Amazon's Kindle Fire

Techcrunch put it plain simple: Amazon Just Won the Android Tablet Wars With Kindle Fire

The first thing that came to my mind when asked about the new Amazon tablet was: cheap. Its bloody cheap. I haven't compared it spec by spec with other tablets (we'll get hundreds of those reviews in a couple of days all around the web) but we have reached a point where hardware is a commodity, the key features are not in the hardware spec of these kind of devices (as Apple knows very well).

Amazon is offering us a new experience. Its not a product, its an experience. Of all my MBA professors and lessons, the ones I always liked the most were the Marketing ones by Fernando Botella, and he always underlined the importance of experience vs product. Apple is the leader in this, and Amazon follows closely behind.

What are you getting with the Kindle Fire? We are getting an experience, something that works perfectly out of the box with the whole environment to make the best of it in a matter of minutes, be it video, music or books/comics/magazines. We get:

• Access to the kindle bookstore (millions of books)
• Access to hundreds of full color magazines
• Access to 100.000 movies & TV shows
• Access to the Amazon App store, full of Android Apps & games
• Access to 17 million songs
• Free cloud storage

And...

Beautifully simple and easy to use (thats what they say)

You may say that with this or that android tablet you have access to an App store and books and whatever... but in the end, what you really want is something your 3year old kid can use because it's as simple as 1-2-3 and that gives you all in a single package. And for only $199!

The iPad Killer?

Is it the iPad-killer? No, of course not. And I don't think Amazon has designed the strategy around it to fight the iPad. Amazon is, at the moment, in a different war, the war that Techcrunch says they've won today.

Today the war was about Android tablets, and Amazon has simply cleared the way to attempt the assault on the iPad. Today Amazon has stated its intentions to Apple: "Hey Mr. Apple, I'm here, I have a good product with  all the power of my online store, cloud, services, etc... I've crushed the other Androids with a single blow and now I'll come for you". 

The rumor is that early 2012 there will be a new Kindle Fire with a bigger, ten inch, screen and prepared for the fight with the iPad. According to this rumor the current Kindle Fire will only be a first step that will get the wheel spinning around, getting speed for the "real" launch. Seems a reasonable strategy and I hope it is true because it will be good for all of us. Competition always is.

Telefónica's CDN, good or bad move?

Yesterday a couple of spanish newspapers decided to "attack" Telefónica:

• El País (In spanish, inside the article: Monetisation of this service puts in question network neutrality) 
• Público (In spanish, the header: Telefónica finds a way to make Facebook and Google pay [...for network usage]) 

  Both articles described a new "VIP" service telefónica had launched: a CDN. Yes, you read right, a CDN. Supposedly this breaks network neutrality...

  Hours later Enrique Dans made a good post on his blog, I hope the journalists read it.

  First of all, it is a pity that on two of Spain's main newspapers there are journalists writing on something they have no clue about, and what's worse, not consulting an expert before writing nonsense.

  But leaving aside journalists and editors incompetence in this matter, lets focus on the real deal and what has been bothering me for some time now: What will the role of the carrier be in the market, considering the path it is taking?

Too many mistakes: Managers and Directors don't seem to understand the market and their role in it

  I won't make friends with this but this is the true situation, and denying the truth doesn't make it disappear.

  We have transitioned from the walled gardens to the total openness of iPhones and Androids where the carrier has no control on what's happening in the handset. From a total control on the carrier side to becoming a mere spectator.

  During Summer 2008 Apple launched the App Store. It took Nokia 1 year to react. Telefonica will launch soon its own App store... 3 years after Apple... and this brings me back to my last post: Business thoughts: Competition vs Market Fragmentation

  Telefónica launched Keteke, its own social network, in November 2008. They spent about 10 million Euros. In august 2010 it was closed, a few weeks after Telefonica bought 85% of Tuenti, main spanish social network, for 72 million Euros. (We'll see what happens with Tuenti, got my own thoughts on that...)

  We know what happened with Lycos and Terra...

