For years, at different publishing industry gatherings, I’ve heard people say things like, “at our company, we’ve discussed giving our subscribers free [eBook readers, netbooks, Kindles, iPads, or whatever else was the current technology] who will agree to continue their subscription for [insert length of time].” At big media companies, they’ve gone as far as investing millions in creating such devices that, well, you don’t hear about later.
I always try to be polite when I hear ideas like this, but in my mind, I’m thinking: “Why not offer free Lazy Boy recliners for them to sit in while reading the newspaper, instead?”
A couple of news items this morning made me think of those conversations: First, that Amazon has cut the price of its lowest priced Kindle to $114. Mashing up two of the trendiest tech-commerce fads ‘o the nanosecond, Amazon has named the $114 version the “Kindle with Special Offers” — the “special offers” are screen saver Grouponesque offers for Amazon products. (Despite being an investor in Groupon’s competitor, Living Social, I can’t help but call this $114 version, the Kindle Groupon.) [Or (for you old-schoolers, a reference to the “screen saver” feature), the Pointcast Kindle.]
The other news item involves Cisco shutting down the USB digital video camera, Flip (Who knew they even owned it.)
Why do these news items remind me of publishers who think giving away hardware is a successful strategy for selling content subscriptions?
There are very few companies that dominate more than one intersection along their industry’s supply chain — or, if you are in media, their content distribution channel. However, that doesn’t stop executives in companies who are dominant at one intersection from coveting the control other executives have whose company dominates a different intersection. Dreams of vertical integration have been, in the words of Ledbelly or, if you prefer, The Animals, the ruin of many a poor boy
I’m an Amazon fanboy, but I still have my doubts about the longterm prospects of the Kindle. I’ve predicted — I’ll link to some later — that the price of the Kindle will drop to free before long, at least for those who pay for a Prime account.
Let’s get this straight: I want the Kindle to succeed over the long haul. I just doubt it will.
As much as I think those of us locked into Apple’s iOS devices benefit from the competition of others, I think end-user devices are a stop on the distribution channel that will be harder-and-harder for Amazon to compete in — despite their dominant position in several other intersections along that way.
Cisco acquired the Flip camera a couple of years ago for nearly $600 million. Cisco has now displayed how to take a hot consumer product & brand and destroy it within months. (It would have taken twice that long for most gigantic companies.) While there are those who say the iPhone and other smart phones have killed the need for the Flip, those people tend to be the same people who won’t agree that the iPad has killed the need for the Kindle.
In other words, can’t there be innovations in one-utility devices — maybe a Flip Flickr with autoload to the web via wifi? Or cameras in different shapes, for different purposes — all sorts of HD wifi enabled webcams. Cisco obviously didn’t care — that spot on the supply chain of content exchange wasn’t seeming sweet, or even desirable, to them anymore. But a company like Griffin Technology (in Nashville) could take the Flip brand and innovate all sorts of one-feature cameras that could look cool and blow away the functionality of “web cams.”
Bottomline: Giving away Kindles, or killing off Flips, isn’t about technology or gadgetry; such decisions are about wanting to be the crossing guard at the next intersection along the content distribution highway.