Kindle Fire HD hurts Microsoft more than Apple(cringely.com)
cringely.com
Kindle Fire HD hurts Microsoft more than Apple
http://www.cringely.com/2012/09/07/kindle-fire-hd-hurts-microsoft-more-than-apple/
38 comments
The consumer doesn't care what the business model is. Microsoft's problem is that all its entry points into the market are being taken away. If it wants to go cheap it has to deal with the $299 Fire HD and the $199 (sort of) Nexus 7. Apple already straddles $399-$499. Those are brand name competitors with premium products and decent or better ecosystems.
It's not clear what Amazon's business model is. Bezos claims he wants to make money on content and not lose too much on devices, but he's losing money on Prime too. It seems to me Amazon's model is to get as much market power as possible -- ideally a monopoly -- and then charge rents, but I don't see how any such monopoly would be sustainable (at least without the DOJ foolishly helping). The one area where Amazon (temporarily) held a near monopoly was ebooks and this is precisely what it did (it still tries, only more subtly).
It's not clear what Amazon's business model is. Bezos claims he wants to make money on content and not lose too much on devices, but he's losing money on Prime too. It seems to me Amazon's model is to get as much market power as possible -- ideally a monopoly -- and then charge rents, but I don't see how any such monopoly would be sustainable (at least without the DOJ foolishly helping). The one area where Amazon (temporarily) held a near monopoly was ebooks and this is precisely what it did (it still tries, only more subtly).
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> Not according to Jeff Bezos, who spend a good portion of his presentation explaining how Amazon make money with their pricing strategy of the Kindles
He may have explained how they want to make money, but I don't recall Amazon or Jeff Bezos ever having stated the Kindle Fire has made them a profit. Indeed, Amazon have been very reluctant to even release hard sales figures for the Kindle Fire.
He may have explained how they want to make money, but I don't recall Amazon or Jeff Bezos ever having stated the Kindle Fire has made them a profit. Indeed, Amazon have been very reluctant to even release hard sales figures for the Kindle Fire.
Amazon's fans seem to think that Amazon can sell a tablet at near cost and make money on either digital sales (movies/books/audio) or as a kiosk to sell physical wares.
What makes them think that they can outdo Apple in the first category? Apple which clearly has a huge installed base, yet runs the iTunes store at break even.
And using tablets as a kiosk might add some value to Amazon, but is it really necessary? Are iPad/Nexus 7/Surface users going to magically find a better/cheaper online merchant?
What makes them think that they can outdo Apple in the first category? Apple which clearly has a huge installed base, yet runs the iTunes store at break even.
And using tablets as a kiosk might add some value to Amazon, but is it really necessary? Are iPad/Nexus 7/Surface users going to magically find a better/cheaper online merchant?
>Apple is the innovation leader. What, after all, has Amazon (or Microsoft) actually invented here? Nothing.
It's not like Apple invented anything either. As with most things they do, the ipad's secret was not innovation but polish, taking existing technology and putting in the integration and software effort to make turn it into a great user experience. I'm not saying this isn't valuable, but it's fundamentally no more or less innovative than what Amazon's doing (making the same experience available at lower cost).
Of the three Microsoft is the truly innovative company. E.g. many of the ideas behind iOS' sandboxing mechanism originated at Microsoft Research.
It's not like Apple invented anything either. As with most things they do, the ipad's secret was not innovation but polish, taking existing technology and putting in the integration and software effort to make turn it into a great user experience. I'm not saying this isn't valuable, but it's fundamentally no more or less innovative than what Amazon's doing (making the same experience available at lower cost).
Of the three Microsoft is the truly innovative company. E.g. many of the ideas behind iOS' sandboxing mechanism originated at Microsoft Research.
>>the ipad's secret was not innovation but polish [which is no more innovative than selling products cheap to earn money on content, Amazon Kindle style]
Uhm, no one on the planet knew how to build an affordable pad that would be interesting outside niches. Microsoft tried for a long time, too.
Then comes the iPhone/iPad. The market, the world, is different.
I do smell a bit of spin in what you wrote... :-)
Uhm, no one on the planet knew how to build an affordable pad that would be interesting outside niches. Microsoft tried for a long time, too.
Then comes the iPhone/iPad. The market, the world, is different.
