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Amazon launches, gives away millions in Amazon Coins to spur app downloads on Kindle Fire

post #1 of 27
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Amazon on Monday celebrated the launch of its new Amazon Coins by giving ?tens of millions of dollars? of the virtual currency to Kindle Fire users as part of its latest bit to attract customers to its own Kindle platform, and away from incumbents like Apple's iOS and Google's Android.

coinage


The online retail giant launched its new currency with a promotion that will see all Kindle Fire owners gifted with 500 Coins, a $5 value. The coins can be used to purchase apps and in-app items on the Kindle Fire (review). Amazon will also give up to a 10 percent discount to customers buying Coins in bulk, the online retailer said.

The virtual currency is aimed at increasing the number of apps Kindle Fire owners buy, putting more money into the hands of developers for the platform and thereby attracting new talent to its platform. Amazon operates its own Appstore and competes directly with both Google and Apple for app, music, video, and book sales.

Revenue sharing on apps and in-app purchases will operate in the same manner it did before Coins. Developers will get a 70 percent cut of the revenue with Coins. Amazon Vice President of Apps and Games, Mike George, says that the new currency is only the beginning.

"We will continue to add more ways to earn and spend Coins on a wider range of content and activities," George said. "Today is Day One for Coins."

coinage
Amazon's Kindle Fire Tablet


Amazon takes a different track with its Kindle devices than does Apple with its iPad. Whereas the iPad is sold at a premium price point, Amazon sells its Kindle Fire devices roughly at cost, maintaining a lower cost of entry with the hope of making back the money when customers buy apps, music, and books.

The online retailer does not disclose how many individual Kindle Fire units it has sold, but it maintains that the device is consistently the most popular item on Amazon.com, which itself is one of the most popular sites on the Internet. Prior to introducing the most recent Kindle Fire iterations, Amazon announced that the Kindle Fire accounted for one out of every five tablets sold in the United States.

A recent report from Asymco analyst Horace Dediu found that quarterly revenues for Apple's iTunes hit $4 billion, giving the company a $16 billion annual run rate for iTunes. iOS device users, according to Dediu, purchase content on Apple's store at a rate of about $40 per year.
post #2 of 27

I strongly hope virtual currencies don't become the new thing. Our real currencies are already virtual, and at least they're exchangeable.


The online retailer does not disclose how many individual Kindle Fire units it has sold, but it maintains that the device is consistently the most popular item on Amazon.com


That just tells me they haven't sold any. If you're too cowardly to even post your numbers, you don't need to be allowed to claim things about them.

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post #3 of 27
Quote:
as part of its latest bit to attract customers to its own Kindle platform, and away from incumbents like Apple's iOS and Google's Android.

I'm pretty sure the phrase would be latest bid not latest bit.

post #4 of 27

Five HUNDRED coins!  Wow, how incredibly generous.  Oh, that's 5 bucks?  Never mind.  At least the the coins themselves look awesome.  Oh, they aren't real coins?  This has disappointment written all over it.


Edited by malax - 5/13/13 at 8:41am
post #5 of 27
MINT THE COIN!
post #6 of 27

When your product is not good enough to for people to pay for it, why not give them freebies.

post #7 of 27

The concept of a virtual currency is not new. The theory is great but I don't think it will ever catch on.  

post #8 of 27
I think this won't help that much, though there is nothing wrong for virtual currencies for purchasing apps and in-apps, it worked well for Facebook, look at Zynga, very successful.

The main problem with buying apps on the Kindle Fire is... its really hard to figure out where to find the appstore on the device!
post #9 of 27
Running out of arrows in your quiver Amazon?
And a coin design borrowing the theme of Katniss from Hunger Games isn't infringement? Or maybe it's a subtle book/movie promotion.
post #10 of 27
Didn't Microsoft at some point pay people to use Bing?

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post #11 of 27
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Originally Posted by c4rlob View Post

And a coin design borrowing the theme of Katniss from Hunger Games isn't infringement? Or maybe it's a subtle book/movie promotion.

 

It looks like an Amazon warrior.

post #12 of 27

Is this the new S & H Green Stamps?

 

Because we all know how successful that was (as a sea-change to currency in general).

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post #13 of 27
Why not just give users 500 pennies...

Or make it easier. $5!
What a joke.
post #14 of 27
... a promotion that will see all Kindle Fire owners gifted with 500 Coins, a $5 value.

 

The "last resort" marketing tactic: pay people to use your device and/or service.

