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Larry Dignan, Andrew Nusca and Rachel King
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Amazon's Kindle Fire just nuked the tablet market: Winners and losers

By | September 28, 2011, 7:58am PDT

Summary: Amazon just split the tablet market with Apple. The Kindle Fire is subsidized because you’ll shop more. Apple will stay high-end. Every tablet maker in the middle is screwed.

Amazon CEO Jeff Bezos took the stage Wednesday to unveil an arsenal of devices that are going to disrupt rivals like Barnes & Noble as well as Android tablet makers.

By rolling out the Kindle Touch (starting at $99), a regular Kindle ($79) and a Kindle Fire tablet ($199), Amazon introduced a subsidized model that only Apple can really match (statement). In a nutshell, we’re entering a near disposable e-reader/tablet era that will split the market between Amazon (consumption based profits) and Apple (high end brand profits). Every technology company caught in the middle is going to have some serious problems.

Also: CNET live blog | Amazon’s Bezos unveils Kindle Fire; color tablet computer | Amazon’s Kindle Fire; At $199, finally a viable college tablet | Amazon’s Bezos unveils Kindle Touch, $99; Kindle, $79 | CNET: Amazon unveils trio of Kindle e-ink readers | Nook vs Kindle Fire specs | iPad vs Kindle Fire specs All Kindle coverage

Here’s a look at the winners and losers in the wake of Amazon’s latest line-up of Kindles:

Winners:

  • Amazon: This tablet isn’t about hardware. It’s about consumption of Amazon services like music, streaming movies and apps. The Kindle Fire is an extension of Amazon’s store. How can Amazon price at $199 for a Wi-Fi tablet? Because you’ll shop more, consume more and be an Amazon Prime subscriber. The Kindle Touch and Fire equate to a lot more shopping and usage.
  • Android market share: Should Amazon’s heavily customized Android tablet take off it will go a long way to bolstering the operating system’s market position. Today the tablet market is all iPad all the time. Amazon will change that.
  • Apple: Amazon’s tablet isn’t an iPad killer by any stretch. In fact, Amazon’s aggressive pricing creates two tablet markets—high end and near disposable. Apple can hold its pricing. So-called iPad killers won’t be able to hold the market. In other words, Amazon and Apple just split the tablet market. There are $199 tablets (Fire) and $499 tablets (iPad). Anyone in the middle is toast.

Losers:

  • Android tablets: If HP’s TouchPad fire sale ruined the Android tablet market, Amazon just killed it. A color tablet at $199 will kill pricing for Android tablets. Rest assured, Amazon will cut prices later. In other words, $99 is the new price point in just a few months. It’s going to be ugly for select hardware makers. Here’s a scenario: You can buy a Kindle Touch (starting at $99) and a Kindle Fire tablet for under $300 and still undercut most tablet makers.
  • Barnes & Noble’s color Nook: Yes, Amazon was late to the color tablet/e-reader party. But Barnes & Noble will have to cut its price from $249. That will squeeze margins for Barnes & Noble, which doesn’t have the financial firepower to hang with Amazon. On the e-reader front, the squeeze is still on.
  • Android 3.0 Honeycomb: What does it say when the two bestselling tablets are hybrid e-reader/tablets running on a lesser version of Android. It says Honeycomb isn’t that great.
  • Research in Motion: If Amazon will sell you a PlayBook-like tablet starting at $99, what is RIM going to do. RIM lacks apps—no Angry Birds—scale and pricing. The PlayBook may be over.

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Topics

Amazon.com Inc., Amazon Kindle, Amazon Kindle Fire, Tablets, Notebooks, Hardware, Notebooks & Tablets, Larry Dignan

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic.

Disclosure

Larry Dignan

Larry Dignan has nothing to disclose. He doesn’t hold investments in the technology companies he covers.

Biography

Larry Dignan

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CNET News.com. Larry has covered the technology and financial services industry since 1995, publishing articles in WallStreetWeek.com, Inter@ctive Week, The New York Times, and Financial Planning magazine. He's a graduate of the Columbia School of Journalism and the University of Delaware.

