The amazonian spider web strategy

6

October

2019

5/5 (2)

Last week, Amazon has introduced an astonishing amount of new hardware onto the market, further expanding the amazon IoT ecosystem. For instance, the speech assistant Alexa is now available on a speaker with a screen (Echo Show 8), on a pair of glasses (Echo frames), on wireless headphones (Echo buds), in a microwave (Amazon Smart Oven) and even as a finger ring (Echo loop). Moreover, Amazon has launched an Alexa-enabled light (Echo glow), home cameras which can be integrated with a doorbell (ring cam) and a dog tag (Ring fetch) (Perez, 2019).The Echo frames and the Echo loop will initially only be launched on the market in small quantities. “If the customers love them, we will increase the use and build even more,” says a blog entry of the company (Amazon, 2019). However, Amazon’s product trials are more than just a taste test. The company has more or less invented the market for language assistants and is now seeking to retain power and occupy much of the market.

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Amazon Ring Fetch

 

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Amazon smart oven 

Currently, the language assistant is a type of remote control to a convenient way to play music, see the weather or set the alarm, but the customer benefit of Alexa has been very limited so far. And looking at the price for the newly launched devices also reveals that Amazon is not looking to directly generate revenue from hardware sales. In fact, Amazon is a shopping platform and the hardware is a means to drive sales on the website. The devices with voice control are something like the entrance door to the supermarket, the department store and the specialist shop in one. Amazon wants to dominate distribution. The only crucial question is: Why isn’t voice shopping working properly yet? And what can Amazon do to change this? The numerous new products suggest that Amazon itself has no answer to this question.

So why is Amazon implementing a costly experiment which might not even yield the expected outcome? The answer lies within the data about customer spending habits that Amazon is will be able to collect and analyze. In order to optimize marketing in the future, it is key to offer products and service timely, contextually, conveniently and easy to consume. Ultimately, smart devices will allow the firm to integrate seemlessly into people’s everyday lives and habits. Interestingly, Amazon emphasised that customers can delete individual records and will provide a function for Alexa devices that will automatically delete records after three or 18 months. (Holzki, 2019). If orders remain absent, it might also be due to the fact that the ring is not exactly a piece of jewellery. Only true evangelists of the amazon ecosystem might be willing to put the chunky piece of plastic to their finger. However, the company’s proven strategy is to try it out, experiment to see what works – and then invest in developing the right products.

What do you think about Amazon’s aggressive strategy in the home device market and will the firm be able to generate a competitive advantage over Google’s Nest and Apple’s Home Pod by flooding the market with new products? Are you an early adopter of innovative beta products or do you prefer to wait until the devices have matured?

 

Amazon (2019) Retrived from: https://blog.aboutamazon.com/devices/amazon-devices-event-september-2019

Holzki, L. (2019, September 26th) Hauptsache es spricht, warum Alexa noch kein Geschäftsmodell ist. Handelblatt. Retrived from: https://www.handelsblatt.com/meinung/kommentare/kommentar-hauptsache-es-spricht-warum-alexa-noch-kein-geschaeft-ist/25055992.html
Perez, S. (2019, September 26th) Everything Amazon announced at its Alexa event. TechCrunch. Retrived from: https://techcrunch.com/2019/09/25/everything-amazon-announced-at-its-alexa-event-today/

 

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Your favourite magazines just got cheaper

15

September

2019

5/5 (5)

