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Amazon Kindle Fire aims to undercut Apple's iPad with $199 price - Page 3

post #81 of 303
9/28/11 at 8:44am
Quote:
Originally Posted by asdasd View Post

the BookStore isnt as good as kindle, it could be. Make it cheaper.

I'm not sure I understand you right but books in iBook store is already cheaper than in Kindle.

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post #82 of 303
9/28/11 at 8:45am
Quote:
Originally Posted by ConradJoe View Post

Tell that to the iPod.

It rescued Apple and springboarded them to iPhone, but it's a commoditized market, and it isn't that big of a market. Apple makes more money per quarter selling iPads now than they do with iPods, and that includes the iPod touch.

It's a small market compared to this "post-PC" market which basically will involve the entire technology and media sectors. There's no comparison between the markets.
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post #83 of 303
9/28/11 at 8:46am
Quote:
Originally Posted by anantksundaram View Post

If the BOM is $180 and they're selling it for $199, even allowing for the piggyback products, they're barely breaking even.

How do you figure that? The device is a gadget designed for the most part, to sell digital books. Additionally, it gives people access to amazon.com through yet another source, which means the device is also a gadget that aids amazon in selling all the other stuff the sell to be shipped to your door. If it doesn't cost them money to sell it, it isn't a loss leader, but even if it were, people who own it will probably by enough books in very short time to make the sale of each e-ready (remember the fire is mainly an e-reader) profitable.
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post #84 of 303
9/28/11 at 8:46am
Quote:
Originally Posted by matrix07 View Post

I'm not sure I understand you right but books in iBook store is already cheaper than in Kindle.

I dont see that in the UK. I see far less choice. What I mean is charge the publishers less, or charge them nothing.
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post #85 of 303
9/28/11 at 8:46am
Quote:
Originally Posted by lkrupp View Post

There will be plenty of weighing in on this by the "anything but Apple" crowd. This will be their new, potential White Knight coming to save the world from the clutches of the useless toy known as the iPad.

As opposed to all the negative comments from the "anything not from Apple is crap" crowd here?
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post #86 of 303
9/28/11 at 8:48am
Quote:
Originally Posted by GMHut View Post

How do you figure that? The device is a gadget designed for the most part, to sell digital books. Additionally, it gives people access to amazon.com through yet another source, which means the device is also a gadget that aids amazon in selling all the other stuff the sell to be shipped to your door. If it doesn't cost them money to sell it, it isn't a loss leader, but even if it were, people who own it will probably by enough books in very short time to make the sale of each e-ready (remember the fire is mainly an e-reader) profitable.

We dont know their losses. However you are correct in that making money on content is their solution.
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post #87 of 303
9/28/11 at 8:49am
Quote:
Originally Posted by matrix07 View Post

I'm not sure I understand you right but books in iBook store is already cheaper than in Kindle.

I believe he means for publishers.

Instead of Apple taking 30%, why not change that to 10 or even 5? You'd kill the Kindle market in publisher profits, making even more people publish with Apple.
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post #88 of 303
9/28/11 at 8:49am
Quote:
Originally Posted by Tallest Skil View Post

Ah, it's this kind of troll again. Didn't miss it.

I'm not a troll, I have been pro Apple for over 20 years. I have been a booster when I was right. Right now, they are selling a toy to people who don't (yet) know the difference. I have been right about AAPL all along and I am right now, thanks. People who boost everything AAPL are largely just bandwagon followers. It's not new; actually AAPL's success is now old. What's next is the eventual rise of new replacements for AAPL, in the coming decade.
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post #89 of 303
9/28/11 at 8:51am
Quote:
Originally Posted by anantksundaram View Post



If the BOM is $180 and they're selling it for $199, even allowing for the piggyback products, they're barely breaking even.

People buy this sort of hardware not to own hardware. They buy it to access content. And Amazon knows how to make money selling content.

Apple claims that they just barely break even on content.

Apple's phone sales are dwarfed by Android phone sales. The consensus in some quarters is that is due to lower prices of Android hardware. The carriers use phones as loss leaders to sell services.

Does Apple make big bucks on services?

It seems reasonable to question whether Apple's strategy of cleaning up on expensive hardware while not making money on the back end will serve them well in the long run. Apple did well in the dying PMP market with that strategy. So far, that strategy has served Apple well in the iOS product markets.

