Competitive Strategy of Amazon's Kindle Fire

This report provides insights into the competitive strategy of Amazon's Kindle Fire device, including a summary of the case study, business strategy analysis, and SWOT analysis.

Running head: MANAGEMENT
Competitive Strategy
Name of the Student:
Name of the University:
Author Note:

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Executive Summary:
The aim of the report is to provide an insight into competitive strategy of the Kindle Fire device
of Amazon. The report commences with the summarization of the case study. Amazon’s Kindle
Fire initially faced troubled in sales and faced immense competition from Apple iPad. The report
discusses how the introduction of tablet increased the sales of the e book. The report also put
forward a discussion on the business strategy of Amazon along with providing a SWOT analysis.

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Table of Contents
Introduction:....................................................................................................................................3
Summary of the Case:......................................................................................................................3
Identification of the Strategic Issues................................................................................................5
Business Strategy of Amazon..........................................................................................................6
SWOT..............................................................................................................................................8
Conclusion:......................................................................................................................................8
References:......................................................................................................................................9

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Introduction:
The report aims at providing an overview into the competitive strategy of Amazon’s
Kindle Fire device. Amazon has been the world’s most renowned multinational company
headquartered in Seattle. In the year 1999, Amazon accomplished its founding mission of
becoming one of the largest online bookstores (aboutamazon.com 2019). The company also
ventured into e-commerce, digital streaming, cloud computing and the artificial intelligence.
Kindle Fire of Amazon has initially faced troubled with its sales. However, in a matter close to
three months, the sales figures of Kindle portrayed that it captured closer to half the share of non
Apple tablet market. Besides, it was also found that the worldwide sales of the e-books grew
from lesser than 1 percent to close to 15 percent after the introduction of Kindle. The report
commenced with a short summary of the case along with an identification of strategic issues. The
report primarily concentrated on the business level strategy with a focus on the general,
corporate and the functional strategy. The report also provided an insight to the SWOT analysis
followed by a conclusion.
Summary of the Case:
The case here concentrates on the introduction of Amazon Kindle Fire device in January
2012 that helped in capturing more than half the market share of the non Apple tablet makers
(Kristensen et al. 2017). The new products from Amazon have also enhanced the sale of the e-
books to about 15 percent in the year 2012. Nevertheless, the CEO of the company had to refine
the business strategy of Kindle Fire after the introduction of third generation of the iPad into the
market. The position of Kindle Fire was also threatened by the introduction of the newer entrants
like Samsung, Google and Motorola into the tablet market. The market share of Kindle Fire was

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captured was also captured by an identical device known as the Nook (Wischenbart 2013).
According to Jeff Bezos, Kindle Fire has been the key to the future of Amazon in hardware
space. It has also been found that the stock of Amazon dropped by US$40 post the launch of
Kindle Fire.
Bezos wrestled with the various issues related to the strategy of Kindle Fire. The main
concern was positioning the device in response to newer entrants into tablet market. There was
also the concern of finding the most suitable target market for Kindle Fire and how it would
remain positioned against the competing products (Azim and Hassan 2013). Amazon was solely
concerned with turning sales success of Kindle into the business success.
Amazon also rolled a platform for a Simple Storage Service (S3) and Elastic Compute
Cloud (EC2). Besides, Amazon Web Services initially made up to only 3 percent which is
expected to triple in following years. The focus of the internal technology for development has
resulted in the significant benefit of the customers. The popularity of the Amazon Prime also
helped in building a customer base that motivated the customers in shopping at the Amazon.com.
Through the marketplace partners Amazon planned in offering the long tail offerings while
lowering the overhead. In absence of the technological advancements customers would not have
embraced Amazon as the way it is.
Amazon since the founding possessed a stronger history of investing in the emerging
years of opportunity ahead of the profitability and revenue (Stone 2013). Besides, the company
took closer to six years in becoming profitable primarily due to its commitment to innovation.
This commitment towards innovation drove Bezos in finding the hardware development group of

