Outside Innovation

Why Amazon Is the Company to Watch in 2013

While everyone else seems obsessed with Google and Facebook and Apple, I’m more interested in Amazon right now. I believe that, with the advent of the Amazon smartphone that’s expected mid-year, we’ll experience Amazon in a more Apple-like way. Instead of Amazon as our go-to online retailer, we’ll see Amazon as our everyday companion.

• We’ll come to expect the ability to stop reading mid-page on a tablet and pick up where we left off on our phone.

• We’ll download and watch free Amazon Prime TV shows and movies on many devices in our household, moving from device to device without missing a scene.

• We’ll check prices from our phones when we’re in stores to make sure we aren’t paying a premium over what Amazon would charge.

• We’ll continue to benefit from subsidized shipping for many of our purchases.

• We’ll be able to use Amazon One-Click^® at the point of sale in stores.

• We’ll be able to select easily among any of our stored payment types when shopping from our phones (online or at point of sale).

• We’ll be able to buy and maintain our mobile apps, music, videos, books, magazines, and newspapers in Amazon’s cloud, so we always have what we want on our devices, and we can always retrieve anything we once bought or enjoyed.

• Instead of annoying ads on our mobile phones that are triggered by our phone’s location and some algorithmic guess about what we might want to do next, we’ll only see offers when we ask for them, and they will be based on deep knowledge of what we actually care about.

• And, if we want to start a new business, publish a book, create a new album, produce a video series, develop a new mobile app, or design a game, we’ll seriously consider using Amazon’s cross-platform infrastructure offerings and cloud services.

Here's my latest analysis:

Amazon’s Next Moves

It’s a Customer Ecosystem Poised to Become an Increasingly Important Part of Our Lives

Amazon is as important as Apple, Google, and Facebook in transforming how we get things done. In 2013, as Amazon introduces its own phones, you’ll have Amazon ease at your fingertips, not just for buying things and comparison shopping, but also to manage much of your life, including all of your digital assets. Moreover, Amazon’s customer-controllable recommendations will challenge Google and Facebook’s ads for relevance. Read more...

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How (Not) to Raise Prices

Over the past month, three well-loved brands in the digital entertainment business have created a flurry of negative buzz about recent price hikes. Netflix changed its subscription pricing models, resulting in higher monthly rates for many long-time subscribers. Apple changed the commission structure for “in-app” media purchases, causing many publishers and online retailers to remove the “purchase more books/movies/TV shows now” links from their apps. Among the media suppliers impacted by Apple’s move was Amazon. One of the benefits of using the Amazon Kindle app on a variety of mobile platforms is that you can buy more books quickly and easily and download them immediately. Now Apple has made that harder to do on the iPhone and iPad.

One thing that customers love about Netflix, Apple, and Amazon is the ability to consume digital content quickly and easily. All three companies make their “stores” and their players/readers available on multiple devices. Apple’s iTunes is available from both PC and Mac, and you can play music and media you purchase from iTunes on non-Apple devices. Netflix lets you stream and play movies on over 200 Internet-connected devices. Amazon’s Kindle reader runs on iPhone, iPad, Mac, Windows PC, Windows Phone 7, Android, or Blackberry. Both Amazon and Apple have made an art form out of impulse purchases—particularly of digital content. The reason sales of digital goods have soared is that they are easy and convenient to purchase on a whim. Netflix makes the digital subscription model work by providing “all you can watch” plans at affordable prices.

Both Netflix and Apple have made pricing changes that have adversely impacted customers (in Netflix’s case) and partners (in Apple’s case). But our take is that Netflix’s price hike will damage its customer loyalty less than Apple’s in-app commission structure. Here’s why.

Why Amazon Opened an Android Appstore

Amazon sells digital goods. Lots of them: E-books, audio books, instant movies, online games, software, and now mobile apps. The digital goods that fly off the virtual shelves the most are those that can be easily purchased from the platform on which you consume those goods.

The Kindle was the first e-book reader to make it so ridiculously easy to buy and download digital books that the uptake was huge. Most readers who developed the Kindle habit increased their book purchasing metabolism by 2x to 5x. You don’t have to think about it. You’re reading something you like, and you just buy another book (or books) by the same author. In my case, I find prolific authors and I buy their entire works and read them in order. (I recommend Anne Rivers Siddons—an amazing writer and a satisfyingly prolific one!)

E-Books Sales Are Soaring. Spurred by the popularity of iPads, Kindles, and other e-book readers as holiday gifts, e-book sales (across all publishers and platforms) increased by 116% in January 2011 to $70 million. During the same month, adult paperback book sales dropped by 20%, and adult mass market paperback book sales dropped by 31%.

Crowdsourcing: Amazon’s Kindle Commercial Contest

Once again, Amazon is running a “Design your own Kindle Commercial” contest. The deadline to submit a single video with original soundtrack and footage is August 29th. You have to be a resident of the U.S. to enter this contest. The winner will receive a $15,000 Amazon gift card and the four runners up $2,500 gift cards. These kinds of contests seem to provide great opportunities for under-recognized professionals to strut their stuff, although I’m sure that the submissions include a lot of good amateur ones as well. Last year's submission helped the careers of the winning producer-director team, the team who wrote and recorded the music, and the team who did the actual video.

Here's the winning submission from last year's contest:

 

Last year’s winners, Angela Kohler and Ithyle Griffiths produced and directed the winning video, using a stop motion video approach that won them not only the first prize, but the opportunity to produce two more videos for Amazon.

How Amazon Could Keep Our eBook Business, Even If We Switch to the Apple iPad

By Patty Seybold (and Clients & Colleagues)

 
It’s not often that we’re faced with the dilemma of choosing between two exceptional customer experiences. The advent of Apple’s iPad poses that dilemma for me. I’m almost certain that once I start using Apple’s iPad, I will use my Amazon Kindle less and less. And that means that my impulse buying, not just of digital books, magazines, and newspapers, but also of digital music, movies, TV shows, and games will move to Apple. Why? Because the iPad is seductive. It embodies the incredible Apple “i-”user experience and I’ll be able to enjoy crisp black and white reading, brilliant color reading, and interact with my content, my friends and colleagues, and the world while relaxing in my favorite leather armchair or lying in my hammock.

This troubles me. I am seduced by the iPhone, but I’m still in love with the Amazon customer experience. Amazon has made my life easy since 1994. I entrust most of my purchases to Amazon. They rarely let me down. I’ve had great customer experiences. I act on many of the recommendations they give me because they know what I love.

Seeking Advice When Torn between Two Loves

So, this week, I sent out an SOS to my family, friends, and my smartest customers—Patty’s Pioneers and Patty’s Visionaries—the people who are my role models—the lead users who break new ground in customer experience and business innovation. I asked them for advice: Advice for me and advice for Amazon. Here are a few of the things they recommended for me, for other loyal Amazon customers, and for Jeff Bezos at Amazon to consider:

According to my clients, Amazon should:

1. Make it easy to buy digital goods FOR all platforms FROM all platforms.

2. Sell easily portable content

3. Provide the best digital library and back-up services

4. Continue to offer the Kindle Reader software across all devices

5. Support color and better graphics on its e-Readers

6. Sponsor an Open Source e-reader platform

7. Embrace ePub and other E-Book formats that are publishers’ standards

8. Provide competitive commissions; but compete on price