It's no iPad-killer; but don't underestimate the Kindle Fire

It's no iPad-killer; but don't underestimate the Kindle Fire

Summary: Guest blogger Bob Snow makes a case for why the Kindle Fire has a solid position in the tablet hierarchy. Don't be quick to write it off, the Fire could squeeze everyone else out of the picture.

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kindle_fire_ogradyA guest blog by Bob Snow:

An amazing price point and simplified version of Android makes the Kindle Fire a real player in the tablet market. It's going to grow the market from the bottom with Apple continuing to own the top. I don't think it leaves room for anyone else to survive without selling at a substantial loss.

Does it hurt Apple?

Maybe a little, but it decimates the rest of the competition over the next year or so. Sure, it could panic Wall Street a bit, (just like the rumor of Apple reducing production of the iPad did). But overall this new $200 price point is going to broaden the market for tablets, which is why it won't hurt Apple too much.

For Apple to continue to own the top end, the iPad 3 needs a Retina display, faster processor and more. Apple will also have to look long and hard at profit margins and consider dropping the entry-level iPad 2 to $400 before the holidays. Apple may need to keep a version of the iPad 2 around as a low-cost option -- like it did with the $99 iPhone 3GS.

With the Kindle Fire broadening the base of the pyramid, Apple has to up the ante for all the other tablet makers so that there is literally no room for them to exist. Amazon can afford to use the Fire as a loss leader to sell content. PC and phone makers, on the other hand, will have to sell their tablets at a loss (as close as $200 as possible with comparable specs to the iPad) to gain any kind of foothold.

Of course, nobody could possibly beat HP at that game. Demand for the HP Touchpad was astounding when it hit $99. It was possibly one of the best selling tablets of all time, for a nanosecond at least. Microsoft just needs to call it quits like it did with Zune and Kin.

The story goes something like this:

- "Your toasters are fantastic and only $10 each. How do you do it?" - "We make them in China but we still lose $5 on every one we sell." - "How do you stay in business if you lose money on every one you sell?" - "Volume!"

Topics: Laptops, Apple, Hardware, Mobility, Tablets

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14 comments
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  • RE: It's no iPad-killer; but don't underestimate the Kindle Fire

    "Microsoft just needs to call it quits like it did with Zune and Kin."

    Right... Whoah now lets not get too crazy here. There are a few of us that want more than just a media tablet. Based on the title of this post it's obvious what side of the fence you're on. This article sounds alot like the fire has made you nervous, why else have you all of a sudden created this new high-end category? Will this high-end media tablet survive once Windows 8 tablets show up with more functionality and the fire shows up a cheap equally capable media tablet? You have good reason to be nervous, the question is how will Apple respond to this.
    rwalrond
    • RE: It's no iPad-killer; but don't underestimate the Kindle Fire

      @rwalrond - Jason didn't create a high-end category, Amazon created a low-end device. Plain and simple.
      Gr8Music
      • RE: It's no iPad-killer; but don't underestimate the Kindle Fire

        @Gr8Music That doesn't answer the question. Where will the iPad fit? It's not a computer, there are lots of things it can't do but it priced much higher than the fire and probably the same as a windows 8 tablet. What is its USP?
        alecfoundry
    • They'll sell some

      Until Windows 8 ships on actual tablet hardware and we see how well it sells, we can expect endless predictions from Microsoft's fans that it will be a huge hit. This in spite of a great deal of empirical evidence that the world is not waiting for Windows in a tablet form factor.<br><br>Personally, I don't think all that many people want a "computer" in a tablet. But nobody knows for sure, and we won't for a year.
      Robert Hahn
      • RE: It's no iPad-killer; but don't underestimate the Kindle Fire

        @Robert Hahn Yes, after all there has never been a computer on a tablet, so until one appears we won't know if there's a market for it.
        varase
    • Re: There are a few of us that want more than just a media tablet.

      @rwalrond You had your chance. You could have bought a Windows XP tablet at any point in the last 10 years, but you didn't. Because Windows and a tablet make a terrible mix.

