Amazon bets on price, content to compete against Apple's iPad
By Chantal Tode
September 7, 2012
Will Amazon try to repeat Kindle Fire success in smartphones?
Amazon clearly wants to compete with the Apple head-on in tablets, claiming that the new Kindle Fire HD 4G is the best tablet at any price.
The tablet market has evolved significantly in the past year since Amazon first introduced the Kindle Fire. The new tablet introduced yesterday as well as upgrades to the original Kindle Fire put Amazon on par with what is currently available from other hardware manufacturers, meaning success will depend on consumer interest.
“[The Kindle Fire HD with 4G LTE] is absolutely positioned against the most popular tablet today, which is the new iPad, with 16 GB of memory and WiFi-only support,” said Jeff Orr, senior practice director for mobile devices at ABI Research, Oyster Bay, NY.
“Amazon drew a direct comparison in their launch event, stating that a comparable product from a functionality perspective by Apple would go for $729,” he said.
“The Kindle Fire HD with 4G LTE is a slightly smaller device than the iPad. It sets a precedent for what we might hear from Apple in the coming weeks.”
Price and content
Amazon is betting that it can continue to carve out space for itself in the tablet market by focusing on delivering competitively priced products that focus almost exclusively on delivering a strong content experience for users.
In contrast, the iPad and some other tablets are designed as portable computing devices with content just one aspect of what they offer.
“Amazon understand what the market needs – that is that content remains king,” Mr. Orr said. “Decisions about tablets really have to do with content and how consumers will engage with devices and not so much about leading with hardware features.
“The Kindle Fire HD is the hardware platform necessary for Amazon to remain competitive and to be able to prove out its content message,” he said.
The new Kindle Fire HD features better WiFi bandwidth and range, access to 100,000 audio books and a new feature that lets users listen to audio books and then pick up from where they stopped to read the book.
The Kindle Fire HD 8.9" 4G is priced $499 and Amazon is calling it the best tablet at any price. It comes with Dolby audio, dual stereo speakers, what Amazon is calling the fastest Wi-Fi, a 4G LTE wireless modem and a $49.99 one-year 4G data package.
A WiFi-only version will go for $299.
Thge Kindle Fire HD, for $199, has a seven-inch screen, HD display, Dolby audio, dual stereo speakers, Wi-Fi and 16 GB of storage.
Amazon also introduced an upgraded Kindle Fire with a new lower price of $159 and a new Kindle Paperwhite ereader in $119 and $179 versions.
“The Amazon message was that consumer decisions are going to be made on content but that you can’t go overboard and make the most expensive piece of hardware and assume that people will follow it – you need to be competitive on price as well,” Mr. Orr said.
While Apple has approximately a 68 percent share of the tablet market, no other single manufacturer has taken a decisive lead to put it in second place.
Amazon is currently in third place with a 5 percent market share, following Samsung.
As the Kindle Fire’s success last year showed, consumers are gravitating toward tablets for a variety of purposes. Now the question will be if Amazon can maintain and build upon its number three position.
Part of the challenge will be building on Kindle Fire’s success in the United States by extending its reach into international markets. The iPad is already available in numerous markets around the world and is growing quickly there.
Currently, the Kindle ereader is available in a number of Western European markets.
“What Amazon now needs to do is extend the work it has done in developing publishing agreements in the U.S. to markets outside the U.S. – that will put it on a more level playing field with Apple,” Mr. Orr said.
“Apple has a lead from an international perspective but I don’t believe this is an insurmountable obstacle for Amazon - it is working at a feverish pace to expand Kindle,” he said.
Competition heats up
Now that Amazon has moved directly into Apple’s territory with a higher-priced Kindle Fire the question is whether or not Apple move into the media tablet space with an iPad mini, which is rumored to be on the table for later this year.
The fourth quarter will also see the release of the first Microsoft Surface tablets.
“The announcements yesterday enable Amazon to remain competitive and perhaps to stay in the top three,” Mr. Orr said. “I don’t think it puts them ahead because there are too many other competitors in the marketplace.
“It will become a very crowded market as consumers make end of year purchases,” he said.
“Both Apple and Amazon remain very competitive going forward .The unknown is the impact of Windows Phone 8 products and any late year move that apple might do”
Chantal Tode is associate editor on Mobile Marketer, New York
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