Amazon has been eliminating unprofitable Amazon products and competitor’s products that are in the same markets as Amazon including Google’s Chromcast and Apple’s Apple TV. After Apple upgraded Apple TV, Amazon removed the product from its website:
“A sign of the heated streaming scuffle: Amazon recently pulled competing Apple TV and ChromeCast devices from its online store to avoid confusion for Prime Video customers, the company said at the time. “That shows you the intensity of the battle,” says Roger Entner, an industry analyst at Recon Analytics.”
But Amazon isn’t only removing competitive products it’s also slashing its own unprofitable products:
“On Friday, Amazon.com said it would be ending its credit card reader program, dubbed ‘Amazon Register,’ which debuted a little more than a year ago. The decision shutters a short-lived program that provided small and medium-sized businesses with an app and $10 credit card reader that could be plugged into a smartphone or tablet to process plastic payments.
‘Effective February 1, 2016, we will discontinue Amazon Register,’ said an Amazon spokesperson in an email. ‘We periodically evaluate our offerings to ensure that we focus on delivering unique benefits. And in this case, we’ve decided to discontinue Amazon Register.’ ”
It will be interesting to see how the market responds to Amazon’s exit from the low end of the acquiring market. Some may perceive this as further expanding the market opportunity for Square, a company expected to launch its initial public offering later this year. Others may perceive this as an indication that margins in the low end of the acquiring market are too thin to be sustainable, a bad message to deliver just as Square attempts to become a Unicorn.
Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group