I do smell a bit of spin in what you wrote... :-)
If you're talking about changing individual people's lives, I'd be willing to bet that the amazon effort will eventually reach more people than apple did, simply because the market at $299 is a lot bigger than that at $499.
If you're talking about showing the world what's possible, those of us who had tablets years before the ipad could see that. The software was clunky, but if you were willing to spend time learning and work with it (which, yes, is a niche market) you could do everything you can today.
What apple did was undeniably a huge step forward. But I don't think it was qualitatively different from those who came before or after, and I think chalking up their success to "innovation" is missing the point.
If you're talking about showing the world what's possible, those of us who had tablets years before the ipad could see that. The software was clunky, but if you were willing to spend time learning and work with it (which, yes, is a niche market) you could do everything you can today.
What apple did was undeniably a huge step forward. But I don't think it was qualitatively different from those who came before or after, and I think chalking up their success to "innovation" is missing the point.
Innovate on the experience, not just the features dammit! I'm really tired of hearing this refrain that Apple is not innovative because all they do is take existing features and put them into....a package that people can actually use!? But then "isn't that the easy, uncreative, uninnovative part?" Yes, building usable experience is innovation, and yes its very important.
>"isn't that the easy, uncreative, uninnovative part?" Yes, building usable experience is innovation, and yes its very important.
If you consider that to be innovation, surely offering an equivalent product at a substantially lower price (as amazon is doing) involves just as much innovation.
If you consider that to be innovation, surely offering an equivalent product at a substantially lower price (as amazon is doing) involves just as much innovation.
Apple innovates on the experience, but they've also refined their supply chain (actually, Cook's main contribution). That is more good engineering than innovation (we can even argue if good engineering is innovation in itself, but its kind of pointless). Amazon has come up with an interesting business model by focusing more on content sales to offset low hardware prices, whereas Apple's thinking is quite the other way (content supports hardware sales, not the other way around!). If you want to call that "innovating on business model", I won't argue with you, but now the term is so diluted that its not very meaningful. My original point was that Apple did a lot of work to bring products to market that were usable and didn't suck, and that is really the innovation that most people acknowledge and notice.
"just as much innovation" is such a weird term, how do you actually measure innovation? At least this isn't another "Apple is successful b/c of their marketing" argument, which is bogus since their marketing budget was (until recently) absurdly low compared to other companies in the same industry.
"just as much innovation" is such a weird term, how do you actually measure innovation? At least this isn't another "Apple is successful b/c of their marketing" argument, which is bogus since their marketing budget was (until recently) absurdly low compared to other companies in the same industry.
"their marketing budget is extremely low compared to others in the same industry"
Any pointers to the figures?
Apple's marketing seems unlike any other hardware manufacturer I can think of. But maybe that's just my perception. When you're watching a film and the camera makes a special pan around a laptop to show the Apple logo, it's hard not to think "This hardware company really puts a lot of effort into marketing. This is not your ordinary hardware company." I have seen Dell do this sort of product placement on occasion, but nobody seems to do it to the extent Apple does.
That's just the tip of the iceberg. To discount the amount of Apple marketing and its effects as "standard for the industry" or even below standard seems a little like willful blindness.
Any pointers to the figures?
Apple's marketing seems unlike any other hardware manufacturer I can think of. But maybe that's just my perception. When you're watching a film and the camera makes a special pan around a laptop to show the Apple logo, it's hard not to think "This hardware company really puts a lot of effort into marketing. This is not your ordinary hardware company." I have seen Dell do this sort of product placement on occasion, but nobody seems to do it to the extent Apple does.
That's just the tip of the iceberg. To discount the amount of Apple marketing and its effects as "standard for the industry" or even below standard seems a little like willful blindness.
http://techcrunch.com/2010/10/27/apple-ad-spending/ quote "And while $691 million may seem like a massive amount of money, it’s still less than half of what Microsoft spent on advertising last year. And it’s less than what Dell spent last year."
I'm not sure what the case is like today, I'm sure its gone up a bit but would be surprised if they surpass Microsoft yet. Apple doesn't pay for product placements; see http://www.businessweek.com/articles/2012-05-10/apple-the-ot... quote "The cast’s (Gossip Girl's) sudden conversion cost the Cupertino (Calif.)-based iPhone maker nothing. Apple has spent decades strengthening its subtle but powerful grip over Hollywood, and unlike many companies, says it never pays for its products to appear on television or in movies."
