Price is right
Not this time
Best Argument: Price is right
$200 is the magic price point
Jason Perlow: In 2010, Apple set off the "Big Bang" for the tablet industry, by introducing the iPad. While the consumer electronics giant did not create the tablet, they created the entire model for which all tablets must have today: an App store as well as cloud-based services to back it up.
However, at an entry point of $500, the iPad (and other full size Android tablets that followed) cannot ever be the "People's Tablet" or the industry equivalent of the Volkswagen.
While cheaper than most desktops and laptops, iPad is still too expensive to stay the market leader. There is still a huge untapped market to fill for people that don't own a tablet at all and would prefer to spend considerably less money on a digital convergence device.
Indeed, $200 is the magic price point that will enable tens of millions of people to buy tablets and eventually propel us into the Post-PC era that Steve Jobs will establish as his true legacy.
It ain’t going to happen this time
David Morgenstern: Every couple of months there comes along a technology vendor with an announcement of a tablet that will knock the iPad off its dominating 75+ percent share of the market. It ain’t going to happen this time with Amazon's Kindle Fire and Barnes & Nobles' NOOKColor.
The problem for competitors is multifold -- even those as well-funded as Amazon and B&N, which have captive audiences in popular Internet storefronts. The Apple iOS/iPad combo is now a major computing platform for enterprise, business and consumer segments; the iPad is now integrated into many uses beyond simple content playback, including sci-tech and industrial segments. And its form factor is completely understandable by users. The iPad’s large user base make it attractive to developers, whether for consumer or business apps.
All these hurdles make it difficult for the competition, even devices with a smaller handprint. Perhaps other devices can find niches. Or maybe not.
Great Debate Moderator
Thanks for joining the debate
Jason and David will post their closing statements tomorrow and I will have my verdict on the winner on Thursday. Between now and then, remember to vote and post your thoughts in the comments.
Great Debate Moderator
How will the Kindle Fire and Nook Color change the tablet market? What will they mean for the iPad, Android tablets, and eventually Windows tablets?
Fire will utterly consume the low end and leave little room for others
In the same way that iPad set the $500 or less bar for 10" devices, The Kindle Fire (and to a much lesser extent, the NOOKTablet) have set the bar for $200 for 7" devices. Other 7" Android tablets will find difficulty breaking into the market unless they come with significant value add for about the same price as Amazon and B&N's offerings. We can expect this new price alignment to affect the Android tablet market as a whole, including full sized devices, as it is almost certain that within one year, Amazon is likely to release a 10" Kindle Fire for around $300-$350. As to how it will affect Windows tablets it is much more difficult to say. I have argued recently that maybe that Microsoft should consider a Kindle Fire-like Windows Phone 7.5 Mango device, price it aggressively and launch it in the Spring of 2012. However this plea from customers to productize their mobile OS in the tablet space has fallen on deaf ears. Microsoft is probably under the impression that it is much better off focusing their efforts on marketing Windows 8 tablets to enterprise customers, since they are much more likely to pay for $500.00 tablets that have full integration with the Microsoft enterprise stack and with 3rd-party ISV enterprise and vertical apps.
The iPad is still top of the market
Little for the dominance of the iPad, which is now a primary mobile platform for solutions in many market segments. I am a big believer in the consumer electronics market model, which says that consumers will buy more than one piece of equipment that does the exact same thing as another, such as radios. We might have a radio in the bathroom and kitchen, a nicer one in a receiver etc. We don't say that we will only have one radio for the whole house. In this consumer electronics model, we might buy a number of mobile computing devices: a smartphone like the iPhone that lets us communicate and compute anywhere and everywhere; a tablet that offers strong mobile computing capabilities and with a screen size that supports collaboration with another person (iPad), and a notebook computer that is the mobile desktop, a machine with enough horsepower to create any kind of content and share that content with a greater number of people. But the tablet market isn't mature and unlike most consumer electronic purchases, the devices are relatively expensive. So it's a stretch to think that customers will buy more than one tablet right now. Either they will be swayed by the low price point of the Kindle or they will pick the one tablet that offers the most capabilities for the buck. That latter choice is still the iPad, which can do more and better. Some consider that the Fire's $199 price point is at the "impulse purchase" range but I don't buy it (ouch, sorry). The e-ink original Kindle at $79 is at that range.