I seem to recall Microsoft paying people to use Bing.  Didn't seem to help much.

(Just DuckDuckGo "Live Search Cashback 2008" for all kinds of references.)

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post #15 of 27
I hate virtual money. You buy something and have 3 coins left which will never be able to be used or converted back to real money. Just use real money! And really? 5 whole dollars! "Honey I'm retiring! We hit the jackpot!"
post #16 of 27

I don't understand their implementation and I see no advantage of switching to "coins" (aka tokens). Are they trying to establish a common currency to standardize pricing across all of their product lines? I suppose that could vastly simplify any currency exchange rate problems, but it would make comparison shopping much more difficult and would ultimately scare customers away.

 

If this is an attempt to circumvent state sales taxes, I don't think this will work unless they allow the use of something like Bitcoin instead. A dollar turned into a token to make a purchase is still a taxable event (at least according to the taxes I'm aware of).

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post #17 of 27
Important distinction:

With iTunes, if you buy an iTunes card for $10, even if you pay only $8 cash, you get $10 in your local currency in your iTunes account.

With Amazon coins, if you buy 10 coins for $8, you have 10 coins in your account. If an app costs 1 coin, from the sounds of it, the developer gets 70% of $0.80 [Amazon's revenue for the coin] and not 70% of $1.00 like on the Apple store.
post #18 of 27
Quote:
Originally Posted by Brunzilla View Post

Why not just give users 500 pennies...

Or make it easier. $5!
What a joke.

It is the same idea as your grocery store giving you reward points. It is an encouragement to buy something from them. Pretty normal marketing strategy.

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post #19 of 27
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Originally Posted by mstone View Post

It is the same idea as your grocery store giving you reward points. It is an encouragement to buy something from them. Pretty normal marketing strategy.

 

If it's merely an incentive system, I suppose that's fine.

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post #20 of 27
Quote:
Originally Posted by whatisgoingon View Post

Important distinction:

With iTunes, if you buy an iTunes card for $10, even if you pay only $8 cash, you get $10 in your local currency in your iTunes account.

With Amazon coins, if you buy 10 coins for $8, you have 10 coins in your account. If an app costs 1 coin, from the sounds of it, the developer gets 70% of $0.80 [Amazon's revenue for the coin] and not 70% of $1.00 like on the Apple store.

According to the article one Amazon coin is worth a penny in US currency. So what exactly is the point you are trying to make?

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post #21 of 27
Does anyone like FB credits/Microsoft points?

I think there's a reason that the successful mobile platforms (iOS, Android) don't use virtual currency.

People hate having to deal with currency that's not what they use everyday. They put up with it when they get rewards (ie, rewards points/miles) or when they get gift cards. But if you have to purchase something and you're forced to "buy points/coins" then it's a huge friction point for the sale.

Amazon is the last company I would have figured to screw up on this - their upside on "coins" must be huge - is it a tax avoidance scheme or do they absolutely hate doing ACH?
post #22 of 27
When you peel the virtual gold foil off of these coins, do you end up with a piece of virtual chocolate?
Mmm, tasty!

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post #23 of 27
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Originally Posted by Applelunatic View Post

I'm pretty sure the phrase would be latest bid not latest bit.

Being as one use of the word "bit" is for a comedy skit, I think it could be appropriate.

post #24 of 27
Quote:
Originally Posted by Maestro64 View Post

When your product is not good enough to for people to pay for it, why not give them freebies.

Like the Pepsi/iTunes promotions in the early days of the ipod where millions of songs were given away for free?
post #25 of 27

Interesting Amazon purchase today. They snapped up a display maker, Liquavista. So now Amazon is getting into component company ownership too.

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post #26 of 27

Amazon seem to have an economic model that is all about selling content. It widely agreed that they are making nothing or next to nothing on the hardware and have to make it up by getting people to buy apps and other media.

 

I am guessing that they are finding too few of their customers are regularly buying content and so a way to get them in the habit of accessing the app store etc would be served well by a $5 dollar token. It might just get a few more to decide whether it is a facility they want to use or not at no cost to the individual. 

post #27 of 27
Quote:
Originally Posted by Timbit View Post

I hate virtual money. You buy something and have 3 coins left which will never be able to be used or converted back to real money. Just use real money! And really? 5 whole dollars! "Honey I'm retiring! We hit the jackpot!"

 

See, when you spend Amazon's "funny money" you get "strange change" after the transaction. A smart investor would ask Amazon to send him his change. Maybe in 20 years, they could be collector's items.

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