Apple doesn't SPEND much on marketing, but the marketing done is incredibly effective. Turns out, just having the best product makes the job much easier.
I'm not sure what the case is like today, I'm sure its gone up a bit but would be surprised if they surpass Microsoft yet. Apple doesn't pay for product placements; see http://www.businessweek.com/articles/2012-05-10/apple-the-ot... quote "The cast’s (Gossip Girl's) sudden conversion cost the Cupertino (Calif.)-based iPhone maker nothing. Apple has spent decades strengthening its subtle but powerful grip over Hollywood, and unlike many companies, says it never pays for its products to appear on television or in movies."
Apple doesn't SPEND much on marketing, but the marketing done is incredibly effective. Turns out, just having the best product makes the job much easier.
"Turns out, just having the best product..."
This is why Apple gets a bad rap in the forums. Who would say that that about their computer (except a Linux weenie)? The reality is these are cheap electronics in a hermetically sealed but stylish enclosure that use publicly available OS configured for dummies. So simple is the design they can be used by lower primates.
I like Apple hardware, it continues to look good after all these years, but comments "Turns out, having the best product..." make me like it a lot less. Apple is attracting some brainless users and will be catering to them more and more. This is not good.
Maybe this userbase explains the product placements. Hollywood wants to convey a sense that a character is not the type of person that would know anything about computers, hence she uses Apple products.
Touche.
And thanks for the links.
This is why Apple gets a bad rap in the forums. Who would say that that about their computer (except a Linux weenie)? The reality is these are cheap electronics in a hermetically sealed but stylish enclosure that use publicly available OS configured for dummies. So simple is the design they can be used by lower primates.
I like Apple hardware, it continues to look good after all these years, but comments "Turns out, having the best product..." make me like it a lot less. Apple is attracting some brainless users and will be catering to them more and more. This is not good.
Maybe this userbase explains the product placements. Hollywood wants to convey a sense that a character is not the type of person that would know anything about computers, hence she uses Apple products.
Touche.
And thanks for the links.
The truth is brutal: they build the right products, they practically sell themselves, and once they've reached critical mass, what else do you expect them to do? Now you bring out the sheeple argument...ah...ok...
At all the computer science conferences I go to, Macs outnumber PCs; no I mean they actually dominate PCs! Now Apple has cultivated an image that the smartest people use Macs? Or maybe these people just use macs b/c they are the best coding machines out there, and they really don't care paying more that? Or maybe we CS PhDs are just sheeple and like shiny things just like less technical users?
Really?
At all the computer science conferences I go to, Macs outnumber PCs; no I mean they actually dominate PCs! Now Apple has cultivated an image that the smartest people use Macs? Or maybe these people just use macs b/c they are the best coding machines out there, and they really don't care paying more that? Or maybe we CS PhDs are just sheeple and like shiny things just like less technical users?
Really?
No. Apple has always been popular with intelligent people (whether they are technical or not) and it has always been the best choice for certain uses.
But things are changing. First they started selling mp3 players. Then phones. Now Etch-A-Sketches. And now we have CS PhD's getting defensive about their choice to use Apple computers. New types of users. New focus.
Xcode makes for "the best coding machines"?
You mean that's better than a machine that comes with a compiler already installed and ready to go?
With no certificates? And No hoop-jumping?
How is it better?
But things are changing. First they started selling mp3 players. Then phones. Now Etch-A-Sketches. And now we have CS PhD's getting defensive about their choice to use Apple computers. New types of users. New focus.
Xcode makes for "the best coding machines"?
You mean that's better than a machine that comes with a compiler already installed and ready to go?
With no certificates? And No hoop-jumping?
How is it better?
(I'm not downvoting you , just so you know)
If you know if a laptop that is better than a high-end macbook pro, please let me know. I mean, please...I'm not supposed to use Macs myself given who I work for...I am desperate for a decent work laptop without a fruit logo on it.
Sometimes MBPs are bought and Windows/Bootcamp is installed, sometimes they install Linux, sometimes OSX is perfectly OK because they are using Eclipse or some other cross platform IDE anyways. And their are those that actually do Mac/iOS development. Fun stuff.
