Maintaining Competitive Advantage in the E-Reader Industry

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Maintaining Competitive Advantage in the
E-reader Industry

Amazon’s competitive advantage in the e-reader industry due to their top selling ‘Kindle’ electronic reading device, still in its infancy, will be difficult for any rival in the industry to achieve. While electronics design and manfacturing are not Amazon’s core competency by any means, Amazon’s Kindle e-Reading device has beat out its biggest rival, electronics heavy-weight Sony, by an estimated 30% higher device sales in 2008. What’s more is that the Sony Reader has been available since 2006, while the Amazon Kindle (only available from amazon.com) just launched in late 2007 and was hugely popular from the start, selling out in the first 5 and ½ hours. Why does Amazon have the competitive advantage in the e-reader industry while Sony, whose e-reader design is sleeker, and hardware and firmware are superior, falls short of attracting the largest market share? Several reasons for Amazon’s top standing in the industry come to light when we apply the strategic models and analysis tools to the e-Reader industry, and Amazon’s Kindle. If we look further into the history of e-books and the emergence of the dedicated e-reader devices that support e-books, several interesting point emerge. First of all, e-reader devices initially appeared almost twenty years ago, in the early 1990’s (Sony’s “Bookman” was released in 1992). Even more suprisingly, the E-ink technology that e-book readers like the Sony Reader and the Kindle use, which tries to provide a more ink-on-paper-like experience, was first conceptualized in the 1970’s, and marketed in 1992. So why is it that we haven’t really heard about these devices until last year? It took the combination of a culture shift in our society, and the perfectly positioned company to begin to make e-books and e-reading devices popular and Amazon was just the company to recognize and take advantage of this unique strategic opportunity.

Amazon’s vision and core competencies are perfectly packaged into, and leveraged by the Kindle: You do not need a computer to get e-books onto the Kindle e-reader. You can virtually get books and other e-content, any time and anywhere, in less than sixty seconds. Anywhere that Sprint’s EVDO 3G cellular network covers, is a place where Kindle readers can browse the Amazon store, read book reviews, view book samples, and purchase with Amazon’s copyrighted “One-Click” feature through the device’s, free “Whispernet” capability. It is this innovative feature and service, in combination with the massive selection of books that Amazon can provide better than any other, which really sets Amazon Kindle apart from all of its rivals. Amazon has created a product that embodies its overall corprate vision “Our vision is to be earth's most customer centric company; to build a place where people can come to find and discover anything they might want to buy online.” The Kindle has its own vision statement, which parallels the corporate vision: “Every book ever printed, in every language, available anytime, anywhere, in less than 60 seconds.”Amazon also is well-known for its unrivaled customer service, the way they are constantly “listening” to and seeking feedback from their customers, followed by their quick response to their customers’ needs. They have made famous their “instant reviews” feature on all of their products, as well as instant feedback to users via the popular “customers who purchased this also purchased”… and “you might also like this” features.

This customer focus is one of Amazon’s core competencies, and they continue to follow this with the Kindle in a multitude of ways. Only twelve months after Kindle 1 was released, Amazon released Kindle 2, which implemented a variety of additional features and design improvements that thousands of Kindle reviewers had suggested through Kindle 1 product reviews on the Amazon site. No other company has the advantage of that kind of user input to apply...
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