  And so on and so forth...

  We've been mentioning Telefónica but similar things are happening on other carriers.

The future: Back To Basics

  From time to time managers need to take two steps back, get out of the forest and see the real picture. We are in a moment in time where carriers need to get back to their true role (even if they don't like it or believe it is too unglamorous for them... I'd also like to be John Carmack, Tim Sweeney or Steve Jobs, but you can't always get what you want)

  These are the basics of a carrier:

•   Network Infrastructure
•   Voice + Data income 
•   Customer information and access

  ... and they have to focus on them and forget the rest because experience tells us they don't know how to do it.

  They have to use their network and put it in value. Doing things like launching the CDN Telefónica is launching is a smart move and it should be the first of many.

  Voice income is going down, data income is going up... work with that, analyse behavior, usage, look for deeply hidden patterns that will let you innovate with pricing, with service packaging... drive revenues up through more attractive pricing plans.

  Monetise all the knowledge you have on your costumers through targetted advertising, to establish JV with companies such as Groupon, etc.

  Take advantage of the trust your users have in your billing system, use your processing power, the ability to provide real-time information to your users and provide them with a state-of-the-art experience for mobile payments. Forget about controlling it, you are not a bank, you are not VISA, you're not even Paypal... join them, work with them... accept a smaller share of the pie but make that pie grow through synergies.

  And, finally, do 3 more things (that will make you win, in 5-10 years, a lot of money in many ways):

1.  Create a early-stage venture fund with 25 million euros every year that will allow you to invest 250K€ in 100 companies every year. 25 million euros is less than 0,25% of Telefónica's net profit in 2010... peanuts for them)
2.   Create a growth venture fund with 25 million euros every year that will allow you to invest 2.5 Million€ in 10 startups every year.
3.   Get a good team for those funds.  

  I only wish Alierta, Fdez-Valbuena, Pallete... read this...

Business thoughts: Competition vs Market Fragmentation

In the past couple of weeks we have been reading some of these news:

• HTC interested in buying its own mobile OS (and dropping Android?)
• Amazon's next tablet will be a blockbuster and a thought that follows is: How "open" will Kindle tablet be? 
• GameStop Confirms In-House Android Gaming Tablet (Gamestop is one of the biggest videogame stores worldwide)
• Telefónica, Vodafone y Orange irrumpirán en la mensajería instantánea este invierno (Telefonica, Orange and Vodafone will get into IM this winter... )

Some talk about companies getting into markets to compete... but others aren't about competition, they are about fragmentation... which is quite different.

You and I can compete in many things... you may decide to manufacture a car and if I decide to compete with you I could manufacture one too... users would be able to buy yours or mine, but they know that the fuel can be bought at the same place, that they use the same roads and streets, and that they can be parked in the same parking spaces.

Now imagine if your car and mine couldn't use the same fuel... and that there are 5 or 6 other people manufacturing cars that use different fuels too. And different streets... and... and... it would be a nightmare.

That is the difference between fragmentation and competition.

If you want to fragment a market you need to have all the cards ready to guarantee yourself enough market share to prevail. You can't fragment to keep a 5% market share because you'll be eaten quite fast.

Apple can decide to fragment a market but only because they create a great product and provide all the tools it needs to succeed: good software, application store, content store, etc. Amazon can do the same (and did with Kindle) but what will Gamestop offer to differentiate itself? Games? Sony has a "Playstation certified" tablet... but of course Sony owns the Playstation and the Playstation Network. Will GameStop prevail as a player in the tablet market? We'll see...

The 3 most important Spanish carriers want to enter into the IM arena... (I remember when in 2001 we had in Xfera/Yoigo a IM project, compatible with MSN Messenger and Yahoo Messenger) to compete with WhatsApp (and the messengers Apple and others will release). How much money are they investing to create the "mega IM platform"? How will they make us change from WhatsApp to their new IM? Are their offering innovative new features? Will it be centred on user experience or just a defensive movement? or a tantrum against the loss of income? We'll see...