Ben Wise on Branding

Watching the world through the lens of the brand

Amazon Devalues Their Brand

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After a lengthy battle with MacMillan, a big publisher, Amazon conceded to their demand to stop selling their e-book titles at the low price of $9.99. The specifics of their dispute are another matter, but the end result will surely hurt the brand of Amazon’s e-book reader, the Kindle.

From the consumer’s point of view, the reader is produced by Amazon and the book is produced by MacMillan. A classic fight between hardware and content. As has been seen in the past, the loser of the fight often becomes the producer of a commodity product while the winner can charge a price premium garnering high profits. Think of PCs – Microsoft was the big winner on content while the HP, Dell, IBM and others continue to duke it out over what has essentially become a commodity. By giving in to MacMillan, Amazon may have sent the Kindle down a similar path.

Will this happen to Amazon’s Kindle? There are arguments on both sides of the coin. Amazon not only produces and sells the hardware, but is the retailer of the content too. Even if the Kindle were to become a commodity product they would still benefit from increased adoption and sales of the e-books. While the Kindle brand would be diminished, Amazon would still benefit.

The second factor is the recent introduction of the iPad by Apple. Apple has maintained a differentiated computer/laptop product and could easily do so in the e-book space as well by leveraging their innovation capabilities. This could relegate the Kindle, along with all the other new e-book readers, to the commodity arena.

As proof of the diminished power of the Kindle brand, News Corp is already pushing for the same deal given to MacMillan. I’m sure they won’t be the last ones to do so.

What do you think? What does the future hold for the Kindle?

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Written by benwisebranding

February 4, 2010 at 4:49 pm

Posted in Uncategorized

Tagged with , , , ,

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