Since its inception in 1994, Amazon.com has made quite a bit of coin on the Internet. Now, the nation's biggest online retailer, based in Seattle, Wa., is offering a virtual coin currency that users can buy and use for discounted payments via the Kindle Fire tablet for in-app and other purchases.
Amazon Coins were first announced in Feburary, but visitors to the site on Monday (May 13) were greeted with a message from founder and CEO Jeff Bezos that Kindle Fire owners have been awarded a credit of 500 coins, worth a penny each.
Discounts For Users
"You can use the coins to buy apps and games, as well as items inside apps and games," writes Bezos. "And if you want to purchase additional coins for yourself or your family, you get to do so at a discount."
As an incentive, Amazon offers a more substantial discount when you buy larger increments of Coins, beginning with a four percent discount off a 500 coin purchase ($4.80), 5 percent off 100 ($9.50), 8 percent off 2500, and capping at 10 percent off 5,000 and 10,000 virtual coins ($5 and $90, respectively).
The availability of Coins comes as a Kindle Fire competitor, Barnes and Noble's Nook HD, is getting an upgrade to the full, unforked Android operating system, with access to the myriad offerings of Google Play for apps, games and media.
"I'd say this salvo is aimed directly at Google and the Play Store," Charles King, principal analyst at Pund-IT told us.
"In essence, Amazon is selling its 'currency' as up to a 10 percent discount over real money but is still selling apps at full cost and guaranteeing its app developers their 70 percent revenue share. That means the difference is coming out of the company's pocket."
Essentially, King adds, it's the same strategy of a "loss leader" used by supermarkets when they sell eggs or toilet paper for a price that is lower than the cost of those goods, to lure customers into the store.
'Fork' In The Road
The problem, he said, is that it sends a message that an incentive is needed because things aren't going very well.
"The trouble for Amazon may be that the company's decision to 'fork' Android, bypass Google and develop its own outlet for Kindle apps is not paying hoped-for dividends," said King. "Despite the Kindle's popularity as an ereader, the biggest and best market for Android apps and developers remains Google's Play Store. That reality seems to be having a direct effect on Amazon's bottom line."
In announcing Coins on its developer blog in February, Amazon told its partners "For you, it's another opportunity to drive traffic, downloads, and increased monetization. Plus, there's no integration required--you'll get paid the same 70 percent revenue share whether the customer chooses to use Coins or their own money."