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Lab126 that led to the development of the future of the e-commerce and the one of the first
successful e-reader known as Kindle Fire.
Identification of the Strategic Issues
Amazon’s Kindle Fire Device remained available a price of $ 199 and lacked many of the
feature put forward by the iPad of Apple and thus resulted in mixed response (Ritala, Golnam
and Wegmann 2014). There was a strong consensus amongst the market observers of Apple that
it should not consider Kindle Fire as its threat and thereby continue in making powerful tablets.
The Kindle Fire device did have any camera or microphone and has been available with
limited memory capacity (Blake and Berger 2013). In fact it was a smaller app pool that did not
have mobile broadband. This led the majority of the market observers in reckoning the fact that
Kindle Fire did not have the capabilities of slaying the giant. It is this type of thinking that makes
the higher performing companies like Apple vulnerable to the potential threats posed by the
disruptive innovation of the competitors.
Disruption occurs based on two given criteria. The first criteria are that the incumbents
move up market in the profitable segments thereby ignoring the lower end competitors to the
bottom of market (Rollins and Calabrese 2016). The second criteria are that a lower end
competitor introduces product with business advantage or scalable technology at the core which
has the potential of displacing the incumbent.
Thus, it can be said that Kindle Fire of Amazon is a lower end competitor to iPad
(Celestine 2011). However, Amazon’s device has a scalable technology at the core and ensures
an extensive use of Cloud. This aspect however lacks in Apple. This is the reason why Amazon

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is able to get away with only 8 GB memory device. Besides, Kindle Fire also has a business
model advantage and uses content for subsidizing hardware.
Business Strategy of Amazon
The corporate strategy of Amazon is described as the concentric diversification
(Bharadwaj et al. 2013). This strategy depends on the leveraging of the technological capabilities
for the success for the success of the business which is followed by strategy of cost leadership
aimed towards offering maximum value to customers at lowest price while wrapping the
business around customers. Amazon is found to act as the go to portal for meeting the needs of
the online shopping.
The strategy went well as Amazon can be viewed as one of the largest online retailer that
has been a consistent leader in market segments where it operated (Mithas, Tafti and Mitchell,
2013). Having said this, it must be taken into account that the cost leadership might follow law
of the diminishing returns where the firms following it are unable in sustaining growth or
increasing profitability.
Nevertheless, the generic business strategy of Amazon might be explained with help of
the Ansoff Matrix described in the following figure. Amazon remains placed in the quadrant of
the overall cost leadership and the constant focus on the costs acts as the key towards
understanding the overall strategy. The particular measures undertaken by Amazon in this
particular pursuit included steeper discounts for the regular members through Amazon Prime
program thereby ensuring even and timely express delivery by waiving the shipping charges
thereby passing the benefits of avoidance of the state taxes on the consumers through further

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lowering the prices. Thus, the overall strategy depends on making the customer experience
smooth and seamless as possible.
Figure 1: Ansoff Matrix of Amazon
Source: (Mohapatra 2013)
Besides, the business strategy of Amazon is also driven by the sources of the competitive
advantage where the focus remains on the technology thereby actualizing benefits of the
economies of the scale along with the leveraging of the efficiencies from synergies between
external and the internal sources that has acted as the cornerstone of business model. Amazon
has also used the Big Data Analytics as the tool for mapping the consumer behavior.
Nevertheless, the overall cost leadership of Amazon with almost no product differentiation
meant that the business model was copied by the competitors. Besides, the focus on the cost
reduction at expense of the product differentiation meant that these products have been available

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in other portal and hence there existed no product line that remained unique or exclusive to it.
Amazon does not stock the products that appeals to immediate gratification. Mostly, the
consumers are seen to make impulsive choices.
It is also to be noted that the functional strategy of Amazon is built across convenience
aspect where consumers does not require visiting the store physically. They can place their order
online and receive the order on the same day (Budzinski and Köhler 2015). The focus on non-
retail product lines like the cloud based services implies that Amazon is addressing issues of
differentiation and had overreliance on the cost leadership.
In this context, it can be said that the business strategy of the Kindle Fire device has been
designed for bringing the consumers closer to everything that support the sales of Amazon (Varia
and Mathew 2014). Thus, pre-loading Kindle Fire paves the way of permeation and stimulation
of connections between the marketers, consumers, content providers, services and goods in all
corners of the $65 million annual sales. The business strategy of Kindle Fire clearly helps in
protecting the media sales that generates over 30 percent of the revenue of Amazon. This helps
in bolstering the revenues of Amazon against the recessionary hits although the e-retailing of
Amazon has been on growth trajectory that appeared to be increasingly insulated from the
economic pressures compared to the brick-and- motor retailers.
SWOT
Strength: Amazon Kindle Fire is the first in the industry that makes an e-reader. The
price of the Kindle Fire device remains attractive to the people who are not able to afford
Samsung Galaxy tablet or the iPad.

