Amazon: Value Pricing on Fire
Amazon updated its Kindle e-reader and tablet products yesterday. So what, right?
Well, I think there are a few nuggets for the legal community. And maybe a bigger lesson for those who want to understand their “client community” and see what withering competition is being unleashed on the market on an ongoing basis.
Fortunately, Amazon CEO Jeff Bezos took the stage to introduce various product/service updates. And to teach us a thing or two.
Here is the man himself, in words and screenshots, courtesy of The Verge.
First Mr. Bezos starts with a wise assumption:
Then we have an observation about what customers really want:
Which he explains with a rhetorical question:
“Why? Because they’re gadgets, and people don’t want gadgets anymore. They want services that improve over time. They want services that improve every day, every week, and every month.”
Hmmmm. What started as something about technology is starting to get a little more interesting for the rest of us.
He goes on to say that the Kindle Fire is really a service (including e-books, movies, TV shows, Prime, etc). The actual non-gadget “gadget” is part of the service:
And to further prove the point, he shows the trend of sales on Amazon, in its post-Kindle phase of the last five years:
That last slide really boggles the mind, when you think about it. I’m sure you could invert it and plot the number of independent bookstores in the United States.
Mr. Bezos then builds up to the reveal of the new Kindle “PaperWhite” e-reader line:
If you look at this, you wonder how they can offer these products at those prices. Mr. Bezos is way ahead of you, as we’ll see in a bit.
Then Mr. Bezos reminds us that Amazon doesn’t just “invent” with products, but also with services:
And he then proceeds to give an example, and shows some of that innovation:
(Note: most relevant lawyers in 5 years will have at least one book on the Kindle platform).
Then Mr. Bezos goes through the new Kindle Fire HD line, and throws down the gauntlet with Apple and the other Anroid-based tablet makers with this price:
(Yes, it’s smaller, but remember many tablets on the market with similar memory are priced around $499.)
This makes Mr. Bezos pause to explain part of Amazon’s “secret” which turns out to be not so secret. Easy to say, but hard to do, for sure, though:
Which raises a question in our minds, which Mr. Bezos anticipates…
… and then promptly answers:
Marketing strategists refer to this as “CLV” as in “Customer Lifetime Value.” Amazon clearly wants people coming back for more. And they do.
So back to that $499 price we mentioned earlier. Amazon has decided to offer 4G LTE connectivity with a unit for $49.99 per year. Then we have the expected comparison slide with Apple:
(Apple will have something to say about this next month with a new smaller iPad, after next week revealing the iPhone 5).
Mr.Bezos then calls it a day with a final slide, sort of placing a stake in the ground. Hard.
I like that pose Mr. Bezos strikes after moving to the final slide in this “Deck of Doom.” It’s sort of like This:
“This is Amazon. Deal with it.”
Can lawyers and law firms be more like Amazon? Maybe a little, more on that next week.