Schumpeterian tablet competition

Lynne Kiesling

If you want good examples of Schumpeterian competition, it doesn’t get much better than this: Amazon to take on Apple this summer with a Samsung-built tablet? The Engadget folks make

… a very reasoned argument that paints Amazon, not Samsung or the rest of the traditional consumer electronics industry, as Apple’s chief competition in the near-term tablet space. An idea that’ll be tough to argue against if Amazon — with its combined music (downloadable and streaming), video, book, and app ecosystem — can actually launch a dirt-cheap, highly-customized, 7-inch Android tablet this summer as Pete predicts.

This evolution is Schumpeterian in several ways, the most obvious of which is the process of creative destruction that disrupts equilibration by entrepreneurs creating a new product that will make some old products less valuable and ultimately obsolete. Note, interestingly, that one of the products likely to be made obsolete is Amazon’s own Kindle.

But the essential product, the tablet computer, is not actually new, which gets to the second, and in some ways more meaningful, Schumpterian aspects of this evolution: this is a good example of competition for the platform. This is not just about coming up with some new gadget that consumers might like; this is about integration of the various applications and services that might create value for consumers into an elegant platform. Given Apple’s announcement this week of iCloud and Amazon’s existing cloud services, this Amazon tablet is part of that platform competition.

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3 thoughts on “Schumpeterian tablet competition

  1. “Note, interestingly, that one of the products likely to be made obsolete is Amazon’s own Kindle.”

    Disagree. It may very well reduce the value of an e-ink reader (which the current kindle is), but e-ink readers have 2 features that won’t exist on an Android tablet: battery life measured in weeks, and reflective surfaces. Note that Amazon is already reducing the prices of their e-ink kindles (which doesn’t point to you or me being right, just one of us).

  2. I think you need to throw Google into this discussion. They obviously have a different business model, but they are seriously shaping this market. Where as Apple and (now) Amazon, are going for top to bottom vertical integration, Google seems to offer users ways to get their services in ways that touch more people. I just bought an Asus android 3.0 tablet, and upon firing it up, I had to do little more than type in my email address, and all my google stuff followed me.

  3. I agree with you both, and I should clarify: when I think about obsolescence, it’s a process that may be somewhat long-lived, so old and new technologies can coexist for some time (akin to the water wheel and the steam engine). The non-backlit feature of the Kindle will probably appeal to enough readers for the Kindle to survive, although for how long I would not attempt to predict.

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