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Weakness: In order to protect the ecosystem, Amazon is making it difficult for the
consumers to view the purchased book outside. The approach followed in targeting the avid
readers with the Kindle Fire device narrowed the positioning strategy since the consumers
perceived Kindle as the tablet for the book lovers.
Opportunities: Amazon partners with the school so that the students are able to use the
table as the primary text book.
Threat: Apple seems to be not only their biggest threat but competitor having the first
mover advantages.
Conclusion:
On a concluding note, it can be said that the future looks brighter for Amazon. Provided
the company focuses on the core competencies along with the expansion of the international
value chain then there exists no reason as to why Amazon cannot maintain the market leadership.
Amazon though faced a tough competition from Apple in launching its Kindle Fire device as
Apple kept betting that the Kindle Fire was not good enough. Jeff Bezos however wondered that
it would be difficult for the Kindle Fire to survive amongst such tough competitors. Besides,
Amazon also remained exposed to the demanding product cycles and fickled based on the whims
of the technology customers. However, it can be mentioned from the report that Kindle Fire was
not only well positioned for signaling to the investors regarding the futuristic growth prospects of
the Amazon business.

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References:
aboutamazon.com 2019. [online] Available at: https://www.aboutamazon.com/ [ accessed 26
May, 2019]
Azim, R. and Hassan, A., 2013. Impact analysis of wireless and mobile technology on business
management strategies. Journal of Information and Knowledge Management, 2(2), pp.141-150.
Bharadwaj, A., El Sawy, O.A., Pavlou, P.A. and Venkatraman, N., 2013. Digital business
strategy: toward a next generation of insights. MIS quarterly, pp.471-482.
Blake, L.J. and Berger, K.A., 2013. Amazon Kindle Fire Claims an Important Market
Position. Journal of Case Studies, 31(2), pp.91-97.
Budzinski, O. and Köhler, K.H., 2015. Is Amazon The Next Google?. ORDO, 66(1), pp.263-288.
Celestine, 2011. Amazon's Kindle Fire Vs Apple's iPad: How dramatically different the two
companies are! [online] Available at:
https://economictimes.indiatimes.com/tech/hardware/amazons-kindle-fire-vs-apples-ipad-how-
dramatically-different-the-two-companies-are/articleshow/10198179.cms?from=mdr [Accessed
28 May 2019].
Kristensen, M., Penner, J., Nguyen, A., Moy, J. and Lam, S., 2017. Company Synopsis for:
Amazon. com, Inc.
Mithas, S., Tafti, A. and Mitchell, W., 2013. How a firm's competitive environment and digital
strategic posture influence digital business strategy. MIS quarterly, pp.511-536.

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Mohapatra, S., 2013. E-commerce Strategy. In E-Commerce Strategy (pp. 155-171). Springer,
Boston, MA.
Ritala, P., Golnam, A. and Wegmann, A., 2014. Coopetition-based business models: The case of
Amazon. com. Industrial Marketing Management, 43(2), pp.236-249.
Rollins, T. and Calabrese, A., 2016. Amazon. com. In Global Media Giants (pp. 427-441).
Routledge.
Stone, B., 2013. The everything store: Jeff Bezos and the age of Amazon. Random House.
Varia, J. and Mathew, S., 2014. Overview of amazon web services. Amazon Web Services, pp.1-
22.
Wischenbart, R., 2013. The global eBook market: current conditions & future projections. "
O'Reilly Media, Inc.".