Great Debate Moderator
The 7-inch factor
How about the 7-inch factor? No 7-inch tablet has ever sold particularly well -- including promising candidates like the original Galaxy Tab, the HTC Flyer, and the BlackBerry PlayBook. Why will the new Amazon and B&N tablets be any different?
Again, all about the price and the content.
Price, Price and Price. And Content/Value Add. The 7" form factor is valid but none of the previous devices have had the correct combination of pricing as well as ecosystem and content in order to be compelling enough for the consumer. Kindle Fire and Amazon Prime is the correct formula for this type of device.
Still too small for greatness, according to Saint Steve
Apple executives have been very insistent on the 7-inch form factor. Apple obviously has done a huge amount of research on tablet form factors and tablet UI usability. Jobs said at an analyst call a year ago that 7-inch screens weren't good enough for greatness. He called 7-inch tablets "tweeners" and said that this form-factor wasn't mobile enough when compared with the iPhone and yet was too small for "great tablet apps." 10-inches is just right. I agree that the smaller size isn't capable of serving as a reliable platform for data input. For the growing class of computer users with eyes north of 40, the larger screen real estate is super important. As we get older, it is natural to find that it's more difficult to focus on objects up close this is called presbyopia. The iPad's extra screen real estate makes it easier to zoom in on text or important objects such as links. If you want a super-mobile device, there are the iPod Touch and iPhone. However, if all you want to do is have an e-book reader, then the 7-inch form factor makes sense. It's like a book. The problem with the Kindle Fire and B&H Nook is that they are being pitched as something more: as a "real" tablet app platform like the iPad.
Great Debate Moderator
What about the professionals?
Both the Kindle Fire and the Nook Color are totally aimed at being consumer media devices. The iPad has gotten a lot of its sales from professionals who use it as a dual purpose device for work and home. Will the iPad continue to own that market segment, or can the Kindle Fire and the new Nook Color poach some of it?
Possibly, but the Productivity Apps need to come.
I believe this depends on the actual professional use cases for the device, which may not be completely apparent or fleshed out at this time. While most of Kindle Fire's market will almost certainly be in consumer, the smaller form factor may prove popular with professionals that want a more portable device (such as female executives that only have so much space in a pocketbook or prefer a device with a lighter weight) so it would not surprise me to see it being used in the same sort of dual work/play role that the iPad currently serves. To fill this dual role, more productivity apps will have to make their way onto the Amazon Appstore and I would expect better built-in messaging and calendar integration as well. After all, the Kindle Fire was modeled after the BlackBerry PlayBook's reference design, which was supposed to be targeted towards professional users.
No way, Apple owns the enterprise and business app market
This is the great new market for mobile computing and Apple owns it. Period. This will account for many millions of units yearly for Apple. It is amazing how business and enterprise customers are starting to deploy iPads. I've spoken to a number SMB managers who are rolling out iPads to sales field teams in the insurance and financial markets. Many IT departments aren't deploying notebooks anymore, but they are purchasing and deploying iPads. Apple recently pointed to airline deployments putting iPads in every cockpit to replace paper-based flight bags. The iPad and iOS are now a platform with a growing range of interesting hardware accessories for automated data collection and other scitech virtual instrumentation. These hardware devices are all integrated with apps and data dashboards. There is no way that Amazon and B&N will be involved in this part of the market. All other tablet vendors want to break into the enterprise. The entry-level pricing of the iPad won't be much of an for influence enterprise rollouts, rather decisions will be about the technology and the partnership. Apple has been a difficult partner but it is making changes in support. It will never open the kimono to plans but it has executed well on the hardware; the Apple IDE that supports both iOS and the Mac; and in iOS features.
