Amazon Continues Changing Retail Landscape

One thing is certain. Online retailer Amazon.com (Nasdaq: AMZN) has changed the retail landscape in the United States forever. But that change is an ongoing process. The way Amazon does business continues to prod other retailers to change the way the companies relate to their customers.

For instance, take deliveries of items ordered by customers of retailers' websites. Amazon offers same-day delivery in 10 U.S. cities for an $8.99 fee in most cases. The company is able to do this thanks to the expanded number of warehouses it has across the country.

Amazon has invested hundreds of millions of dollars into expanding its portfolio of warehouses. These new warehouses are an effort to both get closer to its customers (speedier deliveries) and to get around the imposition of sales taxes on items ordered online.

Same-Day Delivery Service

Amazon's introduction of same-day delivery service led to some other retailers jumping aboard the ultra-fast deliveries of online purchases bandwagon last year. But the cost of offering such a service may adversely effect retail companies' profit margins that are already pressure.

Retail firms are still flying blind as many continue to search for the answers to vital questions such as how many customers actually will use such a service,the cost of it and how to divide the cost between the customer and the retailer itself.

Logistics strategist at consultancy Kurt Salmon, Al Sambar, told the Financial Times “It's ultimately a pretty costly service to deliver.” He does not think consumers will be willing to pay for such a service except for a few special circumstances, such as medicines and Christmas toys.

Firms Jumping Aboard the Bandwagon

Nevertheless, many retail firms are pushing ahead with offering same-day delivery services.

One prime example of this is the country's biggest retailer, Walmart (NYSE: WMT). In several markets, it is testing same-day delivery service of goods ordered online. In these markets, customers can have an unlimited number of items delivered for a flat $10 fee.

The company doing the heavy lifting for Walmart is the Supply Chain Solutions division of leading delivery company United Parcel Service (NYSE: UPS) to make these deliveries. This division of UPS is normally used for instances such as the ultra-fast delivery of key machinery parts for a machine that may have broken down.

This business is not completelt new for UPS though. Last year, it took a 6% stake in Shutl, a London-based firm that matches up retail orders with couriers that can make high-speed deliveries.

Online auction site eBay (Nasdaq: EBAY) is also trying out a same-day delivery service in New York and San Francisco. Customers using eBay's special iPhone app in those two cities that place an order are charged only $5 for delivery of the product that day.

According to the Financial Times, eBay is working closely with Target, Toys R Us, Best Buy, Home Depot and Urban Outfitters to make this experiment work.

The Future of High-Speed Delivery Services

The real question here is whether the majority of consumers really want the option of same-day delivery service.

After all, it would be a costly option for retail firms to offer. Most retailers would have to upgrade their logistics system. Many simply do not know what items they have and where. That makes it difficult to locate a product and ship it immediately.

So far, results have shown customers are more interested in knowing when an item will arrive and not if it can be delivered same day.

UPS has found that what customers really want is a service that helps them to not miss deliveries. UPS does currently offer such a notice service that gives customers a four-hour window in which the delivery will be made.

A UPS spokesperson told the Financial Times, “Quite honestly, what customers are telling us is as long as they know what the committed delivery date and time is, they are fine.”

Even Amazon's CEO Jeff Bazos told Fortune that he's “a little skeptical that same-day delivery is ever going to be a huge part of the business.”

Bottom line – such a service is going to be offered by more and more retailers. But it really will not be a driver of the business and may actually be a further drag on already tight profit margins.

 

This article originally appeared on the Motley Fool Blog Network. Make sure to read all my articles for the Motley Fool at http://beta.fool.com/tdalmoe/.

2013 Will Not Be a Good Year for E-Reader Makers

In the midst of a disappointing sales season for retailers, there have been several bright spots. One of those has to be the number of e-book readers that appeared under Christmas trees.

But the cheer is not expected to last throughout 2013. According to some technology analysts, this category of tech gadgets is expected to see a very rapid decline in its fortunes over the coming months thanks to competition from other devices.

Competition From Tablets

There are several well-known e-readers on the market including the Nook from Barnes & Noble (NYSE: BKS). Last April, the company announced a partnership with Microsoft (Nasdaq: MSFT) whereby Microsoft invested $300 million into its Nook unit. This investment is interesting in the light of Microsoft's move into tablets with Surface. 

There also a number of Asian manufacturers, but the best known of the e-readers are the various versions of the Kindle from Amazon.com (Nasdaq: AMZN). In the run-up to Christmas, the latest Kindles occupied three of the top 10 slots for electronics at Amazon's website.

