Market Force:
Market Issues
● Crucial Issues:
○ Perceived as clunky to use and difficult to load content onto
○ Lack of a well defined e-book distribution channel and promotion model
○ E-reader itself was sold for a higher price than many e-book devices or tablets available
● Underway Shift
○ E-Ink Technology made reading possible in any light and with minimal power usage
○ Distributors develop ecosystem around content, publication and delivery of e-books
○ New pricing model to replace traditional agency-based pricing model
● Market is Heading to price e-books lower than traditional books and publish them together
Market Segments
● Media Junkies: competitive pricing and high content
● Children: as Christmas gifts since its one of the cheapest tablets and for educational needs
● New Gamers: For amateur gamers as memory/processor/screen wasn’t suited for gaming
● Higher Education: $10 billion textbook market in 2012 has the largest potential. Tech savvy students will find digital content to be cheaper and easier to carry around than textbooks
Needs & Demands
● A product that can give access to all digital media content and not just books
● Provide digital media access, web access and additional features at a lower price than iPad
● The market was moving to a feature based e-reader with more control through apps/services
Switching Cost
● Cost associated with loss of compatibility for music files and e-books when switching tablets
● Content not purchased at Amazon is difficult to access without Kindle device/apps
● Customers lose access to a particular brand’s cloud services when switching
Revenue Attractiveness
● The iPad at $499 was really the price differentiator in the tablet market. The other tablets and e-readers were in $200 range and Kindle Fire at $199 had more features than e-reader
● The largest margins could be achieved from digital content that could be purchased on tablet
Market Trends:
Technology Trends
● Apply E-Ink Technology to Kindle to make reading possible in any light condition and with minimal power usage
● Digital rights management (DRM) helps publishers rapidly accelerate e-books development
● Enhance user experience by offering better display resolution and large space
● Advanced algorithms drive popular product recommendations and raise the conversion ratio of cross-selling
Regulatory Trends
● Publisher’s agency based pricing model was being superseded by Amazon’s consistent e-book pricing of $9.99($13.99 for new releases)
Societal and Cultural Trends
● Incredible shift in consumer’s ability and need to have content available to them all the time in handheld devices (phones and tablets)
● Customer accesses to web services and content on the go
Socioeconomic Trends
● Maturity in the e-reader market
● Increase in the digital library of books, videos and magazines available to consumers
● Targeting children for e-books/games/apps for higher purchase of tablets

Industry Forces:
Competitors:
● Kindle Fire competes with iPad, Nook, and Samsung
● It differentiates itself from iPad by a much lower selling price
● It differentiates itself from the Nook because it is not just an e-reader tablet, but offers a plethora of digital media services, such as streaming/downloads/apps
New Entrants:
● Nook Color, ViewSonic and Kobo Vox
● Amazon’s business model of Fire is to sell it as a service and use it as a tool to drive revenue by making it easier to access digital media through Prime and retail services through the Silk web browser
Substitute Products:
● The threat of substitute products is low because of the “ecosystem” that Amazon has built around the Kindle Fire and its propriety book format that cannot be used without Kindle or without the app.
● The switching costs of moving to new products are high.
Suppliers:
● Developed by Amazon’s own R&D organization Lab126
Stakeholders:
● E-book readers
● Digital media consumers
● Competitors (such as iPad, Nook) since Kindle Fire can capture market share from a particular rival or reinforce customer loyalty depending on customer satisfaction.

Macro-Economic Force:
Global Market Conditions
● Global economy is slowly recovering.
● The sale of E-book reader is projected to grow higher in next few years
● The revenue per device reduce year after year due to economies of scale
Capital Markets
● Amazon is an established company for 8 years. It generates the funding through its core business: online retail store
● Kindle Fire is sold at its cost, but generates revenues from contents, app marketplace, advertising, hardware and e-commerce
Commodities & other resources
● Cost of manufacturing continues to reduce
● Amazon’s gross margin for e-books was 20%. Amazon expected a 10% increase in e-book purchases on an annual basis
● App revenue was estimated to increase by 20% each year
● Price of books will remain at $9.99 ($13.99 for new release), a far cry from the cold $26 price of a hardcover book
Economic Infrastructure
● The 3G & Wi-Fi infrastructures are well developed in the US
● All publishers & individual authors are adapting to use new Amazon pricing model
● Amazon Kindle is able to support cross-platform reading experience based on Amazon’s proprietary system