For daily updates, follow Larry on Twitter.

Talkback Most Recent of 279 Talkback(s)

  • The Winner is Amazon w/ Google Android!
    $199? lol... The iPad wake music is sadly playing in the background. Dual core processor on IPS Gorilla Glass screen with FLASH.... no less!

    What a heart breaker for Steve Jobs that must be!!! /S
    ZDNet Gravatar
    KronJohn
    28th Sep
  • Have they specified Flash?
    @KronJohn With all this talk of silk (== skyfire) I wonder if flash videos will be rendered in the cloud then painted on the tablet's screen. And games etc might not work...?
    ZDNet Gravatar
    The Star King
    28th Sep
  • RE: Amazon's Kindle Fire just nuked the tablet market: Winners and losers
    @The Star King Yes in the future it's a possibility. But the same outcome. Still means FLASH is not dead and Android still rules with over 50% of the smartphone market. Plus... if the new FLASH 11 P2P Revolution is anything close to what they're hyping, P2P becomes far more powerful the more users you have serving FLASH games in bit torrent like hives in the 1000's. FLASH 11 could not be streamed from one cloud server at 1080p 30fps! .....and that's the GPU accelerated facts of the coming FLASH 11 Revolution!

    So yeah..... they won't even work on Skyfire. It'll just be for simple games and other flash non interactive content!
    ZDNet Gravatar
    KronJohn
    28th Sep
  • RE: Amazon's Kindle Fire just nuked the tablet market: Winners and losers
    @The Star King Silk != SkyFire. While there are some aspects that are similar, it's not quite that simple. SkyFire renders everything remotely first, then sends it to the device. Silk makes decisions based upon performance and usability on what content to render/cache/store on the servers, and what content gets delivered right to the device for rendering. In the case of your example: Flash games/videos would perform better rendered on the servers, but would be much more usable rendered on-device, so it would likely have them set up there.
    ZDNet Gravatar
    AlexDeGruven
    28th Sep
  • Don't count the Nook Color as a loser yet
    The only thing B&N has to do is to NOT lose money with the Nook Color. If that means zero profits for the hardware, then so be it. They can obtain profits, albeit small, in the ebook part of the equation.

    If B&N can manage to produce a Nook Color at $199 without losing a single penny, then I don't see how it is going to be a loser.

    Now, regarding the Nook Touch B/W, it has been put in a very difficult situation. It might be its end.
    ZDNet Gravatar
    markbn
    28th Sep
  • RE: Amazon's Kindle Fire just nuked the tablet market: Winners and losers
    @KronJohn
    You obviously didn't read the article. Your prediction is exactly 180degrees wrong. If anything, this tablet will help cement the iPad as the top-end tablet. Why would anyone buy an Android tablet priced close to the iPad when they can get this for $200.

    This thing is so cheap there will folks who buy both the iPad and the Amazon. Have the best of both worlds. I own an iPad and wouldn't even think of paying $400 for an Android tablet, but I might just supplement my ipad with this cheap little bargain!

    Your assessment of Jobs weeping might also be wrong. He might actually be thanking the 'Zon folks for releasing this and getting folks minds off more expensive competitive devices. This would put Apple at the top (price and quality wise) where they flourish and prosper.
    ZDNet Gravatar
    camcost@...
    28th Sep
  • RE: Amazon's Kindle Fire just nuked the tablet market: Winners and losers
    @camcost@... This thing is so cheap there will folks who buy both the iPad and the Amazon.

    Yep. My wife and I are both early iPad adopters and both have top-of-the-line iPad 2s...but I may buy a Kindle Fire as well. I have a lot of apps on my iPad 2 that I use frequently and that I suspect will never appear on the Fire -- but, to be honest, the iPad sucks at reading text in sunlight. So the Fire may become my bookstore (and Amazon Prime streaming video device). ..bruce..
    ZDNet Gravatar
    bwebster@...
    28th Sep
  • RE: Amazon's Kindle Fire just nuked the tablet market: Winners and losers
    @bwebster@...