But they were outsold by tablets, which occupied eight of the top 20 spots for electronics on Amazon's website.

Tablets are becoming more user friendly. . .lighter, cheaper and with longer battery life. Not to mention tablets are multifunctional. The Kindle and others are under direct fire from the mini-iPad from Apple (Nasdaq: AAPL) and the Nexus 7 from Google (Nasdaq: GOOG) that costs only $199.

It is this competition that has industry analysts so worried.

The Way of the Dinosaurs?

One worry wart is the research firm IHS iSuppli. It titled its recent report on the industry: Ebook Readers: Device to Go the Way of Dinosaurs?

According to iSuppli, total e-book readers shipments grew from a mere one million worldwide in 2008 to ten million in 2010. Shipments hit a peak of 23.2 million units in 2011. But even then, tablets had already taken the lead over e-readers with shipments of 67 million units.

In 2012, iSuppli has forecast that sales will fall 36% to just 14.9 million units. Another drastic 27% fall is forecast for 2014 when shipments decline to 10.9 million units. The firm sees sales of only 7.1 million units by 2016 as the consumer trend toward a multifunctional device – the tablet – continues.

Research firm Forrester is in agreement with iSuppli. It also believes that tablets will be become cheaper and cheaper while at the same time screens and battery life improves.

An analyst with Forrester, James McQuivey, believes e-reader prices and sales have only one direction to go. . .down. He told the Financial Times' Chris Nuttall, “Prices are falling so quickly that at some point Amazon's going to give you one for free to extend its customer relationship.”

Small Hope

As iSuppli points out in its report, it is an inexorable move from a single-use device to multifunctional devices. But it doesn't mean the complete end for e-readers. Think GPS devices and MP3 players.

There still may be some demand for the devices from one specific sector – the education industry in emerging markets.

With the growing popularity of the iPad and other tablets, it may too late to tap into the U.S. educational market in a big way. But it is a different story in the emerging world. But only if the e-reader makers grasp the opportunity quickly.

Jordan Selburn, an analyst with IHS, told the Financial Times “the future [for e-readers] is in emerging regions and in heavily subsidized opportunities.”

But in those markets, with incomes low, e-readers would have be very low-cost. Perhaps in the less than $20 range for end users. Some one (governments?) would have to subsidize the cost so e-reader manufacturers would make some profit.

So there is a bit of hope for e-reader manufacturers. But just not a lot of it.

 

This article originally appeared on the Motley Fool Blog Network. Make sure to read all of my articles for the Motkey Fool at http://beta.fool.com/tdalmoe/.

Consumer Tech Hardware Wars Heat Up

The past several weeks has seen a continuing convergence between hardware and software and a ratcheting up of the competitive fires between tech giants Amazon (Nasdaq: AMZN), Apple (Nasdaq: AAPL), Google (Nasdaq: GOOG) and Microsoft (Nasdaq: MSFT) with the unveiling of new devices from both Google and Microsoft.

In actuality, the latest product unveilings indicate that companies like Google and Microsoft seem to be adopting Apple's corporate strategy. That approach involves integrated hardware and content. And it is a successful one...Apple dominates the tablet market with a two-thirds market share.

Google launched two new products – a new 7-inch tablet computer and a living-room media streaming device (Nexus Q) which runs on the latest version of its Android software, Jelly Bean. This version of Android, by the way, will offer voice search capabilities similar to Apple's Siri virtual assistant.

The Nexus 7 tablet is priced at only $199, undercutting the $399 price of Apple's entry-level iPad by a good margin. And on the content side, where Google trails Apple and Amazon, the company announced new TV and movie deals with content providers such as Disney and NBCUniversal and publishers like Hearst. Both devices also integrate the company's social network, Google+ while the Google Now feature offers live sports and traffic information based on users location.

The week prior to the launch of Google's tablet Microsoft showed off its entry into the tablet market, the Surface, which has a 10.6 inch screen. It also has a stand, two cameras and a built-in touch keyboard. The main difference between the Surface and other tablet offerings is that it will offer users an experience more akin to a laptop PC.

Microsoft will offer two versions of Surface. The more expensive version will run on Windows 8 (due out in the fall) and uses a new Intel Core processor. A lower priced version features Windows RT and runs on an ARM processor that is found in most tablets. The company has yet to reveal at what price the two versions of Surface will sell for.

