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Where should Amazon place its strategic bet wrt Kindle technology in consideration ofA new and highly fragmented industry where it is unclear whether winner will be in device, software, content, or all threeIncreasing pressure from a competitor known for redefining industriesRecommendations
PeopleExperienced executives with clear visionAttracts talented workersProcessStandardized Interfaces1-ClickTechnologyRecommendationsCloud and EC2 Services
Amazon accounted for 19.5% of online shopping in 2008, equaling $19.2 billion and 53.4% of mass market online retail, servicing 56.6 million unique monthly visitors (Mintel May 2009 Online Shopping Report)What does Amazon make money from?Traditional e-commerceeBook salesCloud computing and EC2 on demand computing powerPredictive technology – recommendation engineEase of use through streamlined processes – OneClickFinancial incentives for customer loyalty using credit cards, coupons, advertisingOperational solutions provider – warehousing, shipping, order processing
Currently, Amazon is vertically integratedNeed to move toward core competencies as key players enter the market
Network Effects drive customer interest and developer lock-inSelf-selection of new markets is possible with new system developer kit (SDK)SDK is in alignment with Customer-Centric corporate missionPotential to identify unexplored uses for Kindle like:MedicalEducationCorporate
Famous authors sign with eBook platformsStephan King (Amazon exclusively)
In eBooks, competition exists within and among hardware, software, and content providers…<br />Where should Amazon focus its energy and resources?<br />Storage and Standards<br />Kindle Application Software Development Kits<br />Capturing Value with Authors<br /> Search<br />Executive Summary<br />
Stack + Vulnerabilities<br /> Search<br />Stack & Vulnerabilities<br />Kindle secured first-mover advantage for Amazon, building on storage core capability. However, because of new entrants, it’s current position in each layer is threatened<br />User<br />Book Stack<br />eBook Delivery Stack<br />SDK/<br />Apps<br />Delivery<br />Device<br />Publisher<br />Content<br />Delivery<br />OS<br />Editor<br />Telecom<br />Author<br />Storage<br />
Search<br />Own The Storage Layer<br />Stack + Vulnerabilities<br />With uncertainty at the top of the stack, being positioned at the bottom enables greater value creation<br />SDK/<br />Apps<br />eBook Delivery Stack<br />Establish the Storage Layer standard<br />Create options value through file extension standards (ePub, .amz)<br />Predicted Outcome<br />Architectural Control Point captures value from upper layers of the stack<br />High quality options value at device layer<br />Maintains strategic price point<br />Device<br />Content<br />Delivery<br />OS<br />Telecom<br />Storage<br />
Search<br />Developers Will Help Drive Growth <br />Stack + Vulnerabilities<br />Using developers to help drive organic growth will enable Amazon to quickly and efficiently identify new markets to place new strategic bets<br />Applications<br />Popular Apps<br />
Search<br />How Organic Growth Occurs<br />Stack + Vulnerabilities<br />Once the most popular applications have been identified, network effects will begin to take shape and bringing in new users and web developers<br />Applications<br />Popular Apps<br />
Search<br />Pursue Relationships with Authors<br />Stack + Vulnerabilities<br />Authors have traditionally been at the mercy of the publishers. However, with the new eBook model, they have a choice – one that is more profitable and efficient for Amazon and authors<br />Amazon has taken control of the storage layer, captured value at the device level and now can explore backward-integration opportunities<br />User<br />Traditional Model<br />eBook Model<br />Delivery<br />Publisher<br />Editor<br />Authors<br />
Search<br />Balanced Scorecard<br />Stack + Vulnerabilities<br />The balanced scorecard approach to measuring success will ensure that Amazon is tracking the correct metrics to meet and exceed its strategic goals<br />
Amazon is well positioned to define and take advantage of the evolving marketplace by:<br />Controlling the storage layer of emerging eBook stack<br />Relying on developer platform to lead market development and innovation<br />Use industry leadership position to pursue direct relationships with authors<br />Stack + Vulnerabilities<br /> Search<br />Conclusion<br />