Kindling Success

Addendum: RIP Steve Jobs – You are this generation’s greatest innovator

Amazon recently introduced a new version of its trendsetting Kindle electronic reader. While the original ignited change in how books reach audiences, the latest intends to disrupt the momentum of Apple’s iPad. Kindle Fire has a bigger – color – screen, a faster browser the company believes will be as smooth as its Silk name and stores everything in the cloud. Since iPad hit the market 18 months ago – having sold more than 30 million units – competitors appeared and vanished quickly.

HP announced six weeks ago it is discontinuing TouchPad after determining it mistakenly tried to compete with Apple’s 83 percent market share. So what makes Amazon think it will succeed where others failed? Amazon is upfront that it’s not taking aim directly at iPad. Kindle Fire is WiFi only with no 3G access. There is no camera, nor can you create and edit documents. You can’t place a voice call. What you can do is access Amazon’s extensive digital library. As CEO Jeff Bezos noted in unveiling Fire: “What we’ve done is really integrate seamlessly all of our media offerings – video, movies, TV, apps, games, magazines and so on.’

Most importantly, you can buy Kindle Fire for $199. The entry-level iPad is $500. Amazon is betting the digital content it sells will make up for the low price. That’s an advantage other Apple competitors aren’t able to utilize.

Anytime there is innovation, copycats follow. The key to not ending up in the product graveyard is to provide enough differentiation that consumers have a viable choice. As someone who purchased the original Kindle several years ago and has read many books on it, I’m glad to see Amazon take the next step in improving its device. Someday – in our lifetimes, I’m guessing – hard copies of books will be collector’s items and nothing more.


Does Competition Lower Prices?

Apple and its iconic leader Steve Jobs rank near the top of any list of great innovators. Dating back to the introduction of the Macintosh on Super Bowl Sunday 1984 – and the Orwellian ad directed by Ridley Scott – continuing through the iPod, iMac and now iPad… Apple keeps churning out the hits and changing industries.

After Amazon shook the publishing world with its Kindle electronic reader, most pundits felt it was a matter of time before Apple would introduce a better device. It took two years before last week’s announcement of a “truly magical product” that comes in full color, allows Internet access, works with all 140,000 Apps – and this is just version 1.0.

Of course, there’s a ‘dark side’ of any great story… and this one impacts consumers. Kindle pricing on new releases is $10 – a tremendous savings compared to buying the hardback; however, within days of the iPads’ introduction, Macmillan said it will increase e-book prices to $13-$15.

Amazon reacted by pulling Macmillan titles: “We have expressed our strong disagreement and the seriousness of our disagreement by temporarily ceasing the sale of all Macmillan titles. Ultimately, however, we will have to capitulate and accept Macmillan’s terms.”

So going forward, Macmillan will set prices and pay Amazon a 30 percent commission. Not surprisingly, that’s the agreement Apple made with major publishers. (And you thought all of the mystery and drama only happens inside the pages!)


Grass Is Always Greener

Last week I was facilitating the quarterly check-in meeting with one of my oil and gas client’s teams. These 55 energetic folks are responsible for delivering $120 million in revenue this year. As you might imagine, they are feeling some pressure to execute efficiently. One person began her comments by saying, “Everyone needs to understand our industry is changing quickly…” The only thing I remember about the rest of her statement is it appeared she was trying to justify some of the challenges they’ve faced thus far.

My guidance was to suggest they not fall back on a “we’re different than everybody else” crutch. I mentioned the airline commission cuts of 1995 – and ultimate elimination a few years later – and how one-third of travel agents evaporated from the industry.

I asked how many of them would like to be a printer right now. No one volunteered. Then I said, “Imagine you work at Amazon. You’re sitting on top of the world with Kindle…until Steve Jobs introduces iPad. How are you feeling today?”

Evolution. Commoditization. Overcapacity. There will always be something that jumps up and disrupts the smooth road you’re walking.

I was the co-owner of a sports travel company during the commission cuts. People across the industry were screaming for a class action lawsuit. We took a different approach – gathering our leaders and asking, “What now?” It took about a year for us to discover a better path. Today, that business – which I sold to my partner – is a two-time recipient of the “Best Travel Company in North America” award.

Of course, there was a class action lawsuit regarding the commission cuts. We eventually received a check for about $1,000. Good thing that wasn’t the change we counted on for success.