Design more attractive electronic
S I artnership with other services - With the ability to
P
reader and target style conscious users who care use Facebook and Twitter, Amazon might partner with PENETRATE EXPAND
about aesthetics. other online services to expand their social networking
E G
services on the Kindle H
PENETRATE I
Existing Market
J
J xpand platform to other devices- Currently the kindle
E
D dd WiFi - Currently the 3G browser has limited
A
platform is available on multiple devices, but by going D F
connection to a select few websites. Allowing wifi K
beyond just digital books, they may be able to expand
and developing a robust browser with e-ink could be
into other devices such as tvs and game consoles.
valuable and very desirable to existing markets
KA
dd color features Existing Products New Products
E ower price of Kindles - current competition of other
L
to be competitive with other devices with similar
devices with similar attributes but also additional
price points add color interface to display full color
functionality may be a threat to the Kindle because
publications and colorful images
they are at similar price points, by lowering their prices
Kindles could help make Kindle the desirable choice INNOVATE
F ncentive Program - for frequent readers, offer
I L igital shopping companion
D
incentive programs that give users discounts or free use to instantly purchase products user might see
offers with frequent purchases to maintain loyalty on tv, magazine, or at a friends house. Use context
awareness and visual recognition technologies to
search and buy products
M ablet computer with e-ink display
T
basic functions of tablet computer, internet
applications with friendly display
Van Vuong :: Portfolio Planing S2010 :: Mayfield
9. OPTION EVALUATION
s
c ie
en ty
g e s t b ili
ce ta es pe asi
an n en m
t va iv Co Fe d
or Ad t e ly ar
p ac or al w
Im i ve tr C ic Re
ic tit At ge lo
g
al
te
g pe ke
t a o ci RE
ra ar er hn n K
m v c na O N
St Co M Le Te Fi SC RA
EXTEND EXTEND INNOVATE
New Markets
A) Children's Line 1 1 4 1 7 4 18 11
B) Educator's tool 4 7 4 4 7 4 30 8 M
C) Sleeker Style 9 7 7 1 9 4 37 5 A
B L
C
PENETRATE
D) Add WiFi 9 9 9 7 9 4 47 2 PENETRATE EXPAND
E) Lower price of Kindles 9 7 9 7 9 9 50 1 G
F) Reader Incetive Program 4 4 7 7 7 4 33 7
E H
I
Existing Market
J
EXPAND D
F
K
G) Library Loan System 4 7 4 4 4 1 24 10
Existing Products New Products
H) Shareable and Sellable e-books 7 4 7 7 1 9 35 6
I) Partnership with other services 7 7 7 9 4 4 38 4
J) Expand platform to other devices 7 7 4 9 4 7 38 4
K) Add color features 9 7 9 7 9 4 45 3
INNOVATE
L) Digital Shopping companion 7 7 4 9 1 7 35 6
M) Tablet computer with E-ink display 4 4 7 4 1 7 27 9
Van Vuong :: Portfolio Planing S2010 :: Mayfield
10. OPTION EVALUATION
GOAL:
Maintain leadership in the Kindle retail platform
by improving user experience, lowering barriers
to digital retail channels and increasing options
for purchasing digital products, with the goal of
increasing Kindle platform retail sales by 30%.