If you know if a laptop that is better than a high-end macbook pro, please let me know. I mean, please...I'm not supposed to use Macs myself given who I work for...I am desperate for a decent work laptop without a fruit logo on it.
Sometimes MBPs are bought and Windows/Bootcamp is installed, sometimes they install Linux, sometimes OSX is perfectly OK because they are using Eclipse or some other cross platform IDE anyways. And their are those that actually do Mac/iOS development. Fun stuff.
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>>I think chalking up [Apple's] success to "innovation" is missing the point
I didn't chalk anything up to anything.
I noted that you were smoking something strange -- probably found at a marketing department -- when you wrote that the iPhone/iPad was as innovative as the Amazon "sell the razor cheap, earn money on the blades" strategy...
Just because lots of people had been trying to create pads, but failed. (Because they were innovative?:-) )
You didn't touch that simple point.
I didn't chalk anything up to anything.
I noted that you were smoking something strange -- probably found at a marketing department -- when you wrote that the iPhone/iPad was as innovative as the Amazon "sell the razor cheap, earn money on the blades" strategy...
Just because lots of people had been trying to create pads, but failed. (Because they were innovative?:-) )
You didn't touch that simple point.
> What, after all, has Amazon (or Microsoft) actually invented here? Nothing. They’ve emulated Apple at a lower price point and to some extent disintermediated the mobile carriers.
Well, perhaps Amazon. But while Microsoft have emulated Apple in hardware a little, they certainly haven't with the OS. Windows Phone 8 and Windows 8 have a very different, very fresh UI. They only use some of the same gestures, even.
Well, perhaps Amazon. But while Microsoft have emulated Apple in hardware a little, they certainly haven't with the OS. Windows Phone 8 and Windows 8 have a very different, very fresh UI. They only use some of the same gestures, even.
And, indeed, MS were responsible for a bunch of pre-ipad touch research that helped shape current UIs.
just as Apple had to accept competition in the MP3 player market, Cupertino will have to adapt to the Kindle Fire HD.
Did Apple "accept" competition in the MP3 player market? There were mp3 players before the iPod. Apple came into the market and absolutely owned it. Portable music = iPod. That's the end of the story.
Did Apple "accept" competition in the MP3 player market? There were mp3 players before the iPod. Apple came into the market and absolutely owned it. Portable music = iPod. That's the end of the story.
I'm not a big fan of Cringely's but I do enjoy this particular insight. It is unclear to me that Microsoft is even in the same game here because of their lack of content.
Specifically Amazon innovated in the book space, its in their roots and they have leveraged the crap out of it. Apple if you recall innovated in the music space. The similarities are stunning, take something people continually consume, is fashion driven, and reduce the friction of that consumption, golden. The 'chunkyness' (in terms of price per transaction) is bigger in books than in music but the mechanisms are similar. All we need now is NetFlix to introduce a dedicated 'video' device, then move up to phones and tablets.
Specifically Amazon innovated in the book space, its in their roots and they have leveraged the crap out of it. Apple if you recall innovated in the music space. The similarities are stunning, take something people continually consume, is fashion driven, and reduce the friction of that consumption, golden. The 'chunkyness' (in terms of price per transaction) is bigger in books than in music but the mechanisms are similar. All we need now is NetFlix to introduce a dedicated 'video' device, then move up to phones and tablets.
I disagree - I've been considering buying a tablet just for my kids, and Amazon has put a better option on the table for parents. I can't tell you the number of times I've found my kid browsing some Youtube videos or in the Apple store after being upsold something in the game itself.
So for me - and I expect for other parents if they can get the word out - Amazon is making a play for my Apple business.
Still amazes me that Apple didn't see the kids/children's market and provide a better solution than the restrictions - I mean they are ok, but the lack of separate profiles means I'm constantly tweaking them as I work on the iPad, then my son grabs it, etc.
So for me - and I expect for other parents if they can get the word out - Amazon is making a play for my Apple business.
Still amazes me that Apple didn't see the kids/children's market and provide a better solution than the restrictions - I mean they are ok, but the lack of separate profiles means I'm constantly tweaking them as I work on the iPad, then my son grabs it, etc.
Who is this author? Since when does "disintermediating an industry" mean "selling and subsidizing the products of an industry"?
And what pundits -didn't- predict a larger Kindle Fire? I thought that was a signed and sealed rumor straight from WSJ+Amazon themselves.
