Amazon's Kindle Fire is Barnes & Noble's Nookopalypse

Will Amazon's Kindle Fire spell fire and brimstone for Barnes & Noble's tablets and e-readers?
Written by Jason Perlow, Senior Contributing Writer

In the next two weeks, we will know who really dominates the future in low-cost tablet computing.

All of that depends on whether or not Amazon's Kindle Fire, which is currently selling at a tremendous rate of thousands of units an hour, is as impressive a product as it is truly expected to be.

Amazon of course was not first to market with a low-cost tablet.

Barnes & Noble, with their NOOKColor ereader cum pseudo-tablet (pictured at right) beat them by about a year, which at the time was considered to be an astonishing no-brainer entry-level tablet at an aggressive price of $250.00.

But while NOOKColor had some early adopters, as well as its proponents -- including some of ZDNet's own gadget and mobile technology writers -- it never achieved the volume sales that would be comparable to Apple's iPad, the current tablet market leader.

Part of this had to do with the fact that as a tablet, it was never particularly powerful enough. It had a single core 800Mhz processor and only 512MB of RAM, with 8GB of flash memory which was expandable.

At best, it was about as capable in terms of processing and graphics power of a typical low-end Android smartphone on the market at the time.

But at launch it also lacked a sufficient application ecosystem as well as value-added services to make it a real competitor for Apple's market leading product, even at half the price.

Eventually, Barnes & Noble did upgrade the software on the device to allow for more tablet-like features rather than focus on it being a color e-reader product. The software improvements provided for additional tablet qualities such as the ability to download subscription magazines and download popular Android applications.

And it was also a very easy device for Android enthusiasts to hack and run full-blown smartphone versions of the OS on.

But none of this really translated into drastically improved sales.

NOOKColor was not a failure by any means, particularly if you compare it to the HP TouchPad or the RIM BlackBerry PlayBook which were complete flops. But it just wasn't the break out gangbusters hit that iPad was.

While Barnes & Noble was struggling in the tablet space against Apple as well as other Android tablet manufacturers to gain market and mind share, the company's e-book nemesis, Amazon, was devoting significant resources into developing new tablets and ebook readers of their own -- the Kindle Fire and new low-cost Kindle e-readers, which they finally announced on September 28.

On November 14, the Amazon Kindle Fire ships to customers.

At $199 the product is being positioned as a loss leader and monetization platform for the company, running on a TI OMAP dual core processor with a full implementation of Android Gingerbread, 512MB of RAM, 8GB of internal storage (with expansion storage provided by Amazon's cloud).

Amazon's 7" tablet also has special modifications that provide a slick user interface to make the Android OS friendlier to non-geeks and to appeal to the iPad's potential customer base.

The product is expected to sell in the millions of units in 2012 and is likely to become the dominant Android tablet on the market due to volume and pricing alone.

However, the hardware, software and pricing itself are not where all of the strengths of this product lie. Unlike the NOOKColor, it will sport Amazon's own AppStore for Android, which will have many thousands of applications to choose from, and which gives away a free commercial application every day.

As to be expected of a media consumption device, it will also have an integrated Kindle reader and Kindle store, providing the widest selection of ebooks, subscription newspapers as well as magazines available on any tablet device in its price class.

It will also be supported by Amazon's Cloud Player for streaming MP3 music and will be able to play streaming movies from Amazon Instant Video.

Barnes & Noble appears to be fighting back against the Kindle Fire onslaught by reducing the price of the existing NOOKColor to $199 and by introducing its own rival device to the Kindle Fire, the NOOKTablet, for $249.

While the NOOKTablet's hardware specs are similar to the Kindle Fire's -- and in some places exceed it, such as having double the RAM and the ability to use expansion memory cards, as well as having a limited library of HD streaming videos available at launch -- it is going to have a very difficult time matching the same value proposition Amazon offers.

For starters, the NOOKTablet is going to be $50 more than its competitor. It also lacks the cloud and value added services that Amazon offers, such as the Silk browser (which utilizes the horsepower of Amazon's EC2 to improve browsing performance) and the new Prime Kindle Owner Lending Library service that was announced this week.

Right now, the only tangible thing Barnes & Noble seems to offer to consumers that could possibly be considered an advantage over Amazon's offerings is their support of the EPUB format.

Up until recently, it also had the advantage of supporting digital library lending, but that too has now gone the wayside with Amazon's participation in the Overdrive service.

Ultimately, I do not believe that Barnes & Noble can provide the full range of services that Amazon offers today with Kindle, Amazon Video, Cloud Player, Appstore for Android or the continual perks that the company can offer for Prime members, nor does it possess the ability to absorb the up front costs of selling tablet devices at a loss in order to monetize additional services.

To match Kindle Fire in functionality it will need to fill in those gaps by partnering with other companies such as Hulu or even Netflix.

Even so, it will have tremendous difficulty in being able to match overall value and or continue to be profitable with their product in the face of such aggressive competition by Amazon, which doesn't have the additional burden of having to maintain a large retail presence that Barnes & Noble does with its 1700+ stores.

To me, the Kindle Fire represents only one thing to Barnes & Noble's tablet and digital convergence strategy: Apocalypse.

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