Amazon Wants To Sell You Everything … With Just One Click

Last week Amazon announced that they are getting into the smartphone business.  This was hardly a surprise for most savvy tech industry watchers.  The company had been dropping hints for weeks.  The new Fire Phone has a few innovative features like a multiple lens camera system that makes your photos look 3-D.  The screen is also 3D and a tad larger than the iPhone 5 screen.  It is not the camera or improved screen or any other smartphone feature that sets this new phone apart from the competition.  Rather, it is how the phone communicates with “mother ship Amazon.”  The phone is designed from the bottom up to assist you in making purchases from Amazon.

It is no secret that Amazon wants to be the place that everyone buys everything.  No longer do they offer only books, DVDs and cool electronics.  For several years the company has continually expanded their inventory to a level which rivals Wal*Mart.  They even have experimented with selling groceries online with same day delivery. 

The managers at Amazon have taken to a new level one of the most widely successful marketing and sales tactics ever developed.  Companies like Gillette and Kodak have for more than 50 years used the sale of one product to enhance the sale of other products. The tactic generates enhanced revenue by requiring the consumer to make many repeat purchases.  Kodak was one of the first to perfect this concept.  They practically gave their cameras away.  They knew that the buyer would need to continue to get film and processing.  Gillette did the same with razors.   Even today, a new high tech razor costs less than single package of replacement blades.   This same strategy was embraced by Ink Jet printer manufactures.  A trip to Office Depot will demonstrate the effectiveness of offering inexpensive hardware and charging an arm and a leg for an ounce of ink. 

For those who use a Kindle, you already know how simple it is to order a book.  It is a “one click” process.  I know that I have purchased several books that if I would not have purchased if I had gone through the traditional online shopping process.  Once Amazon has your personal information, you can buy most anything in a few seconds.

The Kindle Fire tablet is another Amazon product aimed at getting you to be tethered to the company.    Amazon brought out the Fire right after the launch of the iPad.  They did not try to compete directly with the iPad. Rather they designed the Fire to be an easy way to buy and watch videos, programs and movies.  Of course all could be found in the Amazon Library.

So the new Fire Phone follows this tradition of products that get you hooked on other products.  The phone has several features that are designed expressly to help you spend money with Amazon.  For example there is an app that allows you to take a picture of most any item.  The item is recognized by the phone and you are provided a web page that offers to sell you that item.  One click, and it is on a UPS truck heading for your home.  Of course your credit card is charged just as quickly.

Over the years Amazon has made very prudent business decisions.  Their most recent entry into an already crowded smartphone market will be watched closely by tech and Wall Street analysts.   Seems to me that as a phone, the new Fire Phone is nothing get too excited about.  Will enough people want that easy access to buying stuff?  That is the big question.  Maybe I will ask Siri! 

4G Wireless Might Be Fine For Some Users

A friend recently found herself in a situation that I thought I would share.  You or an acquaintance may find that you are in a similar predicament.  My friend recently took a new job and needed to move into an apartment in the Cincinnati area.  Living on a modest income, she wanted to find the least expensive way to have access to the internet in her new digs.   For the last several years she was living on a college campus where very robust internet service was provided either free or very inexpensively.

After shopping around, my friend found that she could get internet access from the local cable company, but the local telephone company was not offering service to her new address.  After considering all the rebates, specials, and other marketing hocus pocus, she found that if she opted for the cable internet service, her monthly bill would be about $50.  Not being a big TV buff, she didn’t want to sign up for one of the “bundles” that include TV.  While this would reduce the cost of the monthly internet access, it would also result in a higher total monthly bill, once the TV portion was added.  She wanted dearly to find a less expensive option.

In our conversation she mentioned that she was going to need a smartphone.  This opened up a new option.  Many smartphones can also serve as a Wi-Fi hotspots.  The phone connects with the internet using wireless 4G or 5G networks and then using a mini Wi-Fi router built into the phone, it can connect to devices nearby enabling them to connect to the internet as well.  So a laptop, iPad or any other Wi-Fi-enabled tablet can access the internet through the phone.  In my friend’s case, there would be no need for another internet service in her apartment.

My friend was purchasing an iPhone 5.  This is one of several phones offered by Apple and many Android and Windows manufacturers which can be used as a Wi-Fi hotspot.  She was required to get a 2 Gig. data plan that would support the increased data usage, but in the long run she was able to get both a new smartphone and internet access for both her phone and laptop in her apartment.  This package was less than the cost of buying a smartphone plan and home internet plan separately.

Caveat Emptor!  This option is not for everyone.  My friend is not an internet power user.  She has a robust internet connection at work and accesses the internet at home essentially for email and some Facebook browsing.  In other words she will not use much bandwidth.  If, on the other hand, she was going to watch movies, play online games and view endless YouTube videos at home, this option would be very expensive.  Unlike most internet plans offered by the cable and phone companies which have unlimited data usage, the 4G and 5G wireless data plans offered by the major mobile carriers, like Verizon and AT&T, do charge extra for using more bits and bytes than your monthly plan allows.  So shop carefully before opting for a wireless plan. 

