Kindle illuminates Amazon

When the Kindle first came out, there were many of us that wondered if yet another device would capture the public’s eye in a year or so full of “gadgets.”  In our 2009 Digital Trends, we’ve talked about the the fact that many consumers are clamoring for simplicity and the devices that are really winning, have one basic feature to highlight. Certainly the iPhone and the host of applications it’s opened the door for challenge that theory, but you could argue that the iPhone’s most popular feature and function is as a “application house.”

More obvious is the success of the Flip camera and surprise, surprise, the Amazon Kindle.

This past week Amazon released its Kindle 2.0, supporting a sleeker and thinner design and longer battery then its previous model, the new Kindle has seven times more storage and it holds over 1,500 books. Its “page turns” are faster and it has introduced some new features like “Read To Me,” which some have said, is a hard to decipher computer voice, and is causing some controversy among publishers. But more important then any of the groovy new features is that the Kindle could contribute to 3% of Amazon’s overall revenue in the last two years. What Kindle has done and what Jeff Bezos set up, is a new iTunes store, making revenue off the device but longer term, selling content through Amazon.

What I love most about the Kindle story comes from a quote Bezos gave in 2007 to Newsweek about the approach to the Kindle:

“If you’re going to do something like this, you have to be as good as the book …But we also have to look for things that ordinary books can’t do.”

The innovation here sprang from asking the question, what’s next…what more can we do, how can we support and grow behavior surrounding Amazon’s original mandate, sell books… This is not a product built for cool factor or to be competitive with the iPod…there are a ton of those solutions. The Kindle sprang from solving a business problem and approaching it’s “sale-ability” through discovering unique value propositions surrounding book consumption behavior.

What we can all learn from the Kindle story this year is that we can’t be squeamish about spending on innovation, r&d, thought leadership. If we can throw resources at growth areas, we can increase the bottom line but as Aldus Huxley wrote in Brave New World (available for Kindle here):

“Imagine the folly of allowing people to play elaborate games which do nothing whatever to increase consumption. It’s madness.”