Great Debate Moderator
What's missing from Kindle Fire and Nook Color?
What are the most important factors missing from the Kindle Fire and Nook Color that will limit their appeal?
Frills and Google
I beleive the lack of Google integration is something of a negative. The Kindle Fire and Nook cannot currently use native GMail, Google Calendar, Google Maps, Google Plus or other native Google Apps that ship with other Android devices. While I would not rule out the possibility that Amazon might negotiate the use of some of those apps and services from Google, it's unlikely to happen for a while if at all. 3rd-party software packages will have to take the place of those instead, but this is not necessarily a bad thing. In the case of email, there's already a decent selection of GMail-compatible applications on the Amazon Appstore. The lack of cameras, GPS and Bluetooth on both the Kindle Fire and the NOOKTablet also limit their appeal since they cannot be used as video conferencing devices or use GPS-aware apps. Kindle Fire's lack of memory expansion and paltry 8GB built-in of storage make it an extremely cloud-dependent device which is inadequate for content side-loading, particularly video. For those who want the ability to side-load movies for viewing on aircraft and in bandwidth-constrained areas, the NOOKTablet, the iPad and full-size Android tablets are currently much better choices.
Do the Fire and the Nook seem like toys compared with the iPad?
Some stray thoughts: First is the number of apps. It's way too low even for a launch situation. Content yes, but customers will want apps. Battery life is key to any mobile device. Sorry to say, the iPad's battery life is more than 30 percent higher than the Fire's or Nook. Perhaps this a place to mention the accessories market. There are dozens if not hundreds of cases for the iPad. Some can make a statement for a salesman or executive and others can go underwater. These can influence a purchase decision for many customers. The iPad is a grownup tablet with cameras and features for collaboration. Both the Fire and the Nook aren't big enough or grown up enough for those features. I agree with Jason on the integration issue. Very dicey.
Great Debate Moderator
We've recently learned that up to a quarter of iPad buyers in one survey regret the purchase. The low cost of the Kindle Fire and Nook Color will drive a lot of impulse buys and holiday gift purchases. Will there be a lot of people who end up regretting it and wish they had a more useful or powerful tablet? Will it be higher than 25%?
As Larry Dignan said, a more impulse device, less risk, thus less remorse.
I beleive that because of the price factor we are looking at potentially a much larger customer base than the iPad. Recent surveys have also indicated that iPads tend to be "family-owned" devices and are shared. At less than half the price, I expect there to be potential for multiple Kindle Fires per household and also for it to potentially threaten the traditional handheld game (Nintendo) market as well. I also expect the device to be extremely popular with high school and college students as a reader and content consumption platform for movies and music. Because of the smaller size the Kindle Fire is much more likely to be used outside the home, to be more of a "go-to" device and thus used more in general. While every product has their share of buyer's remorse, I expect that figure to be considerably smaller for the Kindle Fire than for the iPad or for other larger format tablets due to the fact that the cost is lower, the product is more of an impulse buy and also considered to be a risk-averse purchase, as ZDNet EIC Larry Dignan stated in a recent column. https://www.zdnet.com/blog/btl/amazons-kindle-fire-snappy-consumption-impulse-purchase-device/63274
Unrealistic expectations ...
That 25 percent figure is somewhat hard to swallow given the usually high satisfaction stats on Apple as a vendor. But the hype on tablets in general and the iPad in particular is to the moon. Many customers believe that they can do without a PC by buying an iPad (the same crazy things were said about the iPhone a few years ago). I wonder if any tablet can meet the stratospheric expectations of the market. Still, even in this economy some customers will look at the entry price points (Kindle) and others will look for the total ROI value (Apple). This issue can bite Amazon harder than Apple, I might add, which can direct users to its One-on-One education program and other group sessions at its stores. Amazon can't reach out so easily on the education front.
