The new iPad 3 that Apple is expected to launch today could face stiffer competition than any previous tablet in the form of Amazon?s Kindle Fire, whose success since its launch several months ago is causing the tablet market to grow at faster pace than previously expected, according to a new report from Forrester Research.

In the report US Consumer Tablet Forecast Update, 2011 to 2016, Forrester says that the Kindle Fire is taking market share from Apple and Android tablets while also attracting new customers to the category. In 2012, Forrester now expects 37.9 million tablets to be sold in the United States, up from 35.1 million in its previous forecast.

?Amazon has succeeded where others have failed because they lead with content and services, and they have reached a price point that is hard to beat,? said Sarah Rotman Epps, author of the report and an analyst at Forrester Research, Cambridge, MA.

?Amazon is expanding the addressable market for tablets, but also competing with Apple at the low end,? she said.

Staving off competition
Apple is expected to introduce the next generation of its popular and premium-priced iPad tablet today.

However, the company is reportedly readying the launch of a smaller tablet later this year in recognition of the growing popularity of smaller, lower-priced tablets such as the Kindle Fire.

Apple may also lower the price on its older model iPads, bringing them into more direct competition with the Kindle Fire.

?If Apple launched a smaller, cheaper iPad, it would stave off competition from Amazon,? Ms. Rotman Epps said.

?Older Apple devices usually do drop in price when new models come out,? she said. ?We expect Apple to hold its position as the premium-priced market leader, but a smaller, cheaper option would make the iPad affordable for more consumers.?

In the report, Forrester says it now expects that 105.1 million U.S. consumers will own a tablet in 2015, up 82.1 million in a previous forecast. Annual unit sales to U.S. consumers will grow from 10.8 million in 2010 to 60.3 million in 2016.

Approximately 55 million iPads were sold through Dec. 2011 and an estimated 5.5 million Kindle Fires sold in their first quarter on the market.

Barnes & Noble is also expanding the addressable market for tablets with its Nook Color and Nook Tablet entries, according to Forrester.

Amazon and Barnes & Noble are succeeding because they have developed customer experiences that emphasize content and services and are available at a much lower cost than the competition. As a result, they are taking market share from other players and expanding the addressable market for tablets.

A fragmented market
The Kindle Fire has also grabbed a meaningful share of tablet traffic, according to a new report from Jumptap.

Since the launch of the Kindle Fire in November, monthly tablet traffic on the Jumptap network has grown by more than 50 percent. The Kindle Fire accounted for 33 percent of the tablet traffic on the Jumptap network in Jan. 2012.

Between Oct. 2011 and Jan. 2012, the iPad?s share of tablet traffic dropped from 75 percent to 48 percent and other tablets? share dropped from 25 percent to 20 percent.

"You cannot ignore the market share shift," said Paran Johar, chief marketing officer at Jumptap, Cambridge, MA. "Apple has taken note and we will see some changes in price point and size in future iOS tablet releases."

While the Kindle Fire and the Nook tablets ? which operated using a highly modified Android operating system ? are gaining traction, Android-branded tablets from other manufacturers are not gaining significant traction because they have focused on creating differentiation via the hardware instead of software.

One potential downside for marketers of the growing fragmentation in the tablet market is that they will increasingly need to think about developing tablet experiences for a variety of devices.

While such a multi-device strategy can be costly, it is often the best way to reach as broad an audience as possible. This is similar to how developers approach the fragmented smartphone market, where they develop an app for the iPhone first and then following with Android versions and apps for other operating systems.

"Fragmentation is always a challenge depending on the specific device and type of ad used," Mr. Johar said. "Because of this, marketers may have to create unique ads and landing page experiences."

Final Take
Chantal Tode is associate editor on Mobile Marketer, New York