It is interesting to note that my friend first thought that she could live without internet access in her home since she would have it at work and the library was not far.  After a short period she changed her mind.  We all have become so dependent on having information at our finger tips for somewhat mundane tasks like finding a friend’s street address, directions to the new mall, a phone number or the hours your local dry cleaner will be open.  Some would say we are spoiled.  Others would say it is progress.  I vote for the latter.  If you disagree, don’t forget to go down to the general store and get some oil for your lamps.  You don’t want to run out!

FCC Facing Some Push Bach on Internet Control

Normally a meeting of the Federal Communications Commission does not garner much press unless the commissioners are discussing a “wardrobe malfunction” or slip of the tongue by some miscreant local radio personality.  Most meetings deal with arcane technical standards and are of interest to engineers and executives of large telecommunications and broadcasting companies. Last Month in Washington, when the FCC meet, many of the participants in the room and in the assembly outside on the street looked like they were part of a 1960s protest march.

 

The main agenda item was about Internet Neutrality. The question being discussed was if all content running through the internet’s pipes should be treated equally.  The crux of the discussion was if Internet Service Providers (ISPs) should be allowed to provide faster speeds for some content providers and charge a fee for this “first class” service.  Since its inception, the internet has been free of any preferential status for data flowing across the networks.  So a million dollar bank funds transfer travels on the internet on a first-come-first-served basis along with that picture of your Aunt Mary’s cat.

There were no decisions reached at this meeting.  The FCC’s process is to develop a suggested set of rules.  They release these rules to the public and allow an extended period of time for public comment.  Although any individual may submit a comment, they are usually submitted by lawyers in the name of specific interest groups.  For instance there will be comments by the 8000 lbs. gorillas like Google and NetFlix.  The latter uses a tremendous amount of internet bandwidth to provide video to millions of subscribers.  Public interest groups too will have representation.

Internet purists contend that the internet should continue to provide open and equal access to all.  Corporate and some government officials contend that this can be done by adopting rules that provide faster speeds for those willing and able to pay, but at the same time forbid any technology that would slow down other data. 

Once the stuff of researchers and hobbyists, the internet now is integrated into most every facet of our lives.  Even if we choose to stay “off the grid,” daily we rely on the internet for growing our food, commerce of all stripes, and communications, to name only a few.  Today, the internet is as important as our electric and water services; both of which rely heavily on it to operate.

Look for these internet regulation discussions to increase not only here in the USA, but around the world.   Many governments around the globe are beginning to get very worried about the fact that internet control has become beyond their capacity and some governments get very worried when lack of control happens. 

Owning the New Highway System Key to Future Profits

So what’s going on?  Seems like every cable, telephone, and satellite company is either being bought or taken over by a larger company.  AT&T wants to buy DirecTV; Time Warner is being swallowed up by Comcast.  This reshuffling of assets and the customer base has more to do with what these companies don’t know than some well–thought-out strategy.  They are all playing defense in the face of the unknown.

Who is to blame for this uncertainty?  You are.  The TV entertainment industry is changing at a dizzying pace, but audiences are giving entertainment providers mixed messages.  There is a marked increase in the number of people who are opting to receive TV Programs by non-traditional methods. 

The NetFlix streaming service adds thousands of subscribers each month.  Many of these people are opting to cut the cable cord.  There is a significant and growing number of individuals who now use free over–the-air broadcast stations exclusively to get breaking news and sports programming, and subscribe to an internet-based streaming service, like NetFlix or HuluPlus, for other non-time-sensitive programming.  In almost every case this saves money.

At the same time, the cable and satellite companies still are making billions of dollars on millions of subscribers who continue to use their traditional TV services.  The big question is how long it will be before this latter group opts out of the high monthly bills and moves to the less expensive internet a la carte option.

As a defensive move, the mega media companies like Comcast are shifting gears away from offering the actual programming to a new business of providing the “pipe” into your house (and the “virtual pipe” for your mobile devices).  Look for these companies to move away from the “WHAT” you see, and toward “HOW” what you see gets to you.  One thing is certain: no matter which way the industry goes, there will be a need for some kind of connection into every house and to every iPhone, iPad, or the myriad other mobile devices.  For the home, this may be coaxial cable, fiber optics, or some not-yet-announced technology.  For the mobile environment, faster and more robust wireless networks will be the cash cow.  The companies that have those connections will be kings of their respective mountains. 

As this shift happens, look for the government to pay more attention to these services and decide if they are becoming so-called Common Carriers.  If deemed to be Common Carriers, these companies will have a whole new set of regulations to deal with in setting rates and providing access.  Of the two giants, AT&T will have the experience over Comcast navigating these regulatory waters because of their long history of providing other types of “pipes”—remember that the second “T” in its name stands for “telegraph.”