Great Debate Moderator
Is Nook Color doomed?
Will the Kindle Fire squeeze the Nook Color out of the market now that it's available at a cheaper price, or does the Nook Color still have some advantages working for it?
In a word... Yes.
I concede that NOOKTablet's increased RAM, built-in storage and SD expansion may prove to be useful for a small subset of users. However, ultimately I believe that based on Amazon's superior ability to leverage the supply chain, strong partnerships in retail as well as their ability to monetize the ecosystem for a tablet which is being sold for very close to or less than margin will prove the company to be too difficult an adversary for B&N. Unlike Amazon, B&N lacks the strong app and ecosystem and content cloud with the exception of a comparable e-book library.
Doomed? Maybe not
The Nook has more onboard RAM for video and app storage. The Fire has only 512M and what 8G. That's slim but they are counting on a robust wireless connection. Lots is made of cloud services around streaming rather than downloading or syncing with a wired connection. I've always had great results from video content stored on my iPad and mixed results from live streaming. So, it's unknown how Amazon's live streaming approach will work in the wild. And with customers whose expectations are driven by the experience of television or watching video on a computer connected by wire. B&N has a presence in bricks and mortar stores, so that might be something in its favor. They will be easier to return on the day after Christmas presents are opened.
Great Debate Moderator
How does Amazon's tablet ecosystem compare to Apple's?
Initially weaker, but that will change very quickly.
Right now Amazon's app ecosystem is less robust than even Google's which has about 200,000 Android apps total and has fewer native apps than the iPad which is around 155,000. The exact number of Amazon Appstore certified apps for Kindle Fire as of launch is unknown, but I expect it at this to be anywhere to be 10 to 15 percent of the size of Google's Android Market. However, that being said, the gap should close very quickly based on the simple fact that once volume sales of the Kindle Fire pick up, the developer interest and submissions to the Appstore will increase dramatically. Amazon will "curate" for their device, but I expect Amazon's ecosystem in terms of apps to be very similar in scope to Android Market by mid-2012. In terms of other content, Amazon is a very strong competitor to Apple in terms of e-books (unrivaled in this area), Magazines, Music and streaming video. It should be noted that Apple currently takes a side-loading approach to music and video content with iTunes and iCloud as opposed to Amazon which is completely dependent on streaming from Instant Video and uses a hybrid approach on Cloud Player, but I expect more streaming from Apple on tablets as well in 2012.
Lots of unknowns and now Amazon is selling Fires at a loss
I know I'm a broken record: there will be no comparison with the number of apps in the Amazon AppStore compared with iOS offerings. However, there are many Android developers in the world. Many that I've spoken with have settled on developing for two platforms: iOS of course, and a second, usually Android. I am intrigued by talk of the company leveraging its Amazon Prime service ($80 yearly) that gives customers "free" two-day shipping for all of their Amazon purchases, but also streaming TV and movies. Amazon recently announced that Prime customers will also be able to read from a library of recently-released books. The tear-down stats that came out this morning in news reports were interesting. I were buying a Kindle Fire, I might be concerned that they are selling them at a loss. What will be the support and the continued development for a product that out the gate costs more to make than it's being sold for? It's another question for Kindle buyers.
Great Debate Moderator
Did someone say ecosystem, yet?
Okay, so let's talk ecosystem. I've said repeatedly throughout 2011 that the Amazon tablet will be a success no matter what it looks like or what's loaded inside it because Amazon has the content, apps, and cloud services lined up to make its tablet immediately useful to the masses. Do you agree or disagree?
Ecosystem is everything. The Hardware itself is only a vehicle for content.
