Ipad and Kindle : Blue Ocean Strategy?

Blue Ocean Strategy : Ipad and Kindle Fire
This analyzes why Ipad and Kindle Fire are Blue Ocean products as oppose to Red Ocean products. Apple achieved a value innovation with Ipad, which led to the creation of a new market space. Apple drew the boundaries of the space by educating the customers on its usability. Amazon with its recently launched Kindle Fire targeted non-Ipad users and defined its own space by designing Kindle Fire as a media consumption device with salient features empowered by Amazon’s massive media platform, hence made the competition irrelevant.

Background
Blue Ocean strategy is simply creating an uncontested market space and defining its boundaries rather than competing in the confines of an existing industry. When Apple launched the Ipad, it did not invent the tablet space, however, it did not target tablet users either. Ipad redefined the consumption of computing devices and reached to millions of people who initially did not know that they needed an Ipad.

Amazon differentiated its new tablet Kindle Fire with simplified yet focused features. Kindle Fire does not carry costly features of a traditional tablet such as camera or gps, instead leverages its own including the Silk cloud browsing. Together with Amazon’s massive content offering, Kindle Fire is creating a new market with a strong focus on media consumption, rather than fighting for Ipad users.

In sum, both Apple’s Ipad and Amazon’s Kindle redefined the industry buyer group instead of competing to better serve the existing buyer group. They achieved this by creating value innovation and reaching beyond existing demand.

Rationale
1. Apple achieved a value innovation with Ipad by focusing on the market and user itself. Apple won the untapped demand in the market by redefined the way the user interacts with a tablet. Ipad integrated in a single piece of equipment the versatility of many individual products such as desktops, laptops, iphones, and kindles and offered the device as a platform coupled by the apps. Apple subsequently educated the consumers on the use of the Ipad. The sales success of 15 million of the first iPad in 9 months is a proof of how Ipad created its own market.
2. Instead of fighting in a Red Ocean, Apple moved the market towards a Blue Ocean: Apple created the “app store” and trademarked it, which constituted the necessary foundation of a Blue Ocean for its Ipad, which allowed Apple to move the customers away from mainstream.
3. Amazon differentiated Kindle Fire from Ipad by neatly applying Eliminate – Raise – Reduce - Create framework of Blue Ocean Strategy. Kindle has eliminated some of the high cost features of a traditional tablet such as camera and GPS, reduced the screen size to 7”, raised the massive content inventory of Amazon, and created Silk browser and cloud storage. This strategy allowed Amazon to price and position Kindle Fire for a different market than Ipad consumers.
4. Commanding the largest online inventory of media content, Amazon’s Kindle Fire is a game changer for media consumption. Similar to how Apple set the foundation for Ipad by initially creating the App Store for Iphone, Amazon has established an ecosystem of online content, supply-chain, and cloud infrastructure as well as a proven market of e-readers for its Kindle Fire. With 95,000 sold in the first week, Kindle Fire is reaching beyond existing demand.

Anticipated Competitive Response
Currently Kindle Fire is not posing a significant threat against Ipad. Apple is anticipated to keep its pricing at the same level as it is and continue focusing on its user to enrich its offering. However, Apple should be closely observing its market for any shifts in the demand towards Kindle Fire or emergence of another technology.