And what pundits -didn't- predict a larger Kindle Fire? I thought that was a signed and sealed rumor straight from WSJ+Amazon themselves.
The author has been around quite a long time, but he is better known lately for his (perhaps intentionally) counterintuitive opinions and goofy predictions. I think, sadly, he is going more for pageviews than credibility.
But to answer your second question, "Amazon next week will announce two 7-inch Kindle Fire models, one with new hardware and the other an updated version of the original, CNET has learned. That's counter to rumors it would launch a larger version." Oops. http://news.cnet.com/8301-1035_3-57504515-94/kindle-fire-won...
But to answer your second question, "Amazon next week will announce two 7-inch Kindle Fire models, one with new hardware and the other an updated version of the original, CNET has learned. That's counter to rumors it would launch a larger version." Oops. http://news.cnet.com/8301-1035_3-57504515-94/kindle-fire-won...
> "Who is this author?"
http://en.wikipedia.org/wiki/Robert_X._Cringely
http://en.wikipedia.org/wiki/Robert_X._Cringely
Cringely is at his most prophetic in the comments when he says: If Facebook drops much lower Microsoft might make a play.
Try to list all the reasons Microsoft should not buy Facebook.
Try to list all the reasons Facebook would resist acquisition by Microsoft.
Try to list all the reasons Microsoft should not buy Facebook.
Try to list all the reasons Facebook would resist acquisition by Microsoft.
>The tablet market was already broadening, flattening, and moving down market before yesterday’s Amazon announcement
Right, but Microsoft is trying to bring it up market with the Surface Pro and other small x86 tablets(many of which seem to come with a keyboard or a laptop style dock, sometimes optional). Eg. see http://www.engadget.com/2012/08/30/hp-envy-x2-laptop-tablet-...
As I posted in another comment a few days ago, They will be expensive, but far more capable and powerful(heavier and less battery life too). For example, they can run the full Visual Studio or Eclipse.
You can take a Surface Pro and a Kindle Fire with you, run Eclipse with the Android SDK loaded, connect the Kindle Fire to the Surface and take the program you just wrote on the Surface and run it on the Kindle! Or write your code while on a roadtrip or on the subway and debug it on your Android or Windows phone(don't know how Hackintosh it can get for running apps on the iPhone).
Can you do that with a Kindle, iPad or any other tablet on the market right now, which are used by most people as consumption devices?
Where Microsoft is competing with the Kindle, Android tablets and the iPad is with Windows RT, which is a different beast(and costs less than $100 for OEMs + they are rumored to get kickbacks on ecosystem sales). The only big advantage Microsoft has right now in this space is Office RT. Amazon's tablets are oriented even more towards content consumption(read Amazon's content) than the iPad. It all boils down to how much consumption vs. 'creation' the consumers want to do on their tablets, or if they want to get one device that does it all.
Right, but Microsoft is trying to bring it up market with the Surface Pro and other small x86 tablets(many of which seem to come with a keyboard or a laptop style dock, sometimes optional). Eg. see http://www.engadget.com/2012/08/30/hp-envy-x2-laptop-tablet-...
As I posted in another comment a few days ago, They will be expensive, but far more capable and powerful(heavier and less battery life too). For example, they can run the full Visual Studio or Eclipse.
You can take a Surface Pro and a Kindle Fire with you, run Eclipse with the Android SDK loaded, connect the Kindle Fire to the Surface and take the program you just wrote on the Surface and run it on the Kindle! Or write your code while on a roadtrip or on the subway and debug it on your Android or Windows phone(don't know how Hackintosh it can get for running apps on the iPhone).
Can you do that with a Kindle, iPad or any other tablet on the market right now, which are used by most people as consumption devices?
Where Microsoft is competing with the Kindle, Android tablets and the iPad is with Windows RT, which is a different beast(and costs less than $100 for OEMs + they are rumored to get kickbacks on ecosystem sales). The only big advantage Microsoft has right now in this space is Office RT. Amazon's tablets are oriented even more towards content consumption(read Amazon's content) than the iPad. It all boils down to how much consumption vs. 'creation' the consumers want to do on their tablets, or if they want to get one device that does it all.
So these new Surface Pro things are going to be like a current ipad-style tablet, but with a keyboard, heavier, have shorter battery life and be more expensive. That sounds very much like a device I already have, which is called a laptop. It runs Eclipse pretty well on the rare occasions I want it to.