Will it work in the long term? Nobody knows. Amazon might change everything.
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post #90 of 303
9/28/11 at 8:52am
Quote:
Originally Posted by iGuessSo View Post

Yes, and I stand corrected by Tallest Skil, iPhone is 3:2 not 4:3. So its screen areas are:

iPhone (3:2): ~6 sq in
Fire (assuming it's 16:9): ~15.6 sq in
iPad (4:3): 48 sq in

So this definitely proves that big things are bigger than small things.

iPhone 3.5" 960x640: 5.65 in^2
Fire 7" 1024x600: 21.37 in^2
iPad 9.7" 1024x768: 45.16 in^2

I used cos(atan(h pixels/v pixels)))*diag to compute the width.
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post #91 of 303
9/28/11 at 8:52am
Quote:
Originally Posted by bwik View Post

Right now, they are selling a toy to people who don't (yet) know the difference.

Mhmm.

Quote:
I have been right about AAPL all along and I am right now, thanks.

The entire rest of the world disagrees.
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post #92 of 303
9/28/11 at 8:52am
I've skimmed over the comments of others, so perhaps someone pointed this out, but at a razor thin profit of $20, there will be no leeway for returns. There have been countless complaints about not being able to return defective Kindles, so this untested device is hamstrung out of the gate by not reasonably allowing for defects. An old rule in business is a person happy with a product will tell five people, but a person unhappy with a product will tell 50. Given Amazon's notoriety with not accepting product returns for the kindle, this may be another HP disaster in the works
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post #93 of 303
9/28/11 at 8:52am
Quote:
Originally Posted by Tallest Skil View Post

I was going to explain the inherent difference, but if you're still making this argument, you can't understand why you're wrong.

What inherent difference? That it's important to create a usable GUI for whatever screen size your device is going to have? Brilliant!
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post #94 of 303
9/28/11 at 8:53am
Quote:
Originally Posted by asdasd View Post

I dont see that in the UK. I see far less choice. What I mean is charge the publishers less, or charge them nothing.

In US, it's already cheaper. I really love it every time I searched and see the price on Kindle.

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post #95 of 303
9/28/11 at 8:54am
Quote:
Originally Posted by anantksundaram View Post

Although the initial market reaction is positive, markets over time will demand a higher profit margin. It does not like loss leaders.

If the BOM is $180 and they're selling it for $199, even allowing for the piggyback products, they're barely breaking even.

The real rub will be the pricing on the 10-inch version.

By piggyback products, I assume you're talking about music/movies/books/everything else Amazon sells? If so, I'd say it's going to be difficult to tell since there's the question of how much prospective Kindle Fire users are willing to spend on the ecosystem - I'd imagine somewhere between Google and Apple in terms of $ per user. They may do better or worse than breaking even, but their move to tablets part offensive and defensive at the same time. Amazon needs to go mobile to complete their ecosystem (end to end) and protect its revenue stream(s).

So yeah, while operating margin is thin, they could still do quite well out of this.
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post #96 of 303
9/28/11 at 8:55am
Quote:
Originally Posted by bettieblue View Post

The ignorance continues.

Please show me a 7 inch tablet that has the full might of a Amazon echo system behind it....including the Cloud storage Amazon already has and the Andriod app store it already has.


Bettieblue - I'm with you. The fan boys don't get it...

1. Apple IS NOT ALL successful because of it's products - the major support mechanisms are the iTunes STORE for movies and music. That's the major revenue generators long after the product is sold.

2. Amazon already offers movies and music from it's store, both in a virtual form AND physical form. It's on your Apple iPad and iPhones and computers already in fact. But now, they are offering it also on a closed ecosystem - their OWN tablet, another money making channel of distribution - for AMAZON.

3. As much as the fanboys LOVE the iPad... the truth is... what does it REALLY do for $500?
Well it does, so prettily, Internet, email, movies, books, and games - on demand (or get it now).

Now enter Amazon - it offers (wow pretty too) internet, email, movies, books, and games - on demand... as well as every product in it's stores for $199.

And the now tiring look of the iPad and the more tiring price of $500... consumers, not fans will use the best price-to-value rationale/logic to make their choices. And my bet is Kindle fire.

As much as you all THINK it's NOT an competitor to the iPad, I got news for you... it is, and it's gonna hurt.
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post #97 of 303
9/28/11 at 8:55am
Quote:
Originally Posted by GMHut View Post

How do you figure that? The device is a gadget designed for the most part, to sell digital books. Additionally, it gives people access to amazon.com through yet another source, which means the device is also a gadget that aids amazon in selling all the other stuff the sell to be shipped to your door. If it doesn't cost them money to sell it, it isn't a loss leader, but even if it were, people who own it will probably by enough books in very short time to make the sale of each e-ready (remember the fire is mainly an e-reader) profitable.

