Ron Johnson may have been a disaster at J.C. Penney, but his retail strategy served Apple (NASDAQ:AAPL) well. After all, if Samsung and Microsoft are both copying it, there must be something to it.
But now, Amazon (NASDAQ:AMZN) could be about to roll out something even better. Its new Kindle Fire HDX tablets include a "Mayday button," which allows owners to summon an Amazon rep at a moment's notice.
Amazon's tablets still have their drawbacks, but the new Mayday feature is intriguing. It should set Amazon's tablets apart in an increasingly competitive market.
Apple's retail edge
Obviously, the iPhone and iPad are revolutionary products, and no doubt, the primary source of Apple's rise over the last few years. But the company's retail strategy has been equally as revolutionary and certainly contributed to Apple's resurgence.
By building stores nationwide, Apple is able to offer unprecedented consumer service. Writing in 2010, Bloomberg Businessweek ranked Apple the third-best company for customer service, behind only L.L. Bean and USAA. That's a trend that's continued, with Consumer Reports giving it top marks for the last two years and ranking it far ahead of every other computer manufacturer.
When Apple customers have an issue with their device, they can simply bring it into an Apple store and get assistance directly from a Genius -- something that, until recently, no other PC manufacturer could offer.
Amazon flexes its cloud muscle
But with its new Kindle Fire HDXs, Amazon has taken it a step further. Owners of Amazon's latest tablets won't even need to visit a store -- they can simply press a button and an Amazon rep will begin talking to them in seconds. The rep can even take control of the device remotely and highlight different parts of the screen.
While there are obvious limitations to the service (what if the device won't turn on or connect to the Internet?), it's definitely a unique feature that sets Amazon's tablets apart from the competition.
And it's only possible because of Amazon's investment in the cloud -- the Mayday feature is powered by Amazon's impressive cloud technology. Amazon is the largest provider of cloud infrastructure, with some estimates pegging its market share at about 36%. According to research firm Gartner, AWS has more than five times as much capacity as its 14 largest rivals.
Analysts at Oppenheimer have argued that it is "inevitable" that AWS will, at some point, be spun off, and when it is, it could be worth as much as $100 billion. However, that may be unlikely, particularly if Amazon continues to weave cloud services like Mayday into its products.
Amazon's threat to Android
Perhaps because of their price, Amazon's tablets have sold fairly well since their introduction in 2011, and the new Mayday feature could only enhance their appeal, particularly to the technologically challenged -- a group that may have otherwise shied away from tablets.
Amazon likes to compare its Kindle Fires to Apple's iPads, and thus, they pose an obvious competitive threat. But the bigger challenge may be to Google (NASDAQ:GOOGL), whose Android operating system powers Amazon's Kindle Fires.
That said, although they technically run a version of Android, Kindle Fires run a heavily modified version, one that Amazon has dubbed Fire OS. Despite giving Android away for free, Google benefits by getting Android users onto its services.
Not so with Fire OS: Amazon's version of Android strips out all traces of Google's services, replacing Google Play with Amazon's own app store, and Google search with Microsoft's Bing. In effect, Amazon is piggybacking off Google's work, taking advantage of Google's technology without allowing the search giant any benefit.
The problem is made worse by the fact that Amazon's tablets are priced competitively with other Android devices: At $229, Amazon's 7-inch Kindle Fire HDX is the same price as Google's own 7-inch Nexus 7.
Kindle Fire HDX: Does Amazon finally have a winner?
Slate's Matt Yglesias dubbed Amazon's Kindle Fire the "fruitcake of tablets." Each year, sales of the Kindle Fire peak around the holidays, then fall off the rest of the year. In large part, this may be due to the phenomenon of people simply giving away the Kindle Fire as a gift, not buying them for themselves.
But with HDX, Amazon may have finally built itself a winner. As Apple was able to revolutionize customer service with the Genius Bar, Amazon may be able to take it to the next level with Mayday. By leveraging its unique cloud infrastructure, Amazon is able to offer a feature its competitors can't match.
That obviously poses a threat to all tablet makers, including Apple, but Google may be most exposed. Priced competitively, Amazon's Kindle Fires could appeal more to would-be Android tablet buyers than Apple customers.
At any rate, one thing is clear: Amazon continues to view tablets as an important part of its retail strategy.
Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Amazon.com, Apple, and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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