Is it any wonder that by some estimates Amazon (NASDAQ: AMZN) has move ahead of Best Buy (NYSE: BBY) to become the largest consumer electronics dealer in America? Aside from its huge e-commerce traffic, it has also shown it will drop prices on popular items to extraordinarily low levels. One recent example is 4K Ultra HD TV, Amazon sells for under $2,000. A careful look at the offer shows Amazon is selling more than a TV
PC Magazine recently described the technology as the “next big step in TV technology. Its editors added:
A UHD or 4K display is one with at least 8 million active pixels. For televisions, that resolution has standardized to 3,840 by 2,160. Digital cinema 4K (the resolution in 4K movie theaters) is slightly higher at 4,096 by 2,160. However you define it, it’s four times the number of pixels on a 1080p display, and over 23 times the resolution of standard definition television.
For starters, 4K is obviously much sharper than 1080p. In the space that a 1080p HDTV holds a pixel, a 4K TV of the same size can hold four. That makes for a significant jump in clarity, assuming you have native 4K source material to watch in that resolution.
Amazon’s offer: $1,534.89 for a LG Electronics 65UF8600 65-Inch 4K Ultra HD Smart LED TV (2015 Model). Its primary features:
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Refresh Rate: 240Hz (Native)
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Backlight: UHD LED (Edge LED)
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Smart Functionality: Yes
Dimensions (W x H x D): TV without stand: 57.2″ x 33.5″ x 2″, TV with stand: 57.2″ x 35.8″ x 13.3″
- Inputs: 3 HDMI, 3 USB, 1 RF, 1 Component, 1 Composite, 1 Optical, 1 RS233 and 1 LAN
Amazon is clever. A possible buyer cannot get the price until the LG Electronics is added to the customer’s cart, so the e-commerce company gets the customer half way to actually buying the product. Amazon adds several marketing wrinkles. The customer can get $50 off the price of the LG Electronics TV, but has to apply for Amazon.com Store Card. A buyer does not have to pay any interest on a credit card purchase, if the entire amount is paid in a year. In the meantime, Amazon has collected a large amount of data as the consumer applies for the card.
Amazon also uses the low price TV as a means to sell to its “Prime” service by offering credit card holders “5% back.” Prime is another way Amazon adds a layer to customer engagement. For $10.99 per month, the subscriber gets free access to a library of tens of thousands of streaming videos, a music service, photo storage, and some forms of free shipping. Amazon has started to produce its own content to compete with Netflix (NASDAQ: NFLX), and fiber to the home and cable companies. It needs a growing roster of Prime subscribers to support huge production costs
Finally, the version of the LG Electronics 65UF8600 65-Inch 4K Ultra HD Smart LED TV is a 2015, something Amazon likely wants to clear from inventory.
A low priced 65-Inch 4K Ultra HD Smart LED TV is not just a TV. It is a means for Amazon to bring in new customers and hold them, or to get current customers to make more purchases.
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