Van Vuong :: Portfolio Planing S2010 :: Mayfield
11. RECOMMENDATIONS
RECOMMENDATION #1
New format with
Lower prices and expand $ 500
color and wifi
product offerings Kindle 3
Price: $359.00
Currently new products like the iPad poses a threat to Display: Color touch screen
Size: 8” x 5.3” x .36”
the Amazon Kindle. Although these products might be $ 400 Storage: 2,000 books
in a different class of devices, they still have the same
functionality as the Kindle with additional attributes that
the kindle lacks like color and wifi. Even though the Large format-
$ 300 ideal for
Kindle is the best in the class of digital reading devices, newspaper display Kindle DX
Price: $489.00
the iPad and other readers have added features and Display: 9.7” diagonal E Ink
functions at not that much of a price difference. Regular format-
Size: 10.4” x 7.2” x 0.38”
books
Storage: 3,500 books
Adding a new product to the portfolio with competitive $ 200
attributes and added functionality and also lowering the Kindle 2
Price: $259.00
prices of the current devices could help the Amazon Display: 6” diagonal E-Ink
Size: 8” x 5.3” x .36”
Kindle stay ahead of the game. By lowering prices of
$ 100 Storage: 1,500 books
the devices, they might become more affordable and
Kindle
penetrate the student segment of the e-book market. In (First generation
resale only)
addition to lowering prices and adding an offering with Price: $199.00 used
Display: 6” diagonal E-Ink
advanced features, Amazon should continue to stay on $0 Size: 7.5” x 5.3” x 0.7”
top of software updates and added features that other
devices may or may not have, but also create unique Personal computer Regular format-
platform books
offerings for the Kindle. Free 3G service does set them On-line retail
platform
apart from other devices and they should leverage this (physical books) Mobile device
and other partnerships with online services and retail platforms
outlets to make this a more desirable feature.
Kindle on
STRATEGIES tablet/iPad
1) Add new product with added features- color and wifi
Kindle on
iPhone
2) Lower prices of current black and white
Kindle on PC
Physical books
3) ontinue to upgrade services and increase
C though Web
Portal for
partnerships with online services online retail
Kindle on
Kindle on Mac Blackberry
4) dd unique capabilities to new product to set
A
precedence for the retail of digital content (Possibly
leveraging free 3G services). Online retail Platform for Kindle Books (software) Amazon Products (hardware)
Van Vuong :: Portfolio Planing S2010 :: Mayfield
12. RECOMMENDATIONS
Large format-
RECOMMENDATION #2 ideal for newspaper
display
Focus on expanding platforms
and customize retail experience $ 500 Kindle DX
Price: $489.00
Display: 9.7” diagonal E Ink
Amazon has revolutionized online retail services and Size: 10.4” x 7.2” x 0.38”
Storage: 3,500 books
is currently a leader in this industry. Device platforms
like the Kindle is an opportunity for Amazon to flex $ 400
its innovative muscles and transform the way people Regular format-
books
buy and possible sell digital content. Their strength in
customizing consumer’s experience could be leveraged $ 300
Kindle 2
Price: $259.00
to create product and service platforms on more digital Display: 6” diagonal E-Ink
Size: 8” x 5.3” x .36”
devices. Their current and future partnerships with Storage: 1,500 books
other services and products could also be valuable
Kindle
in the development of these platforms. Currently $ 200 (First generation
resale only)
they have expanded the kindle e-book platforms to Price: $199.00 used
Display: 6” diagonal E-Ink
blackberries and other smart phones, laptops, ipods Size: 7.5” x 5.3” x 0.7”
and tablet PCs. They are also on their way to integrate $ 100
social networking services like Facebook and Twitter on
the Kindle. This is just the start. Focusing on expanding
device platforms and customizing the retail experience
by developing products and services for more hardware $0
devices and leveraging their partnerships could help the
growth Amazon. Personal computer
platform additional device
On-line retail platforms
STRATEGIES platform
(physical books) Mobile device
platforms
1) everage social networking features and
L
expand services
Kindle on
2) ntegrate Amazon software into more device
I tablet/iPad
platforms (tvs and game consoles?)
Kindle on
iPhone
3) Increase partnerships with online services
Kindle on PC
4) evelop profitable models for retail of digital
D Physical books
though Web
products and services that might be desireable for Portal for
online retail
buyers and sellers Kindle on
Kindle on Mac Blackberry
Online retail Platform for Kindle Books (software) Amazon Products (hardware)
Van Vuong :: Portfolio Planing S2010 :: Mayfield
