Amazon AMZN just launched the first satellite for its brand-new Internet service. While this is good news for Amazon, the competitive marketplace, and the public in general, the real question is: Will it become a dominant service or just another in a crowded competitive field?
Let’s start with Cable TV companies — true heavy hitters in the Internet space. These include Comcast Xfinity CMCSA , Charter Spectrum CHTR , Altice and all the smaller services as well. Next up: Telephone companies, like AT&T , T-Mobile TMUS , Verizon VZ and countless smaller providers.
The market is dynamic too, so there are emerging services to reckon with as well: Wireless carriers like T-Mobile, for example, now offer home wireless Internet connections. They’ve already won 523,000 home-based Internet customers as of the first quarter of this year. AT&T and Verizon are also entering this space and could end up growing at the same fast pace
And don’t forget that Amazon is entering the marketplace on the satellite side, where there’s another range of competitors, including the likes of Elon Musk’s privately held Starlink, Viasat VSAT , Hughesnet (a subsidiary of EchoStar Corporation SATS ) and more.
At this early stage, I believe Amazon can be successful — even amid all of the competition and innovation that’s already under way.
But I don’t believe the company will be satisfied with that. You see, very large, very successful companies like Amazon do not enter a market unless they can dominate.
They don’t want to just be another player. They want to be a leader. The leader in fact.
So the real question is, if Amazon is successful and dominates the satellite Internet space, how will that impact existing and older competitors, both wireline and wireless via satellite and new ones with wireless access?
I think we will see most competitors wait and see. However, while they may wait to act, they will be planning their counter-offensives. Something they can launch quickly.
In fact, I have been invited to participate in several exploratory meetings like this.
Other competitors may opt for a pre-emptive strike, trying to lock in customer relationships ahead of Amazon’s entry. Expect to see some of them offer attractive long-term deals if customers commit.
I think Amazon will rock the boat as they enter this new space. They will likely make attractive offers of their own. They could bundle their service as part of Prime.
Whichever approach the company chooses, expect lots of excitement and bundles and noise and chaos.