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Summary:

Today Amazon (NSDQ: AMZN) revealed its new Kindle lineup, including a touchscreen E Ink eReader and Amazon’s first color touchscreen tablet,…

Amazon Kindle Fire
photo: Amazon

Today Amazon (NSDQ: AMZN) revealed its new Kindle lineup, including a touchscreen E Ink eReader and Amazon’s first color touchscreen tablet, the Kindle Fire. I can’t say I’m surprised. The day the iPad launched, my colleague James McQuivey wrote that Amazon should “go head to head with Apple on a media tablet.” In March of this year, I wrote that “iPad 2 won’t have much competition in 2011, unless it’s from Amazon,” and more recently I published a report outlining the competitive advantages and disadvantages Amazon’s product strategists will face if they launch a tablet.

Looking back at that report, here’s what we got right:

Amazon is competing on price, content, and commerce. The Kindle Fire, a 7-inch Wi-Fi only device, will retail for $199-less than half the price of the iPad, less than the 7-inch Barnes & Noble (NYSE: BKS) Nook Color, BlackBerry Playbook, and HTC Flyer. As I predicted, Amazon is indeed drawing on all its content and commerce assets including video, music, games, as well as magazines, apps, and services-the Kindle Fire comes with a 30-day free subscription to Amazon Prime, and a pre-installed Amazon shopping app. It also features a spiffy custom-built browser, called Amazon Silk, which interfaces with EC2, Amazon’s cloud server, to optimize performance. (Meaning: it’s really fast.)

Amazon is overcoming challenges to supply, channel, and partnerships. Amazon appears to be overcoming nearly all the weaknesses I foresaw in its product strategy: 1) Supply-Kindle VP Dave Limp says they’re making “millions,” which is good, because that’s how many we expect them to sell. 2) Channel- will be selling the Kindle Fire at its retail partners (Best Buy, Radio Shack) in addition to Amazon.com, which gets more than 80 million unique visitors per month in the US alone. 3) Partnerships-In our most recent report we wrote that Amazon would need to overcome the challenges of co-branding with Google/Android-and they have, by not including any Google (NSDQ: GOOG) or Android branding whatsoever on the device. We think this is a good move if the goal is mass-market adoption.

Amazon still lacks a convincing global strategy compared with Apple. At launch, the Kindle Fire will only be available in the US. The iPad is available in 64 countries, and we estimate that 50% of iPad sales in 2011 are outside the US.

And here’s what we missed:

We didn’t know for sure what the size and price would be-turns out it’s small (7 inches) and cheap ($199). In the report we surmised that Amazon could launch a 10-inch tablet for $299, and maybe they will, but not today.

We didn’t explicitly say that one of the iPad’s great strengths compared with an Amazon tablet is the iPad’s ability to do double-duty as a work and leisure device. The Kindle Fire is solidly a content consumption device, good for media, plus email and Web. It has some productivity apps like QuickOffice, but we won’t see companies like GE and Mercedes Benz deploy the Kindle Fire for their enterprises the way they have with the iPad.

Overall, after seeing the device, our call and recommendations are the same. Amazon will sell millions of tablets, and the rapidfire adoption of the Kindle Fire will give app developers a reason-finally-to develop Android tablet apps. Apple’s place as market leader is secure, but Amazon will be a strong number two, and we expect no other serious tablet competitors until Windows 8 tablets launch.

Sarah Rotman Epps is an analyst at Forrester Research, where she serves Consumer Product Strategy professionals and blogs.

This article originally appeared in Forrester Research.

  1. $500AShareIsAnnoying!}:-D Wednesday, September 28, 2011

    I clearly remember just a while back, that the main stink about the iPad was that it was only a content consumption device and that was supposed to be a detrimental thing about the iPad.  Of course, it’s been proven that the iPad can actually create and consume content.  Yet with the Amazon Fire tablet, consuming content is supposed to be the main and only selling point which somehow makes it perfect.  Pundits certainly are fickle in taste.  One unfortunate thing with this Amazon Fire is that no one outside of Amazon will ever know how many are going to be sold.  Amazon always hides that fact and Wall Street doesn’t seem to care.  Amazon continues to excite investors and shareholders as though Amazon is going to automatically be bringing in huge amounts of revenue from this tablet.  I don’t think so, but maybe I’ll be proven wrong.

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  2. Alphonso Evans Friday, October 7, 2011

    The mass consumption is the selling point. The dominace is coming from mass production. The more people have the kindle fire the more Amazon will sale its products and services. The strategy is same as Mc Donald’s more means more sales. If Amazon has a global concept than the sky is the limit. No one in  the tech world except for Microsoft has a real global concepts. Apple is has great products but it is to
    expensive and that why it will not dominate the world.

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