I agree. Sure, there's nothing particularly impressive about the Kindle Fire hardware. It's a pretty pedestrian dual-core, 7" tablet with a fairly standard 1024x600 IPS screen with no storage expandability, no bluetooth, no GPS as well as no cameras or other frills that its 10.1" Android cousins such as the Motorola XOOM or the Samsung Galaxy Tab have. But let's put this in perspective. The iPad 2 also is a somewhat lacking piece of hardware if you compare it to something like a XOOM or a Galaxy Tab. It has no expansion whatsoever, it cannot output to standard HDMI ports without an overpriced accessory or AirPlay on an Apple TV (which works only questionably) its cameras are mediocre when compared with competing devices, it has a weak Wi-Fi radio and has about half of the RAM of the competition. But it still manages to be the most popular tablet around. Why? A fantastic industrial design and excellent marketing, but also largely because of the strength of the App and content ecosystem. And this is why Amazon is going to sell millions upon millions of Kindle Fires in 2012.
A tablet is more than content and Amazon is untested
Maybe: that is my waffle answer. Amazon will have plenty of face-time with its customers and that will be important. It has content but how will it be presented and delivered. The mobile service is different than the earlier Kindles for both user experience and for the Kindle's server-side infrastructure. But there are many consumer side unknowns: To say that Amazon has "the apps" is an overstatement, it's an insignificant number compared to the 140K iPad-centric apps on the Apple Store. In addition, Amazon is only making its AppStore available in the U.S. and as far as I understand, has it is unclear on international availability. The iPad is available in 90 countries worldwide. Apple execs said in Oct. that it has iPad for sale in about 40,000 points around the world. And it's still rolling out the product. It's unknown whether customers will accept Amazon's transition to a general-purpose tablet vendor. As I mentioned before, the tablet market is immature and the not well understood by customers. Much of the positioning of the Kindle has been around books. Or content viewing. And that's what its pitch is still. But will the Fire be a great platform for new games? Or other types of tasks, such as mobile content creation, something iPad users like to show off. Collaboration? And will Amazon support them? All unknowns. The iPad is well established as a content and gaming platform. And every consumer knows this.
Great Debate Moderator
What will be any different at this new price point?
The Nook Color has already been on the market for most of the year at $250, and while it has become a cult favorite among hackers and tinkerers, it hasn't made a huge impact on the overall tablet market. Why will the new Nook Color (at the same price) or the Kindle Fire (at $200) be any different?
The correct formula has been achieved this time around.
While I think the NOOKTablet will have a reasonably sized following for the reasons you have stated, ultimately B&N cannot make a business model out of hackers and tinkerers. Barnes & Noble needs to monetize its platform with a compelling app ecosystem as well as with paid content delivery in order to make up its margins on the device costs, which have to be razor thin. The Amazon Kindle Fire, however, will be successful for all the reasons the B&N NOOKTablet will have problems. Amazon has spent several years developing cloud services to feed the Kindle Fire with in the form of the Amazon Appstore for Android, Amazon Cloud Player (MP3), Amazon Instant Video and of course Kindle eBooks and Magazines. And it will serve as the perfect platform for Amazon to sell you more and more stuff. Additionally, one needs to consider the value add that Prime membership serves as part of the Kindle Fire "Secret Sauce". Today, it provides a complimentary reading library as well as selected free Instant Video content. Amazon can continue to bolster Prime with additional benefits such as more videos, more free premium books and perhaps free music content.
Or not ...
Certainly, the Kindle Fire has more of a chance to break out than most. It's backed by the world's biggest online store and can splash the device on every page that customers see this holiday season, even when they're buying underwear, or whatever. Kindle goes with EVERYTHING! And just by definition, you can't have a market success based on hackers and customers who want to find a cheap entry-point to "try out" a tablet. Yes, the Nook is a more appealing hardware platform with its SD port and 1GB of RAM. But that's really not the value proposition to consumers. So, regardless of its capabilities, the Nook is in trouble as a market leader. There appears to be plenty of confusion around defining a tablet's value proposition on the Android side of the market. What is a tablet computer going to be used for? Much of the positioning appears to be around viewing mobile content. That's different than the iPad proposition. Of course, the iPad has proved to be a much more robust and mature platform during 2011, one targeting content but also a wide range of collaboration, creativity, business and gaming apps. Not only is the hardware more capable, and there are more apps, but Apple's solution approach and marketing has caught on with consumers as well as in other segments.
