Amazon ignites tablet war with Fire, takes on Apple4 min read . Updated: 29 Sep 2011, 12:26 PM IST
Amazon ignites tablet war with Fire, takes on Apple
Amazon ignites tablet war with Fire, takes on Apple
New York: Amazon.com Inc took the wraps off its long-awaited “Kindle Fire" on Wednesday, tacking on a mass market-friendly $199 price tag that poses a serious threat to the dominance of Apple Inc’s two-year-old iPad.
The eagerly anticipated gadget, while lacking many of the high-tech bells and whistles common on tablets from cameras to 3G wireless connection, may sound the death knell for a raft of devices based on Google Inc’s Android. The software powers tablets made by Samsung, Motorola, Asustek, HTC and LG Electronics.
Dotcom entrepreneur and billionaire, chief executive officer (CEO) Jeff Bezos, unveiled to a packed audience the gadget he hopes will wed Amazon’s books, movies, music and other content with cloud or Internet-based storage and Web browsing.
“People have been waiting for a tablet for 200 bucks for a long time and this is the best one I’ve seen so far," Tim Stevens, editor-in-chief of gadget review website Engadget, told the news agency.
The Kindle Fire tablet has a 7-inch screen, free data storage over the Internet and a new browser called Amazon Silk. Amazon expects shipments to start on 15 November - hitting store shelves at Best Buy and other chains just in time for the peak holiday shopping season.
By pricing the Fire at less than half the iPad - yet stripping out costlier components and features - the Internet retailer hopes to get the device into millions of consumers’ hands, who in turn will buy Amazon content.
One key differentiator that might help the Fire stand out during the cut-throat holidays is Amazon’s “EC2" cloud computing service, which supports Internet browsing and helps speed loading of websites. That was not available on rival tablets, Stevens noted.
“Expect a blood bath as pricing will have to get extremely aggressive," said Mark Gerber, an analyst at Detwiler Fenton & Co. He expects Amazon to sell at least 3 million Kindle Fires this holiday season, taking the number two spot in the tablet market.
The Fire was unveiled alongside several rock-bottom-priced versions of the basic Kindle reader, with the lowest at $79 - a clear challenge to Barnes & Noble Inc’s Nook that will surely force the ailing bookstore chain to try and match.
Amazon shares closed 2.5% higher, while Barnes & Noble dropped 7%. Apple shares dipped 0.6%.
“These are premium products at non-premium prices," Bezos said. “We are going to sell millions of these."
Analysts had expected Amazon’s tablet to be priced around $250, roughly half the price of Apple’s dominant iPad, which starts at $499. The Nook Color e-reader costs $249.
The Web retailer might be angling for a lower-end slice of the market that Apple - which maintains a careful grip over its higher-end branding and margins - has traditionally steered clear of. Still, breaking into a crowded tablet market will be difficult. Companies from Hewlett Packard Co, Motorola, Samsung and Research in Motion Ltd, have launched tablets, but none has taken a big bite out of Apple’s lead.
Apple dominates the North American tablet market, with 80% of the 7.5 million units shipped during the second quarter of 2011, according to Strategy Analytics.
Bezos took a jab at its larger rival during the New York press conference on Wednesday, noting that the Fire needs no wires for syncing. An image of a white USB cord appeared on the screen behind him, prompting laughter from the crowd.
Bezos didn’t mention Apple but the picture of the cord resembled those commonly used to connect iPhones and iPads to computers.
Still, Michael Yoshikami, who oversees $1 billion at YCMNET Advisors, discounted any serious hit to Apple - for now - because of Apple’s similarly rich library of content. But he thought Apple may need to start offering some sort of subscription-based video streaming service - iTunes is downloaded primarily - to respond.
Rivals without their own content or services to support their devices, such as Samsung, are most exposed, he added. “HP’s decision to get out of tablets is actually looking fairly bright," he told the news agency.
Having its own tablet is important for Amazon because the company has amassed a mountain of digital goods and services that could be sold through such a device.
The tablet might also encourage customers of Amazon, the world’s largest Internet retailer, to shop online for physical products more often. Amazon recently redesigned its main shopping website to make it easier to navigate for mobile users.
“Getting this device into the hands of customers means Amazon can expand their e-commerce footprint - this is a strategic focus for the company," said Eric Best, an Amazon veteran who now runs online commerce company, Mercent.
“Every Kindle Fire user, by virtue of the better browser and richer operating system, has the potential to become a more frequent Amazon shopper."
Meanwhile, competition at the high end of the market is heating up. Motorola on Wednesday announced it will offer 4G-LTE upgrades for Motorola Xoom users on Verizon Wireless, improving loading speeds.