Sony, Google Challenge Amazon – WSJ.com.
This is a recent story about Sony and Google partnering up to challenge Amazon. What Sony needs to do is follow the successful strategy of Lexus when they came into the U.S. market to challenge the luxury car incumbents. Lexus focused on the customer experience, providing elegance at an affordable price. They were not trying to step down and give middle and lower class americans a luxury car they could afford, but rather provide a luxury vehicle that could rival Lincoln, Cadillac, Jaguar, Mercedes and BMW at a much lower price. These cars were elegantly appointed with comfort, style and standard features far beyond what you would get in the above mentioned brands. Additionally, the purchasing and services process were very simple and hassle free. They did their research and attacked all the pain points of the owners of other luxury brands. Many people decided to give Lexus a try, not me though as I have always been a BMW loyalist, as either their second or sometimes primary luxury vehicle. Where Lexus excelled is in substantially raising the bar on repeat purchase rates. Customers were blown away with the ride, the quality of the vehicle, the fact that they had far fewer repair issues than their competitors. As Lexus increased their share in the market, they were able to raise their prices and not lose customers, while also continuing to steal share away from their competitors.
Sony is in a fairly similar position in that Amazon is the category leader with a first movers advantage. What Sony has going for it, however, is the fact that they are not entering into a mature market, but rather an emerging category where there is plenty of opportunity. Amazon has snagged the early adopters already, who will help propel the Kindle forward through word of mouth and repeat purchases, just as has been the case with the iPod. Sony certainly wants to avoid letting Kindle gain the significant competitive advantage that the iPod has. iPod has watched many wanna be competitors come and go. iPod is a great product and has its direct linkage to iTunes, where songs cannot be exported across other devices, thus making switching costs very high.
Sony’s partnership with Google is brilliant in that it can help to minimize the current advantage the Kindle has of being owned by Amazon which provides a simple and seemless ordering experience, as well as being the current leader in convincing publishers to make their books available for electronic distribution through the Kindle.
It is my believe that eventually, the Kindle, and whoever else emerge in this space, will replace many printed books. We will begin to see students use them in school, as well as other new business models popping up where travelers will be able to rent a kindle for a flight or cruise or other travel event and download content on their rented device.
Early on, Sony needs to prove it is a viable contender to the Kindle. They need to made their product available at a below market cost to convince consumers to give it a try. I am sure there is some fear that Sony may not stay in the space, thus they would rather go with the Kindle because they know Amazon is in this for the long haul. We need to see the Sony product in the hands of people. If I were Sony, I would send it to leading bloggers, executives and other influencers who could help Sony to gain share.
Just like with Gillette, they switched from being in the razor business to being in the razor blade business. Sony should not focus so much on making money initially on its device, but rather the revenues from the downloads. You never get a shot at the download revenues if you do not have devices in distribution.
My challenge to you Sony is to break from the traditional product entry strategy. Use your creativity, ingenuity, and the combined brand cache of Sony and Google to give the Kindle a run for their money. I would be happy to set my Kindle aside and try your product if you want to use me as a test. You need to find your core and then run with it. Make some noise, let people know you are in the game. Turn up the volume Sony and get this one right like Lexus did and not wrong like Microsoft and Dell did against the iPod.
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Sony Reader product page: http://tinyurl.com/2za2ru
In My Words... by Fred Neil 