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5by5 | The Critical Path #65: The Shoe Seller's Dilemma

An update on Asymconf California, a discussion of engagement and why Android does not get enough of it, why Amazon likes giving away Fires and the causal hypothesis of Samsung’s success in smartphones. That plus announcing a new 5by5 show: High Density.

via 5by5 | The Critical Path #65: The Shoe Seller’s Dilemma.

  • http://alexandersmith.co/ Benjamin Alexander

    Were you live this morning when Dan pulled the plug?

    • http://www.asymco.com Horace Dediu

      I think we ran late into another slot. Need to maintain schedule better.

      • http://alexandersmith.co/ Benjamin Alexander

        The potential for disaster is part of the magic of live entertainment.

  • http://thetorg.com/ Torg

    Interested in what you have to say about Fires!

  • M Rogers

    WRT the conference and California, I recommend Steve Blank, “Secret History of Silicon Valley” http://steveblank.com/secret-history/ If you don’t follow Steve, you should. Disruption as a science as applied to entrepreneurship.

  • http://twitter.com/matthewwanderer matthew

    Congratulations of the expansion of the podcast. Seems like a great fork in the road to take.

    BTW, is the “shoe seller’s dilemma” interchangeable with the tried-and-true “shoemaker’s dilemma”?

  • Bill Esbenshade

    Have never posted before, but wanted to thank Horace and those commenting — what a great service!

    Horace, in one or maybe two of your past Asymco posts you noted that you didn’t believe the Kindle Fire was disruptive because: (1) it’s a subsidized product, the tablet is still improving, and the subsidized nature of the Kindle Fire means that Amazon lacks the incentives needed to continue up Christensen’s improvement trajectory (to the point where the tablet is commoditized); and (2) Amazon’s content/retail service business doesn’t scale well internationally.

    In the “Shoe Seller’s Dilemma” you state that “[t]he disruption [via the Kindle Fire] may be a device that conforms to the business model of whomever wants to obtain data from the end user.” So Amazon is giving away the Kindle Fire, at least in part, to collect customer data, thereby cutting off Google’s data flow. As you note, the Kindle Fire also boosts Amazon’s retail “foot traffic,” and may produce small but significant improvements in Amazon’s core retail margins, which is what Amazon really cares about — they don’t care if the tablet breaks even. You also note that Amazon’s approach may be a form of low end disruption, whereby low end devices aren’t even sold by device makers anymore, and are instead given away by retailers like Amazon or possibly Wal-Mart.

    I guess my question is, do you believe Amazon’s retail give-away approach — which is asymmetrically motivated by the desire for customer data and by the desire for small improvements in core retail margins — could ever disrupt Apple’s tablet business, at least in the United States? And could other large international retail businesses, such as Tesco for example, adopt Amazon’s model and disrupt Apple outside the United States?

    My thought is no, because a proprietary retail tablet, such as the Kindle Fire, is never going to be “good enough” for a large number of tablet users. A lot of people are always going to be turned off by a service, and a user interface, which tries to funnel all tablet activities/uses in the direction of a particular retailer (whether it’s Amazon’s services or whether it’s Google Play). And many people who have one work computer and one tablet are never going to be completely satisfied with a proprietary, limited tablet such as the Kindle Fire — they’re never going to feel it’s “good enough.”

    My problem with Christensen’s model has always been that what’s “good enough” is so subjective, and so changing, especially in technology. As you note, tablet input methods are still improving, as are other tablet features. And what’s “good enough” this year may not be good enough next year, because of dramatic and unforeseen improvements in technology. I think this is partly what Steve Jobs meant when he said that people don’t really know what they want until you give it to them — in technology, what’s “good enough” is constantly in flux, and is really hard to pin down.

    Anyway, thanks again for the great work and please comment if you have a chance!

  • Karthik

    Hi Horace…From your analysis, it looks to me that Amazon is trying to create a cash pie that it fully owns (by tailoring devices to match shopping / usage habits). While it is good to have the pie for yourself and yourself only, how much of buying a customer would have to do to justify that 1 or 2% increase in sales? If the main objective is just to increase sales on AMZN.com, an Amazon app does an equally good job. I agree that the app doesn’t sell movies etc like how the Kindle is tailored to do but its I don’t how much of a sales uplift Amazon gets by movie or music sales on its URL.
    Just trying to figure out whats the problem Amazon is trying to solve by making a Kindle and releasing revision after revision…

    • http://www.asymco.com Horace Dediu

      A device allows for more information to be captured about the user’s behavior and thus the serving of more purchase opportunities. Whoever designs the device is in a position to harvest user information to a far deeper degree than whoever is a guest on the device. This “ownership” of the device is why Google chose to be a systems software developer and to give away that software.