Target , the second largest discount retailer in the United States, has decided to phase out Amazon's Kindle line from its store.
The official statement from Target says that an assortment of other e-readers and supporting accessories will be on shelves including Barnes & Noble's Nook.
The prime reason going rounds behind this move is that Amazon used Target's store as a showroom and pushed buyers to purchase Kindles online by giving them extra discount of about five percent.
This move, prima facie, looks like an innocent business decision by Target making the retailer look like a victim - but there is more to this than meets the eyes.
Why Amazon gave 5% discount on Kindle
Last Christmas Amazon started giving 5% discount to buyers who used a special application to scan the Kindle's code while in Target's store and later bought the device from Amazon's online store.Target accused Amazon of using Target's brick & mortar store as a showroom while sabotaging Target's sale. The order takes around 15 days to process and ship and usually buyers need to fork out couple of dollars as shipping charges if they want express delivery. There is also an option where Amazon ships free for purchases above certain amount but that takes more time to deliver.
So, the price of device is more for a buyer who typically wants the product delivered via express shipping. This means Amazon's online sale of the product does not compete at all with the brick & mortar retailers.
Now, comes the question - does a 5% discount wean away Target's pie of the sale?
Even if Amazon offered 5% discount, the shipping cost was still there - which made the price of the device still equal to what brick & mortar store were offering.
Moreover, 15 days shipping time always work against the online store when a brick & mortar store store offers the same device, at the same price - without a wait.
This uncovers the lid off Target's cooked story of Amazon using brick & mortar store's as its show room while cutting into their pie of sales.
Timing of the announcement
In the last week of Apr 2012, there was a surprising announcement by Microsoft about investment of $300 million and another $305 in coming 5 years in Barnes & Nobles. Barnes & Nobles have agreed to distribute its free Nook Metro app through Microsoft's Windows Store. A fortnight after this announcement came the announcement by Target about phasing out Amazon's hardware.Microsoft has tried to catch the various consumer electronics bandwagons in the past. Most notable example being their Zune platform though which they tried to tackle Apple's Ipod, and failed miserably. It is another story that they do not care at all about user experience and all they care about is profit margins. This time they thought whoa! we missed this e-reader wave too - let us catch it as soon as possible while it lasts. The result is last minute investment decision. Microsoft! you are just repeating the history.
Target saw big wads of cash being flashed by biggies like MS and decided to choose side as MS and its allies always had the capacity to rally market around them.
Target saw the opportunity to change sides and show its allegiance to the side having larger pockets.
Target's announcement to store Nook & Ipad on its shelves just shows how opportunistic they are.
Kindles are awesome products that created history.
Since 2006 - when Sony first launched their E-book readers and 2007 - when Amazon first launched its E-book reader Kindle, the price of e-book readers has dropped to the level of being called as highly affordable devices. The price drop is a result of constant endeavors by Amazon to delight buyers by presenting them with world class devices with affordable prices and an ecosystem that cares more about their satisfaction. Price drop by Amazon results in entire industry following suit and other players also drop the prices of their devices.
I am not against Nook. It is an awesome device too. But despite other features, Kindle's ability to download stuff from cloud using free 3G that works in around 100 countries and certain limited web browsing features like access to wikipedia, Gmail etc for free - stands head & shoulder above Nook.
Kindle fire which captured more than 50% tablet computer market is a success story in itself. Its low price has sucked air out of the lungs from some mighty hardware makers and forced them to rethink their strategy.
Kindle fire uses Android platform of Google and catches the ire of anti Google corporations that primarily include MS.
The most notable industry sponsored PR tactics was the recent smear campaign against Google and its motto 'Dont be evil'.
Don't they think these pathetic moves will not win them consumer's faith & love.
Enemy of enemy - friend
This time again, evil forces have gathered to take reality from the consumers and present them with favorable sponsored stories that show them as angels - which they certainly are not.
