Amazon's gadget as a service theme: Hardware becomes irrelevant soon

Amazon's gadget as a service theme: Hardware becomes irrelevant soon

Summary: Amazon CEO Jeff Bezos walks the line between talking Kindle Fire specs and telling you services trump gadgets. The entire tech food chain---prosumer to enterprise---will see hardware as a mere vessel for delivering broader services.

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Amazon launched its new Kindle Fire tablets---including one starting at $159, an 8.9-inch model checking in at $299, and a 4G LTE wireless model for $499 ---and while CEO Jeff Bezos talked up Wi-Fi antennas and other hardware specs, the overall theme is that the gadget is dead. Long live services.

If Bezos ambitions with the first Kindle Fire were obvious---it's just a vessel to deliver Amazon's video, music and shopping services---now it really bonks you over the head.

More: Amazon Kindle Paperwhite might be most paper-like e-reader ever | Amazon turns heat up in tablet market with 8.9" Kindle Fire HD | Pictures: Amazon's big event | Kindle Serials = book subscriptions | CNET: Amazon live blogfull coverage| Techmeme

The model is simple: Price the tablets and e-readers aggressively and make dough on the back end ecosystem. It's not rocket science, but others can't match Amazon. Google certainly can't match the services. Apple has the ecosystem, but frankly is more about the hardware.

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Amazon flips the model and it was almost comical how Bezos talked up specs on the Kindle Fire a bit, but then noted those details don't matter.

If you play this Bezos vision thing out a bit more it's probably just the beginning of the hardware irrelevancy movement. On the consumer side, it's obvious that smartphones and tablets are all starting to look alike. They're all sharp for the most part. All that matters, however, is the content and the apps with a dash of ease of use.

My hunch is that this services replacing hardware theme will play out higher up on the food chain too. Note how IBM's latest mainframe includes built-in analytics to monitor performance and spot issues. It's the first step to self-healing systems.

VMware talks about the software defined data center. Rest assured that HP, Dell and a host of others are going to meld hardware with cloud services.

And then there's the appliance game that Oracle is trying to play. Exadata boxes are just a vessel to collect software maintenance revenue. Exadata boxes are a wee bit more expensive than a Kindle Fire, but the model isn't all that different.

Hardware will come with services up and down the technology food chain. All Bezos is doing is speeding things up a bit and being a lot less subtle about the fact that services will always trump hardware going forward.

Topics: Hardware, Amazon, Data Centers, Smartphones, Tablets

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37 comments
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  • So much for predictions and rumors by the experts

    I nailed it -- yes pat on my back.
    oldgeek143
  • Bring it on Apple, Google and Microsoft

    From the article:
    "8.9-inch [wifi] model checking in at $299

    This will be a welcome choice for consumers (think large-format magazines) and education (think eTextbooks).
    Rabid Howler Monkey
    • On the other hand...

      The iPad is still the most popular ebook reader at 50% of users polled over at MacWorld while the Kindle took 30%.
      DWFields
      • Polled where?

        At MacWorld. I'm not disputing that many people use the iPad as an eBook reader, but I'm wondering what the number would be for all eBook users and not just those at an Apple conference.
        rompca
        • You know, MacWorld does have a website

          The polling is still going on over there.
          DWFields
          • With the price of Apple products

            I think we all feel polled...
            happyharry_z
          • Apple Conference, Apple Website, Same Idea

            It's not saying that the iPad isn't popular. It could be the most popular. However, an Apple devoted site is not a place where the ratio of Apple users to non-Apple users is likely to be the same as it is for the population in general. The numbers are almost certain to be shifted somewhat in favor of Apple products just because of the demographic of site visitors.
            CFWhitman
          • I won't deny that possibility

            However, I do want to point out that the Kindle series came in second (distant, but I'm willing to accept a somewhat-balancing shift) followed by the rest.

            However, what we do know is even in the non-Apple world, the iPad still sells far more units than the current Kindle series by a ratio of about 2:1 and the Kindle is currently the best-selling "Android" tablet. Let's see how the Fire XL does, priced at $499, hmm?
            DWFields
      • Macworld

        What would you expect from a bunch of the Apple Fanboys?
        vgschoonover
    • Been there, done that ...

      for a lot less with an Archos 80 ($125 at Staples a few months ago - got 2). Don't care if it's not a Retina class display - 1024x768 (yesss! 4:3 ratio) - good enough for non-movie "consumption" of web sites, email, documents. Plus it has a micro-SDHC slot and GPS, and not locked down to Amazon - I can read my B&N and Kindle books on it along with Gutenberg. Now that is my kind of value proposition.

      BTW, I did warn some folks in BestBuy last night, who were eying some current Kindles to wait for the new stuff to become available - looked like they were serious about that "old" stuff, and thanked me for the heads-up.
      aroc
  • He's right, but...

    It's not going to happen for a few more years, yet.
    DWFields
  • So?

    It's irrelevant because they don't sell it outside the US so for the rest of the world we'll stick with Apple and Android thanks Amazon.
    duncan.mcdonald@...
    • True, but you have to think they are working on this

      Amazon isnt stupid, they know they need to reach more markets worldwide.
      otaddy
      • "Coming Soon" vs "Here Now"

        Amazon refused to sell the Kindle Fire outside the US - because the support that US customers take for granted didn't work. As discovered by anyone who took their Kindle on vacation.
        It's a pity Android aren't hammering this point home in order to gain market share.
        alan_r_cam
  • I like the looks of the paperwhite, but does it have built-in Amazon ads?

    If so, it's a no-go for me. I get enough junk e-mail from Amazon.
    Userama
    • You want no ads?

      If only Amazon had a website detailing options and prices... Oh, wait... http://amzn.to/QjSihL

      ;-) Just add $20 for the no-ads version.
      jimoro
  • amazon's been doing it for a while. Google is doing it now.

    Baidu and Xiaomi are doing it in China. There are rumors that MS will do it with the surface RT. It's definitely the way the market is moving. If MS does do it with the surface, it will be interesting to see if OEMs start demanding that MS subsidize their devices too. After all, MS isn't going to let them make their own app stores, at least for RT. And would MS listen to them if they demand that? It'll be interesting to see how this evolves.

    Apple is the only one not doing this at the moment it seems like. right now they are still king of the tablet hill and can just rub their hands together in glee. With android chipping market share away and windows 8 coming out soon though, they might have to start selling devices at (or at least closer to) a loss also.
    theoilman
  • Relevance of the Kindle

    "If you play this Bezos vision thing out a bit more it's probably just the beginning of the hardware irrelevancy movement." That's like saying that the tires on a car are irrelevant. We'll see if Amazon makes any further Kindle hardware. Owning a Kindle Fire all that I can say is Caveat Emptor
    ebhb2004@...
    • caveat

      "Caveat emptor" is just people absconding responsibility and giving a free ride to the swindler. This is what people want?
      HypnoToad72
      • Relevance of the Kindle:Caveat Emptor

        "Caveat Emptor" = "Buyer Beware"
        ebhb2004@...