Fairly simple to figure out.

Just for the sake of argument, assume the ideal expected gross margin is ~50% (equivalent to the rough number that's been thrown around for iPads). If so, the product would be priced at $360, instead of $200. That's then $160 they have to make up from sale of digital books. This, in turn, means they're lowering the margins on that segment by that amount, or they have to raise prices to make up the difference (lowering demand).

There's no free lunch.
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post #98 of 303
9/28/11 at 8:55am
Quote:
Originally Posted by Prof. Peabody View Post

...
I don't think it's right to say that the two devices compete or don't compete. The situation is more complicated than that.

Quote:
Originally Posted by asdasd View Post

This could easily be good news for Apple.
Amazon makes money from content, mostly so can sell hardware at a loss.
Apple makes money from hardware mostly, so can sell content at a loss.

Spot on.
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post #99 of 303
9/28/11 at 8:55am
Quote:
Originally Posted by lkrupp View Post

There will be plenty of weighing in on this by the "anything but Apple" crowd. This will be their new, potential White Knight coming to save the world from the clutches of the useless toy known as the iPad.

But there is definitely a market for an inexpensive device that can deliver the basics. We'll just have to wait and see.

Just read about it....

http://www.amazon.com/Kindle-Color-M...pf_rd_i=507846
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post #100 of 303
9/28/11 at 8:55am
Undercut the iPad on price? This doesn't make any sense; apples to oranges.

It's like bragging about how your Nissan Sentra undercuts the Porsche 911 GT3 on price.
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post #101 of 303
9/28/11 at 8:56am
Quote:
Originally Posted by Tallest Skil View Post

I believe he means for publishers.

Instead of Apple taking 30%, why not change that to 10 or even 5? You'd kill the Kindle market in publisher profits, making even more people publish with Apple.

Yeah I'm all for it. Would love to see that but knowing Apple...

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post #102 of 303
9/28/11 at 8:57am
Quote:
Originally Posted by ConradJoe View Post

It seems reasonable to question whether Apple's strategy of cleaning up on expensive hardware while not making money on the back end will serve them well in the long run. Apple did well in the dying PMP market with that strategy. So far, that strategy has served Apple well in the iOS product markets.

Will it work in the long term? Nobody knows. Amazon might change everything.

Markets, as a reflection on human culture, always has the top 10% who are willing to pay more for higher value products. Apple under SPJ has been able to target that market really well. Their performance was and continues to be selling products that gets those 10%.
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post #103 of 303
9/28/11 at 8:57am
Quote:
Originally Posted by applecider View Post

Silly me can't find the amout of memory the fire has.

I like to store some files on my devices so that they can be used on a plane or boat or remote locations, so while the cloud is nice, local storage is nicer.

How much does the fire have?

8 GB on board

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post #104 of 303
9/28/11 at 8:59am
Looking good, Amazon, looking good.


Quote:
Originally Posted by rbonner View Post

The big seller for the kindle was reading in the sun, thinking it will loose that edge.

I don't see why, the Kindle Fire is but one of 4 Kindle types and the only one without an eInk display.
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post #105 of 303
9/28/11 at 8:59am
Quote:
Originally Posted by Robodude View Post

So yeah, while operating margin is thin, they could still do quite well out of this.

"Well" is not the same as "well enough" for markets.

Apple could do similarly "well" by lowering margins too, but the question is whether they'll go there.

Also, over the longer haul, let's see how they deal with managing a hardware supply- and retail-chain.

Incidentally, all that said, I actually think that Amazon may have a hit on its hands (esp. in conjunction with the new lower-priced Kindles).
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post #106 of 303
9/28/11 at 9:00am
Amazon is obviously going to sell a few of these tablets, because of the cheap price and since they're selling it for zero profit or maybe even at a loss.

It's basically a poor man's iPad, and there are definitely some people around who dream about iPads, but couldn't afford one, so they might get something like this color Kindle instead.

Also, I noticed that the prices quoted for the new e-ink Kindles are for the ad infested versions. The ones without ads cost more.
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post #107 of 303
9/28/11 at 9:00am
Quote:
Originally Posted by LuxoM3 View Post

Bettieblue - I'm with you. The fan boys don't get it...

1. Apple IS NOT ALL successful because of it's products - the major support mechanisms are the iTunes STORE for movies and music. That's the major revenue generators long after the product is sold.

