Amazon Learns Lessons From Kindle Fire Fail

| About:, Inc. (AMZN)
This article is now exclusive for PRO subscribers. (NASDAQ:AMZN) is a company that learns from its mistakes, and we can all learn lessons from its reaction to them. The Kindle Fire was introduced in the fall and was obsolete by the winter. It was priced near cost and sold well at Christmas, but the follow-on was not good. And the reviews were horrendous.

As a device company, the effort had fail written all over it. And Amazon has taken that lesson to heart, in three ways:

  • You have to refresh the product more often.
  • You can't just have a product, but a product line.
  • Channels matter.

A Staples (NASDAQ:SPLS) executive is expecting "five or six" new products for this fall. Note where the leak comes from - someone in the channel. SlashGear thinks this may mean just two products, a 7-inch and a 10-inch tablet, each with three different levels of memory.

One size does not fit all. You need to refresh more than once a year. You need channel partners to succeed. And one more lesson.

Content matters. Amazon is combining two English companies it bought recently into one larger entity, and deliberately announcing the combination in the run-up to the London Olympics, so it will get maximum exposure. Lovefilm had been a movie subscription service, Pushbutton an interface company, but now both will work on the larger question of digital interfaces for a range of devices, from TVs down to game machines.

In other words, they're not relying entirely on Android, either.

Taken together, we see a company that is serious about end-user devices, that knows it has a lot of work to do in order to gain share there, and that is willing to do that work. If the second quarter's results cause the substantial sell-off I expect, I'll be looking to get back into AMZN.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.