Of course, Amazon is not standing idly by. The company also offers a $199 tablet based on the Android operating system. And it recently announced that, for the first time ever, it is recruiting app developers as the company prepares to roll out its smartphone and tablet (including the Kindle Fire) platforms later this year in Europe.

So can any of the new devices challenge Apple's supremacy in tablets? Of course, they can. The tech world is constantly in a state of flux. But there is one key to doing that.....

That key has to be the thousands of independent software applications developers. Without content and apps, rivals to Apple (the iPad offers more than 225,000 apps) have little chance to compete. Can Microsoft and others entice app developers into writing apps to be downloaded to their devices? Google has a decent job so far with thousands of apps available and with 20 billion downloads. Now it remains to be seen if Microsoft can get developers to come up with apps for the Surface.

This article was originally written for the Motley Fool Blog Network. make sure to read my daily articles for the Motley Fool at http://blogs.fool.com/tdalmoe/.

A Look at the Corporate Tablet Market

In the battle for the consumer market in tablet PCs there seems to be a clear winner so far – the iPad from Apple (Nasdaq: AAPL). The latest figures from research firm IDC for 2012 show that Apple's worldwide market share grew from 54.7 percent in the fourth quarter of 2011 to 68 percent in the first quarter of 2012. Samsung was second and Amazon was third.

But it is still anybody's game in the corporate market for tablet PCs, although Apple is leading. A survey earlier this year by NPD In-Stat found that 68 percent of tablets provided by companies to their were iPads. Then there is the whole BYOD phenomena. More and more corporations are allowing their employees to bring their own device to work, adding even more growth in this sector.

Companies are doing so because, once security issues are addressed, BYOD projects result increased employee satisfaction, greater worker flexibility and significant cost savings. Take Citrix Systems (Nasdaq: CTXS), the cloud networking and visualization technologies company, for example. Just three years after launching a limited BYOD program, it has already met the 20 percent cost savings goal it initially set thanks to a large drop in desktop PC support requests.

The other major players in this market include tablets based on either the Android operating system from Google (Nasdaq: GOOG) or ones based on Windows from Microsoft (Nasdaq: MSFT). Google's Android does lead Apple in sheer numbers in the smartphone sector but that success has not translated to tablets. Its growth seems to be hindered by security concerns (very important to corporations) over a lack of control over the download of apps. Meanwhile Microsoft is being held back by the fact that many employers are awaiting the release of the new Windows 8 later this year as to whether to allow employees' Windows devices.

This is a fast growth market for the telecommunications companies. In fact, AT&T (NYSE: T) recently said that over the past year it has seen “an explosion in use” of tablet PCs by corporations. The company reported that the number of companies using tablets grew by 194 percent in the first quarter of 2012 versus the same year-ago period. It added that more than 27,000 business customers have adopted mobile device management deals with the company.

AT&T and its main rival, Verizon Communications both view the trend among companies to mobilize their business operations as a significant opportunity to add a large amount of revenue to their bottom line. Both firms have invested heavily into mobile app development and services that target business customers. AT&T says that 50 percent of Mobile Enterprise Applications Platform customers purchase additional software or services from the company, justifying the investment into these apps.

Investors can be assured that this macro trend of companies adopting BYOD will only continue in the future. This is probably good news for Apple, although rivals are still nipping at its heels. But for certain, this trend will turn into a major cash generator for the large telecommunications companies as they offer to manage BYOD programs for their customers.

This article was originally written for the Motley Fool Blog Network. Make sure to read ALL of articles daily for the Motley Fool at http://blogs.fool.com/tdalmoe/.

Apple Takes Lead in Digital Learning and Online Education

School-age children are quickly moving away from the traditional ways of learning, involving the use of paper, pencil and printed textbooks.....

The age of digital learning is upon us.

At the forefront of this new era is a company known to every investor – Apple (Nasdaq: AAPL).

The company recently announced its long-anticipated entry into the digital textbook market. It did so by unveiling a new “bookstore” for its iPad tablet, a new application for sharing university courses, online classes and a free publishing tool to help authors create interactive courses.

This is the company's first launch of a new product line since the death of Steve Jobs and therefore quite important.

The potential to improve students' results is significant. After all, children today have grown up with technology all around them all their lives.

The CEO of Discovery Education, a subsidiary of Discovery Communications (Nasdaq: DISCA), had some valuable insight on this subject. He said, “When they [students] go to schools and are asked to 'power down' and put technology away, you're not engaging them and you're going to lose them.”