2. Amazon already offers movies and music from it's store, both in a virtual form AND physical form. It's on your Apple iPad and iPhones and computers already in fact. But now, they are offering it also on a closed ecosystem - their OWN tablet, another money making channel of distribution - for AMAZON.

3. As much as the fanboys LOVE the iPad... the truth is... what does it REALLY do for $500?
Well it does, so prettily, Internet, email, movies, books, and games - on demand (or get it now).

Now enter Amazon - it offers (wow pretty too) internet, email, movies, books, and games - on demand... as well as every product in it's stores for $199.

And the now tiring look of the iPad and the more tiring price of $500... consumers, not fans will use the best price-to-value rationale/logic to make their choices. And my bet is Kindle fire.

As much as you all THINK it's NOT an competitor to the iPad, I got news for you... it is, and it's gonna hurt.

Add to this Netflix is a huge hit, but they are imploding. Amazon is the only one close to Netflix as in streaming....vs rent a single episode from iTunes/Apple TV. This is just another example of why this will be a hit.
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post #108 of 303
9/28/11 at 9:00am
DOA.

Amazon should have learned from Samsung's and others attempt.

Yes amazon has content but it can not compete.
Amazon's content is already accessible via iOS.
200 bucks is a significant amount for what you get.
Might as well get an iPad 2.
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post #109 of 303
9/28/11 at 9:01am
Quote:
Originally Posted by Apple ][ View Post

Amazon is obviously going to sell a few of these tablets, because of the cheap price and since they're selling it for zero profit or maybe even at a loss.

It's basically a poor man's iPad, and there are definitely some people around who dream about iPads, but couldn't afford one, so they might get something like this color Kindle instead.

Also, I noticed that the prices quoted for the new e-ink Kindles are for the ad infested versions. The ones without ads cost more.

Bloomberg said it cost them $180 to make so it is probably even.
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post #110 of 303
9/28/11 at 9:02am
Quote:
Originally Posted by macinthe408 View Post

Undercut the iPad on price? This doesn't make any sense; apples to oranges.

It's like bragging about how your Nissan Sentra undercuts the Porsche 911 GT3 on price.

IMO, they're not trying to undercut the iPad on price. They're undercutting the Nook Color on price. Any effect on iPad sales is just collateral damage. This particular product is aimed squarely at B&N.

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post #111 of 303
9/28/11 at 9:03am
Quote:
Originally Posted by LuxoM3 View Post

the major support mechanisms are the iTunes STORE for movies and music. That's the major revenue generators long after the product is sold.

But are in NO way Apple's primary revenue generators. The hardware remains far and away more profitable/revenueish.

Quote:
Now enter Amazon - it offers (wow pretty too) internet, email, movies, books, and games - on demand... as well as every product in it's stores for $199.

Running worse software, on worse hardware, smaller.

Quote:
And the now tiring look of the iPad and the more tiring price of $500

Which explains the success of all the other tablets that look exactly like the iPad but were cheaper.

Did I say success? I meant six week lifespan and then discontinuation.

Quote:
consumers, not fans will use the best price-to-value rationale/logic to make their choices.

Seems they're already doing that.

Quote:
As much as you all THINK it's NOT an competitor to the iPad, I got news for you... it is, and it's gonna hurt.

'Kay.
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post #112 of 303
9/28/11 at 9:05am
Quote:
Originally Posted by anantksundaram View Post

Fairly simple to figure out.

Just for the sake of argument, assume the ideal expected gross margin is ~50% (equivalent to the rough number that's been thrown around for iPads). If so, the product would be priced at $360, instead of $200. That's then $160 they have to make up from sale of digital books. This, in turn, means they're lowering the margins on that segment by that amount, or they have to raise prices to make up the difference (lowering demand).

There's no free lunch.

It is not just digital books. $79 a year for Prime which gets you basically Netflix streaming. I buy almost everything I can off of Amazon, that I dont need today, because it is just easy. I have an amazon shoping app on my phone for this reason. I can do it from this device as well.

If they are breaking even or making $10 as Bloomberg reports then there is no loss, and huge potential for way more "buy now with 1 click".
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post #113 of 303
9/28/11 at 9:07am
When are they releasing "the iPad killer", I don't want to miss it.
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post #114 of 303
9/28/11 at 9:07am
Quote:
Originally Posted by Shrike View Post

Markets, as a reflection on human culture, always has the top 10% who are willing to pay more for higher value products. Apple under SPJ has been able to target that market really well. Their performance was and continues to be selling products that gets those 10%.

It isn't. They want to win in the Tablet market - and they keep presenting market share figures when they can.