Less than $100 is still a pretty hefty tag in this market too; that's half the price of a Nexus 7! I think Microsoft are going to have to learn that this market isn't going to allow them the huge margins they've traditionally enjoyed on PCs.
Less than $100 is still a pretty hefty tag in this market too; that's half the price of a Nexus 7! I think Microsoft are going to have to learn that this market isn't going to allow them the huge margins they've traditionally enjoyed on PCs.
>So these new Surface Pro things are going to be like a current ipad-style tablet, but with a keyboard, heavier, have shorter battery life and be more expensive. That sounds very much like a device I already have, which is called a laptop. It runs Eclipse pretty well on the rare occasions I want it to.
This reminds me of the folks that discounted the iPad because it was not good as a smartphone for portability(oversized iPod Touch) and much less powerful than a laptop. Predictions based on personal anectodes in a billion plus device market are a dangerous thing.
I agree that the Surface Pro is trying to create a new market here(spaced between iPad style tablets and the laptops/MB Air/Ultrabooks which is an uphill task, but I do think there are a lot of people who want a no-compromises powerful portable tablet for on-the-go use.
This reminds me of the folks that discounted the iPad because it was not good as a smartphone for portability(oversized iPod Touch) and much less powerful than a laptop. Predictions based on personal anectodes in a billion plus device market are a dangerous thing.
I agree that the Surface Pro is trying to create a new market here(spaced between iPad style tablets and the laptops/MB Air/Ultrabooks which is an uphill task, but I do think there are a lot of people who want a no-compromises powerful portable tablet for on-the-go use.
I hope I'm not falling into the same trap as people discounting the ipad; FWIW, I'm not trying to say that this new product won't catch on because it won't be useful to people. I'm trying to understand why it is a new product at all and not just a laptop; on paper most of the specs sound the same, except for maybe the keyboard being removable.
The tablet market, at this moment, is going the other way, to include devices that are cheaper, a bit smaller, and more oriented toward pure consumption (Nexus 7, Fire HD, iPad Mini). This market has lower margins but the potential for lots of sales even beyond the iPad today.
Now Microsoft comes with Surface (Pro and non-Pro), sounds like they are going after niche high-end tablet markets (those who want Office + a keyboard), and higher-end tablet markets (though who want to run Visual Studio). Completely opposite direction that at best will be a successful ultra-book. I'm not seeing mass appeal, but a lot of that will come down to pricing.
Now Microsoft comes with Surface (Pro and non-Pro), sounds like they are going after niche high-end tablet markets (those who want Office + a keyboard), and higher-end tablet markets (though who want to run Visual Studio). Completely opposite direction that at best will be a successful ultra-book. I'm not seeing mass appeal, but a lot of that will come down to pricing.
New products can and do disrupt market trends, especially in such a huge market.
> sounds like they are going after niche high-end tablet markets (those who want Office + a keyboard), , and higher-end tablet markets (though who want to run Visual Studio).Completely opposite direction that at best will be a successful ultra-book.
Niche in this market mean at least tens of millions of people. Not to say that the Surface Pro will succeed(pricing is important as you say) but the laptop/ultrabook market is still much bigger than the tablet, both the install base and sales.
> sounds like they are going after niche high-end tablet markets (those who want Office + a keyboard), , and higher-end tablet markets (though who want to run Visual Studio).Completely opposite direction that at best will be a successful ultra-book.
Niche in this market mean at least tens of millions of people. Not to say that the Surface Pro will succeed(pricing is important as you say) but the laptop/ultrabook market is still much bigger than the tablet, both the install base and sales.
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Microsoft, it seems, will never learn it's not about adding features, but solving a problem better than your competitors. That, more often than not, is about removing the bad stuff, not adding even more bells and whistles.
so, moot?
> Amazon is copying Apple’s playbook, page-by-page...
> What, after all, has Amazon (or Microsoft) actually invented here? Nothing. They’ve emulated Apple at a lower price point and to some extent disintermediated the mobile carriers.
Not according to Jeff Bezos, who spend a good portion of his presentation explaining how Amazon make money with their pricing strategy of the Kindles. The difference between iPad and Fire HD is not in price, but in their producers' business models.
The author clearly doesn't get it.