Amazon CEO Jeff Bezos espousing the newly created “Amazon Doctrine”:
Above all else, align with the customer. Win when they win. Win only when they win.
Amazon wants to make its money off selling content, not selling hardware; it sells its hardware at cost and makes it money off selling customers its content. This will only work if they can make profit off of content (something that even Apple hasn’t really been able to do), but it may very well turn out to be a genius move and here’s why:
It’s really early in the game, but it’s starting to look (and perhaps more importantly, feel) like Apple’s lead in the tablet market may be insurmountable. If this is true, making money off hardware sales of any non-Apple tablet is near impossible. By effect, some would say that Apple’s hold on the content market is also insurmountable. I’m not so sure. The important part of content is, well, the content. Within reason, no one cares if they’re reading a book on a Kindle or an iPad. The important thing is consuming the book. If Amazon’s goal is to sell content and not hardware, then Amazon wants to give consumers the ability to access that content from any device. This is evident from Kindle and Instant Video being available for all major platforms.
If selling content is its goal, why is Amazon even entering the tablet market? Two reasons: first, it needs to lower the cost barrier for buying a tablet (and the $159 Kindle Fire does that very nicely) and second, it locks those who do buy Amazon hardware into the Amazon ecosystem (does anyone really think Apple will be putting iTunes on the Kindle Fire any time soon?).
If a movie is available for the same price on both iTunes and Amazon and said movie can only be played on Apple devices (and Windows) if purchased from iTunes, but from any platform if purchased from Amazon, why would anyone buy the movie from iTunes? Being able to access content from any device is a clear win for consumers.
Amazon is doing what Apple did years and years ago: if you can’t win, it’s time to change what you’re playing.