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  • AMZN: Apple's Biggest Contender Rises from the Ashes; Holiday Showdown!

      Amazon.com's launch of the Kindle Fire is a significant event in the technology industry. Amazon's business model puts them in position to be one of the few to challenge Apple in the tablet computer business, while challenging AppleTV and Netflix with streaming media. AMZN provides an underdog play this holiday season.

      Earlier this year AMZN launched the Kindle Fire. The Fire's main strength is its price tag. At $199 it is $300 cheaper than the IPad. The 7" tablet is the perfect size for portability, without compromising the viewing experience. An argument can be made that the IPad is more feature rich. However, a tablet computer’s most efficient use is viewing media. With this in mind the Kindle Fire provides a cheaper alternative to an IPad, while providing the same amount of value.

     While being more cost efficient, reviewers are reporting initial bugs in the user experience. Fortunately for AMZN, almost all of them are software related. Software related issues are easily fixed through a device update and apply to early adopters, as well as new owners. The one hardware complaint mentioned was the lack of a home button. At first this may seem like a hardware issue, however it could easily be fixed by placing a home button on the touch screen via a software update.

     As Amazon updates the Kindle Fire’s platform, it will quickly spread through the market place. Amazon Prime allows its members to not only watch movies, but read books as well. Thus, AMZN has completely cornered the mobile media market. Their competition is Apple TV, which relies on third party vendors (such as Netflix) to supply their content. AMZN has the advantage of distributing its content in one package.

     AMZN is much more attractive when put in prospective of the economic environment.  In the down economy holiday shoppers will be looking for bargains. Amazon.com gives them the opportunity to buy books, movies, and video games at a discount. None of these items lose any value pre-owned. They just need to be viewable. The increase in bargain will draw tablet buyers to the Fire, increasing the subscriptions to the Prime service.

     Early surveys of Thanksgiving shopping activity by Channel Advisor, showed a traffic increase of 27% on Thanksgiving Day. SeekingAlpha's market currents reports:

     Here's an encouraging early piece of holiday shopping news: IBM's Coremetrics retail data indicates online Thanksgiving sales were up 39% Y/Y, as consumers scooped up major electronics and apparel promotions. It's added that the share of consumers using a mobile device to make a purchase rose to 11.09%, from 4.25% in the year-ago period. (comScore forecast)


     Further, entrepreneurs will take advantage of Amazon's Marketplace to sell items to bargain hunters. Amazon has effectively produced an its own economy. By allowing people to sell used books (and pretty much everything else) on the site, they encourage more purchasing. The consumer knows he will be able to sell the book when he is finished. Amazon gets a commission on every repeat sale of this book. Amazon is essentially doing what the CBOE does with options, acting as the middle man, encouraging constant trading, and increasing liquidity in the market place.

     Holiday shopping will be dominated by online retailers this season, as consumers look for the best deal, to save fuel, and take advantage of the options online shopping provides. Though it has some initial bugs, the Kindle Fire provides a competitive alternative to the IPad. As the platform evolves it will eclipse it, due to the leverage AMZN's business model provides.  Amazon.com is the next revolutionary company. It is far superior to the typical brick and mortar retailers (WMT and TGT), because it allows the individual to profit with business. It acts as a market maker for used books; buying them back from the user. Amazon is at the forefront of creating a more efficient economy, much to the chagrin of the competition.

     



    Disclosure: I am long AMZN.
    Nov 25 5:22 PM | Link | Comment!
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  • I hope $AMZN 's event has a new version of the black and white kindle. Most underrated product.
    Jun 5, 2014
  • $AMZN Oh the poor publishers. It's like lamp oil salesmen suing con edison.
    Jun 3, 2014
  • $EKSO reminds me of the Elysium suit.
    May 4, 2014
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