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An interesting development in the tablet market, but hardly a new business strategy. Cell phone companies have done this for years. Cheap iPhone + high monthly
by kevinconroy 14y ago
An interesting development in the tablet market, but hardly a new business strategy.
Cell phone companies have done this for years. Cheap iPhone + high monthly contracts with 2 year lock ins.
But before them, video game console companies did it. Sell console with razor thin margin (or in XBox's case, at a loss), and make it up by selling lots and lots of games.
But before them, Gillette (and others) perfected and honed the idea by practically giving away razors and then selling you the blades. I got a Mach 3 in the mail days before my 16th birthday (which is another story of amazing data mining in the 1990s), and they've hooked me into buying those stupid blades for the last 15 years.
Bezos is no idiot. He's applying well known business models to his market now that he knows he can achieve the necessary scale.
- rootedbox 14y agoThe problem with the complimentary goods model is that it depends on a certain amount of proprietary between the complimentary goods. But what happens when someone makes a complimentary good that is interchangeable, and breaks the proprietary; and then undercuts your price.. You are screwed racing to the bottom of profit margins with a competitor, and then you have 2 items which are low margin.
- notatoad 14y agoIt depends on either proprietary lock in, or a service integration so good that you don't want to buy the content anywhere else. I'm perfectly capable and willing to pirate any ebook I want to read, but most of the time I just buy them in the kindle store because it is so much more convenient. Amazon doesn't have to race to the bottom on content pricing because their services have value.