Everybody calm down. Apple has a strong competitor here, but they just have to win the war not the battle. They already beat Amazon in music, and movies (as far as I know) - so they win in content there, Do it in books and you kill Amazon.

Here's the thing - Amazon's margins are razor thin, 4 -5 %. I get this from last year.

year average 4.3%

AMZN 2010 full year 4.1%

AMZN Q4 2010 3.7%

AMZN Q1 2011 average guidance 3.4%

WMT 3-year average 5.8%


So Apple have a few percentages of margin to play with. Remember despite being better than Amazon in music, Apple make very little margin, or profits from content. Its probably contributes 4-5% of gross sales. Thats all Amazon has. So trend that down to 0% and you can take out Amazon.
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post #115 of 303
9/28/11 at 9:07am
Quote:
Originally Posted by anantksundaram View Post

"Well" is not the same as "well enough" for markets.

Apple could do similarly "well" by lowering margins too, but the question is whether they'll go there.

Also, over the longer haul, let's see how they deal with managing a hardware supply- and retail-chain.

Incidentally, all that said, I actually think that Amazon may have a hit on its hands (esp. in conjunction with the new lower-priced Kindles).

Interesting discussion, btw.

It's only worth it to Apple to lower margins if it increases their profits. Right now, they're selling literally every iPad they make so it's not. We'll see if, further down the line, Apple looks to diversify iPads to the extent they have done with iPods.

Additionally, I agree with your statement on this being a possible hit. A little more bullish than yourself having met many who this type of product would be ideal for. To think, all it took was taking the much maligned closed approach for a tablet maker to come up with a competitive product running Android.
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post #116 of 303
9/28/11 at 9:08am
Quote:
Originally Posted by Tallest Skil View Post

But are in NO way Apple's primary revenue generators. The hardware remains far and away more profitable/revenueish.



Running worse software, on worse hardware, smaller.



Which explains the success of all the other tablets that look exactly like the iPad but were cheaper.

Did I say success? I meant six week lifespan and then discontinuation.



Seems they're already doing that.



'Kay.

Before the Kindle Fire, iPad had 80+% of the tablet market in year 1 of its life. That dropped to 60% (in the sixties) in year two of its life because of Xoom, Tab and others. All of those others lacked, apps early on and the echo system that Apple had.

Care to guess what the iPad tablet market share will be in December of 2012? I bet its below 50%, but still the biggest....because of this tablet.
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post #117 of 303
9/28/11 at 9:11am
I think the Kindle Fire will sell well for the price conscious consumer. It is however slower than the original ipad, has little memory, poorer and smaller screen, and lacks a camera. It does not have 3G, and it is saddled with Flash (which has yet to work well on tablet form).

It will compete nicely against Samsung and other Android tablets, for whom price is a very big deal. Interestingly, it will put a very distinct and different fork on it, where content will be pushed to Amazon and not Google.

But for most consumers, they are looking for the leading edge in technology, and this is clearly not it.
It is yesterday's technology repackaged in a nice discount price. For some that is enough.

JoeG
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post #118 of 303
9/28/11 at 9:11am
A Kindle would never replace my iPad because I already have a Kindle app on my iPad but would never be allowed to have an iBooks app on my Kindle.
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post #119 of 303
9/28/11 at 9:11am
Quote:
Originally Posted by tjw View Post

What a stupid comment.

How do you possibly manage to use your iPhones with a poxy little 3.5inch display! Talk about shooting yourself in the foot with a stupid comment.

The difference is that the iPhone UI and apps are all designed for that little screen, including elements that are just large enough to operate with normal sized fingers. Conversely, if Android device manufacturers try to squeeze a full Android tablet interface down into 7 inches, they're either going to have to engage in some serious customization, or the result will be widgets and buttons that are too small.

However, I note that apparently Amazon did in fact customize the UI, so I'm betting that they did an OK job targeting that 7 inch screen... no sandpaper needed.

Thompson
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post #120 of 303
9/28/11 at 9:12am
Quote:
Originally Posted by bettieblue View Post

Before the Kindle Fire, iPad had 80+% of the tablet market in year 1 of its life. That dropped to 60% (in the sixties) in year two of its life because of Xoom, Tab and others. All of those others lacked, apps early on and the echo system that Apple had.

Care to guess what the iPad tablet market share will be in December of 2012? I bet its below 50%, but still the biggest....because of this tablet.

SHIPPED. NOT SOLD. Do you even bother to read the stories from which you're getting your information?
PhilBoogie
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