Remember the last time you picked up a printed magazine from a newsstand? Three months ago, when I forgot to bring my headphones on a long train ride, I decided to purchase a good old magazine to kill some time. Upon making my way into the newsstand in the train station, I was facing hundreds of options to choose from. Whatever you are interested in, may it be sports and fitness, business or law, motor vehicles, travelling, interior design or cooking, art and fashion, philosophy or psychology, cross-words or knitting, you will find a magazine about it. I ended up with three different journals at a total of €25, because I was interested in a few articles in each of the journals. And after I finished reading the exciting parts, I disposed of the magazines.
Clearly, several inconveniences make the traditional magazine an unattractive choice for consumers in the digital age. First of all, magazines outdate very fast, they come in unhandy shapes and size, are not environmentally friendly and consist of advertisement by half. Second of all, you are probably interested in reading only one interview or article, and specialised journals can be very pricy. In general, consumers can buy, access and consume content in three different way. The first one is the traditional way of shopping at a newsstand (and buying impulsively). The second and more cost-efficient way is paying for an annual subscription to receive the latest issue every month via mail. Lately, most magazines offer an online subscription with access to web content, often combined with a mobile app. Consider the example of the “Wall Street Journal”, where a subscription, including home delivery of the printed version and access to the web content, mobile and tablet apps, will cost you more than 270€ annually (Wall Street Journal).

Sweden-based start-up Readly discovered the opportunity to bundle customer value in 2013 and is now offering a monthly subscription at a flat fee of €9,99 with access to more than 4.000 titles. And customer seem to appreciate the platform business model approach, as “the app’s revenue grew by 54% just last year – from €12 million to €19 million” (Loritz, 2019) In terms of cost structure, Readly is paying out up to 50% of subscription fees to publishers, depending on the time consumers spent reading their magazines. Additionally, Readly attracts publishers to the platform by sharing user behaviour data, to let publishers obtain additional earnings from ads. With total revenue growth of 723%, the Financial Times ranked Readly among “Europe’s Top 200 fastest growing start-ups” (Smith, 2019). While the global magazine industry accounts for a €70 million market volume, only 6,5% is consumed digitally (Loritz, 2019). Despite Readly’s considerable success and the large bundle offered, the start-up is now challenged by Apple.

With personalised suggestions featuring a human-curated news enhanced by live pictures, Apple is aiming to innovate mobile reading experience with Apple News +. This initiative is building on the Apple News app, introduced in 2015 which included mostly add-driven content, focusing on the daily news. Since March 2019, U.S. customers with IOS and OS operating systems have access to more than 300 titles at a flat fee of $9,99 (Goode, 2019). In contrast to Readly, Apple emphasises user data privacy, cutting ad revenue of publishers to a bare minimum.
While Apple is expanding its service environment, it is also threatening the publishing industry. Media conglomerates that offer their portfolio on Apple News +, risk cannibalization of their current subscriber base. Nevertheless, it is also an opportunity to attain new customer segments in a digital environment and gain an edge over competing magazines (Lee, 2019).

How do you consume the news? Would you rather subscribe to Readly or Apple New+, or do you prefer to get off the screen for once and read a printed magazine?

 

Goode, L. (2019) Apple Launches Apple News+ Paid Subscription Service. Wired. Retrieved from: https://www.wired.com/story/apple-launches-apple-news-plus-news-subscription-service/

Lee, Edmund (2019) Media Companies Take a Big Gamble on Apple. New York Times. https://www.nytimes.com/2019/04/02/business/media/media-companies-take-a-big-gamble-on-apple.html

Loritz, M. (2019) The digital transformation of the magazine industry: Interview with Readly CEO Maria Hedengren. EU-Startups. Retrieved from : https://www.eu-startups.com/2019/07/the-digital-transformation-of-the-magazine-industry-interview-with-readly-ceo-maria-hedengren/

Smith, I. (2019) The FT 1000: third annual list of Europe’s fastest-growing companies. Financial Times. Retrieved from: https://www.ft.com/content/238174d2-3139-11e9-8744-e7016697f225

Wall Street Journal https://store.wsj.com/shop/US/US/wsjusafm0519/?inttrackingCode=aaqul1tm&icid=WSJ_ON_PHP_ACQ_NA&n2IKsaD9=n2IKsaD9&Pg9aWOPT=Pg9aWOPT&Cp5dKJWb=Cp5dKJWb&APCc9OU1=APCc9OU1

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