Apple has wisely joined with partners in the educational publishing field to help sell their product. Some of the partners include well known names such as McGraw-Hill (NYSE: MHP) and Pearson ADR (NYSE: PSO).

These publishers and others unveiled a limited number of digital textbooks that are priced at $14.99 or less. Apple will take a 30% cut of the sales from these textbooks sold over its new iBooks 2 app.

This is a steep cut for Apple but its partners believe Apple can give the industry, with 1.4 billion students enrolled worldwide, just the rocket boost it needs.

Sales in the global textbook market are expected to reach $19.4 billion by 2013. The share of that market taken by digital textbooks is forecast to jump from just 3.4% in 2010 to 18.3% next year, especially if iBooks is a success.

Publishers are hoping iBooks succeed because they will also benefit from the switch to digital textbooks since they would no longer be burdened by the costs of printing and distribution of a traditional textbook.

Of course, it will not be entirely smooth sailing for Apple in this market.

Holding it back will be the price of its iPad - $499. Many schools simply cannot afford to buy iPads for use by their students and Apple made no mention in its presentation of offering schools a discount on its iPads. Currently, there are 1.5 million iPads being used by schools for educational purposes.

This may open the door to this market for lower-cost rivals such as the Kindle Fire from Amazon.com (Nasdaq: AMZN) which sells for only $199. The same publishers who are working with Apple have stated they are also involved in projects with Amazon and other tablet makers.

The educational market is relatively small for Apple, but its rapid growth offers Apple a wonderful opportunity to continue growing the company after the death of Steve Jobs.

But it is unlikely that iBooks will dominate the market as Apple does with music. The real winners here in the long term will be the publishers like Pearson, McGraw Hill and others.

Tablet Wars Heat Up

Tablet PCs are becoming more and more popular with consumers. The research firm NPD DisplaySearch last week estimated that the tablet PC market grew 250% in 2011 versus 2010 to 73 million units.

This heady growth not surprisingly has led to a heated battle for turf in this market between Apple (Nasdaq: AAPL) and its global rivals.

Last year tablet PC manufacturers from all over the world charged into battle against the preeminent tablet PC, the iPad from Apple. They all boasted they had the device which would knock the king off the throne.

None succeeded. Apple's iPad still retained a two-third market share.

In fact, some iPad rivals failed miserably...most notably the Touch Pad from Hewlett-Packard (NYSE: HPQ) and Research in Motion's PlayBook (Nasdaq: RIMM) But that does not mean the others have given up trying.

Apple's rivals this year are counting on a new Android operating system from Google (Nasdaq: GOOG) and the arrival of Microsoft's (Nasdaq: MSFT) Windows 8 to cut into Apple's market share. The addition of improved content from the likes Samsung and Sony ADR (NYSE: SNE) will be another weapon in the battle with Apple.

The release in 2011 of the Android 3.0 version, called Honeycomb, was not a success. It was designed specifically for tablets so it, in effect, split the Android operating system into two. It therefore did not get much developer support, ending up with a small base of Honeycomb tablets that offered very few applications.

This situation should change in 2012 with the introduction of the Android 4.0 version, called Ice Cream Sandwich. It is a unified operating system which already appeared in November operating Samsung's Galaxy Nexus smartphone. Since it is a unified system, the assumption is that developers will come up with lots of apps for it.

Microsoft's Windows 8 will come out sometime in the second half of this year. The excitement here will be its touch-optimized 'Metro' interface offering a bold alternative to the traditional Windows desktop. Tablet makers like Toshiba say “we're very excited about Windows 8 and we think it will grow the market for tablets in 2012.”

Also entering the fray are the makers of ereaders like Amazon (Nasdaq: AMZN) which have hit hard with their versions of tablet PCs selling for under $250. Amazon's Fire led its Kindle tablet to sales of more than 1 million a week in December.

One important aspect to Amazon's success so far has been its ability to sell its content and services, offering consumers a quality experience.

The ereader companies, with their low prices, will likely put the squeeze on Apple's other competitors who are trying to sell their tablets at somewhere near the $500 iPad level. A survey by the consumer electronics site Retrevo last month showed that consumers are unwilling to pay more than $250 for a non-iPad tablet.

But the survey showed consumers are willing to pay $500 for the iPad thanks to its apps and content.

The launch of iPad 3 in the spring may give consumers even more reasons to stick with Apple. It will be hard to dethrone this king.


This article was originally written for the Motley Fool Blog Network. Please check out my daily articles for the Motley Fool at http://blogs.fool.com/.