      And Microsoft's Windows 8 efforts have just been rendered too little, too late. Even before it can be released, Windows 8 is already dead in the water.
      ldo17
      • RE: It's no iPad-killer; but don't underestimate the Kindle Fire

        @ldo17 Who are you to predict the future and say Windows 8 is dead? Despite the iPad being in the market, Windows 7 is still the market leader by far. Windows 8 will just be a bigger success, probably dominating all markets, maybe even the phone market, considering it will be the OS with the widest audience, and probably the most apps once every developer signs on.
        israeljamesbond
  • A Great Reading Device it will Be

    I am an iPad fanatic and have both an iPad 1 and iPad 2, but I still am interested in getting a Fire as a book reading device because of its size and expected better reading capability in bright sunlight. Amazon book pricing is also lower than books from the iBookStore. Also the other Amazon features and the price of the make it attractive to me.

    But the iPad will always be my main mobile lifestyle device!
    RoyWagner
    • Fire screen tech more like iPad than previous Kindles

      @RoyWagner The Kindle Fire's screen is essentially the same technology used in the iPads, not the eInk display of less-expensive, e-reader-only Kindles ... which can't do all the cool media stuff the Fire or iPad do.

      So I wouldn't expect the Kindle Fire to look much -- if any -- better in sunlight than an iPad. For that, Amazon still offers the traditional Kindle, now at a new, lower price.
      jscott69
  • RE: It's no iPad-killer; but don't underestimate the Kindle Fire

    I agree that Amazon will get a nice chunk of the market, but I disagree that Apple will have to reduce price to stay in the market. Apple just has to continue what it's currently doing to make money hand over fist. The only difference is that people who would like to try a tablet but consider an iPad (and all of those shiny high priced android ones) but find them too expensive will grab a Fire.
    Aerowind
  • Amazon has created

    A way for many to now purchase a tablet that previously could not justify the cost of an iPad or even $300 for a competitor. This will introduce many people to the tablet market and get them "hooked" on using tablets. This is good for Amazon & for Apple. In many cases these folks may make a move to "upgrade" to a more powerful tablet like the iPad once they get a tast of a tablet by purchasing the Fire. If the Fire establishes itself as the entry level tablet leader and Apple continues as the high end leader, the middle is going to be a crowded place with low volume sales.....
    tgschmidt
  • RE: It's no iPad-killer; but don't underestimate the Kindle Fire

    The battle here is to determine where the dividing line falls between the iPad and Kindle Fire in terms of units sales. If the point of entry for an iPad remains at $500, then Apple will lose a significant number of sales to Amazon. While the Kindle Fire should help expand the tablet market significantly, some sales will inevitably come at Apple's expense. Apple will have to weigh the tradeoff between reduced unit sales and reduced profit margin. Keep in mind that Apple maintains healthy profit margins in the phone and personal computer business where others just peddle a commodity.
    bobsnow
  • A poor value

    As retailer, my customer feedback gives me a feeling the whole tablet PC thing may turn into the Pet Rock of computing unless substantially upgraded models hit the market - fast.<br><br>The selling points of tablets are obvious: Small size, great battery life and trillions of apps that do everything from paying at Starbucks to checking the weather. It's what's omitted from the sales pitch that creates buyer remorse:<br><br>* Unless you're someplace with free Wi-Fi (802.11) access, you're enslaved to a carrier's 3G/4G data plan. Go over the limit with AT&T or Verizon and the customer receives a monthly overage bill that could choke a horse. Having a 250GB hard drive (versus 8-32 GB of flash memory) reduces the need for "cloud" computing.<br><br>* The novelty of a touch screen keyboard goes away when running word processing or spreadsheet apps. Although a "real" keyboard is available for most units at around $100, it's added baggage. Don't ask me how many times I've been asked, "How can I install MS-Office?" on an iPad or Android tablet.<br><br>* No optical drive. Although not on netbooks either, it's surprising how many people want to use a portable device to entertain Junior with DVDs on a road trip.<br><br>I'm still pondering where the tablet fits in between the smart phone and a notebook PC. Other than a smaller screen, the phone can do everything the tablet does. Given entry level 15" notebooks with Windows 7 are available at around $300, the tablet PC is a poor value - especially for customers who already own a smart phone.
    aqr
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