Image courtesy of NYTimes.com

Lots of sites are covering the fact that Amazon has decided to sell their own line of electronics accessories named AmazonBasics.  Right now, you’re able to preorder a selection of cables, and blank discs.  These products are add-ons people usually purchase and do so frequently because the prices are low and very few people have a preference to a brand.

While many are making light of this decision from Amazon it has much further reaching ramifications which I’ll be discussing below.

Firstly, this move further stresses the reality that products succeed or fail because of distribution than design.  There are only but so many ways to make an HDMI cable, and whichever is the best doesn’t matter if that better product never gets promoted online or in a store.  Amazon doesn’t need to manufacture anything it wants to make, all it has to do is give it space on it’s frequently visited site and the rest will take care of itself.  They are guaranteed to make a profit since they are able to control the cost and price.  The bar is set relatively low and as stores like Circuit City, Best Buy and Walmart have proven, there is lots of money to be made with private label products.  While this may not change the business models for many companies, there are going to be companies who are going to go out of business.  Afterall if you have to fight Amazon on their own site, you’re likely to lose and lose dearly.

Secondly, if this experiment proves to be successful then the cables and discs are the first in a foray of product from portable DVD players, GPS systems, digital cameras, and HDTVs.  I found it amazing that no one else made the connection between this announcement and the eventual introduction of an Amazon HDTV.  If you don’t think it’s possible you only have to look at Best Buy and their line of Insignia, and Dynex HDTVs.  By the virtue of their distribution, they are to get companies like Samsung and Sharp to make these televisions with a different name put on them.  Customers love the lower prices with comparable quality and the transaction guarantees higher profit and no competition.

Thirdly, many companies are realizing with this announcement how dangerous it is to have a handful of companies with so much insight.  Amazon knows what customers buy, how much their willing to pay, what time, and what accessories they like to buy as well.  This gives the perfect opportunity to make sure that they succeed with this product launch.  It would be unfair for Amazon to promote their own products over another manufacturer, but this kind of favoritism doesn’t prevent companies like Google, or Microsoft, or Best Buy from doing the same when people come to them.

It may be until Q4 2010 until we start seeing them get out of just cables.  Still, this is a very important day in history as it marks a change in how customers buy their electronics, the brands they have to choose from, and the pricing pressure applied to manufacturers.