    but, to be honest, the iPad sucks at reading text in sunlight

    Maybe I missed something, but doesn't the Fire have the same type of screen as the iPad (IPS). This is still a back lit screen and shouldn't be much better in the sunlight then the iPad. I would think only the other "e-ink" based models would be great in the sun.
    ZDNet Gravatar
    tk_77
    28th Sep
  • RE: Amazon's Kindle Fire just nuked the tablet market: Winners and losers
    @camcost@...
    You make no sense. This tablet is the lowest end of tablets. It will not compete with the majority of android tablets as it doesnt have the specs or hardware to compete with full blown android tablets. The ipad stays where it is as its base is just apple users who do not care about functionality or price. Tablets like the Samsung Galaxy, xoom,transforer, and thrive all out do the ipad completely and if they can cut cost to $250 or $300 so buying a table made sense then the ipad would be done. Fcat is I have all of the above tablets ie tab, thrive, xoom, and transformer and I only paid max of $295 new for the highest one. This kindle will keep the ereader crowd but as for the general public they do not make sense as they are underpowered , on an old os version, missing front camera, and not in the 10.1 format.
    ZDNet Gravatar
    Fletchguy
    28th Sep
    • Flagged
  • RE: Amazon's Kindle Fire just nuked the tablet market: Winners and losers
    @Fletchguy@...
    Looks like another didn't read Dignan's article and are coming up with counter conclusions to justify their previous purchases.
    ZDNet Gravatar
    camcost@...
    28th Sep
  • Why not pay $400 for an Android tablet?
    @camcost@... The IPad is a bunch of icons that run applications. It does nothing else. The camera is a joke. Its not fool-proof (my Netflix app freezes, web browser freezes, apps need to be restarted occasionally, all which if forgivable but happens). The IPad isn't anything but a screen that plays apps. There is no experience, just icons.

    Android is the same thing, a bunch of icons and runs apps (most are the same apps). To say otherwise is simply fanboyism.
    ZDNet Gravatar
    A Gray
    28th Sep
  • RE: Amazon's Kindle Fire just nuked the tablet market: Winners and losers
    @camcost@...
    Fire nukes the low end and Microsoft will nuke the high end when they start pushing Win 8 based tablets. My Dev preview from Build makes the iPad look like a toy.
    ZDNet Gravatar
    sharkboyjohn
    28th Sep
  • RE: Amazon's Kindle Fire just nuked the tablet market: Winners and losers
    @camcost@... If you have an iPad why would you need this? If its because they don't do the same thing then why would someone buy this over a standard Android tablet when its going to be short the same features that it would be from an iPad. That simply doesn't make sense.

    Then again it would take an iPad minded person to buy both IMO.
    ZDNet Gravatar
    storm14k
    28th Sep
  • RE: Amazon's Kindle Fire just nuked the tablet market: Winners and losers
    @camcost@...
    A gray = toddybottom?
    I could be wrong but they seem to whine the same way. Especially the part at the end where you basically have to be a fanboy to disagree with him.

    Going back to his post, guess what my quad-core desktop does? Run applications and have icons. What do you want a computing device to do? your laundry?
    ZDNet Gravatar
    anono
    28th Sep
  • RE: Amazon's Kindle Fire just nuked the tablet market: Winners and losers
    @KronJohn

    Did you even read the article? This does not affect the iPad (as predicted), but instead will kill the other Honeycomb tablet market trying to compete with Apple offering premium pricing. Amazon and Apple have what most of these tablet OEM need, and that is a content ecosystem (Curated Apps Store, music store, movies, TV shows, Audiobooks, eBooks, games, Cloud syncing and storage, all tied to the same one-click account). Apple will control the high end market and Amazon will eat-up the lower end. Apple at anytime can match Amazon's pricing and make it up with the increased shipment, but they don't need to. That will just offset their entire product line (iPhone, iPod Touch, iPods will also need to be lowered). This again will affect the others trying to compete with Apple but lacks the Apple-like ecosystem. Rim, Samsung, Toshiba, Acer........

    This two way threat of Apple and Amazon may also affect Microsoft's Windows 8 premium tablet plans a year from now.
    ZDNet Gravatar
    dave95.
    28th Sep
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