Great Debate Moderator
No luck for iPad competitors, so far
There has been plenty of competition for the iPad in 2011. New tablets have poured into the market one by one, but none of them have made much of a dent in Apple's momentum or market share. Why?
In my opinion, it's all about the price.
There are a number of reasons why previous rivals to the iPad failed. The most important of all of these being price and overall value. The first 7" Galaxy Tab and Android Honeycomb Tablets, the BlackBerry PlayBook and the HP TouchPad were all priced way too high after Apple set the bar at $500 for their entry-level model iPad. Apple had the superior ecosystem for content and Apps as well industry leading design, component integration and build quality that none of these competitors could come even close to matching at the prices they were selling at. When you're coming in as the underdog, pricing your product at $450-$550 doesn't make a lot of sense, and I think that resonated with consumers.
People trust Apple for technology, especially mobile tech
Certainly, potential customers for tablet computers found Apple's iPad solution a better value, whatever the price point (with the competition often higher). But price was just a part of the value proposition. The iPad has the greatest collection of apps specific for the device and can use the hundreds of thousands of iOS apps for iPhone/Touch devices. In the first quarter of 2011 there were a third more iOS apps than Android (the total for all devices, which have incompatibilities). Now, that may look decent on the Android side, but there were way fewer tablet-optimized Android apps during the first half of the year. According to Apple in Oct.,there were more than 140K iPad native apps. Orders of magnitude fewer tablet-specific apps on the competition. And customers now mostly trust Apple as a purveyor of technology and online services. Amazon is new as a technology partner and same with B&N. Millions of customers around the world use iPhones and have an existing investment in iTunes media and in iOS apps.
Great Debate Moderator
It's about time to get started
Are both of my debaters online and ready for the first question?
Let's do this
Ready to go
Ready to rumble!1
It's all about price and value.
I've already stated that I feel very strongly that Kindle Fire will succeed because of price and the value add that Amazon brings to the table with their content delivery capabilities and integrated app ecosystem.
My opponent, while making some valid arguments relies heavily on Apple's current strong market position and is under the questionable assumption that their research into form factors and Steve Jobs's vision ultimately will outlast Amazon's attempt at achieving tablet supremacy.
But even visionaries can sometimes be dead wrong. Thomas Edison, the man who Steve Jobs has been compared to numerous times, was stubbornly convinced beyond any doubt that Direct Current (DC) was the future in electrical power.
It only took an enterprising businessman named George Westinghouse and the brilliant mind of a young Nikola Tesla to prove him to be incorrect, and as a result the much more efficient Alternating Current (AC) became in use all over the world for power transmission instead.
Is Jeff Bezos destined to be the George Westinghouse of tablets and digital convergence? We'll soon find out.
Apple sells a 'real' tablet
Huge impact ahead
The iPad has resiliently fended off challenges from a steady stream of upstart tablets throughout 2011. However, it is about to get its stiffest challenge yet from the Kindle Fire. As Perlow noted, Amazon has nearly all the pieces in place to challenge Apple from an ecosystem perspective, and that's far more important than the tablet itself. While I still have my doubts about the general usefulness of a 7-inch tablet, the $199 price tag of the Kindle Fire will override those concerns for most people.
Barnes & Noble doesn't have the ecosystem and its tablet is $50 more expensive than the Kindle Fire, so I don't see it being as big of a threat. The best thing the Nook Tablet has going for it is a strong retail presence. I also don't see either the Kindle Fire or the Nook Tablet being as appealing to business professionals, who are some of the iPad's most steady buyers because they want to use the tablet for both work and leisure.Still, I give Perlow the nod on this one. The Kindle Fire is about to have a huge impact on the tablet market.