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JP Morgan: Kindle Fire is 'noise,' won't compete with Apple's iPad 2

post #1 of 157
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Amazon's new Kindle Fire won't compete with Apple's iPad 2, and isn't even a lock to become the second-most-popular tablet on the market, one Wall Street analyst believes.

In a note issued to investors on Wednesday, Mark Moskowitz with J.P. Morgan said any claims that the Amazon will become the world's No. 2 tablet-maker are simply "noise." He said he's "not impressed" with the Kindle Fire, which was unveiled with a $199 price point on Wednesday.

Moskowitz said that he still doesn't see a major competitor to Apple's iPad in the tablet marketplace, as he feels Amazon's new color touchscreen tablet is a stepping stone "at best."

"Until we see how the Kindle Fire evolves, we are comfortable stating that the emergence of a major two tablet vendor remains elusive," the analyst wrote.

Moskowitz said he believes users have come to expect certain features in a tablet, and Amazon's device may not meet those expectations. He feels the Kindle Fire is more of a hybrid device than a true tablet.

"It is our view that for tablet vendors to win customers, a feature-rich, user-friendly tablet is a key requisite," he said.

The Amazon tablet has three main features that could win consumers: Amazon's proprietary user interface built around Android, content from Amazon Prime, and a low price point. However, Moskowitz said he doesn't feel that any of those are a game changers.

On the Fire's $199 price point, Moskowitz said it may attract early adopters, but he's wary of such momentum being sustained. He said the low price may in fact turn out to be a detriment in marketing the device to consumers.



"Kindle Fire's low price point speaks to how there is much lacking in the device," he said. "We argue that the price point is not going to afford most users a tablet-experience, which is a problem if Amazon wants to become a major tablet vendor."

The Kindle Fire's 7-inch screen, coupled with the absence of a camera, GPS and microphone, were listed as shortcomings when compared to similar devices such as the iPad. And because the device also lacks 3G connectivity, Moskowitz believes it could be a hybrid device leading the way for a more full-featured device.

Amazon is rumored to be working on a 10-inch tablet that will launch next year, as well as an 8.9-inch version with an "amazing form factor" for the second half of 2012. Reports have suggested Amazon is testing the market with the first Kindle Fire before potentially pursuing additional form factors next year.
post #2 of 157
Quote:
Originally Posted by AppleInsider View Post

In a note issued to investors on Wednesday, Mark Moskowitz with J.P. Morgan said he's "not impressed" with the Kindle Fire, which was unveiled with a $199 price point on Wednesday.


ANALists.
post #3 of 157
Fire's going to do well in sales because it's affordable and from a well known company.

Can Amazon turn a profit on their services like Prime and the Amazon store is the question. They're making little to nothing on this hardware.
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post #4 of 157
Good to see a continuance of sound judgement flowing from the bowels of Wall Street.
post #5 of 157
Quote:
Originally Posted by hmurchison View Post

They're making little to nothing on this hardware.

Losing around $50 on each, I thought was the consensus.

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post #6 of 157
Quote:
Originally Posted by Tallest Skil View Post

Losing around $50 on each, I thought was the consensus.

No, that was a guess by a single analyst.
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post #7 of 157
Quote:
Originally Posted by Tallest Skil View Post

Losing around $50 on each, I thought was the consensus.

"We'll make it up in volume"

lol.

HP may as well keep selling the TouchPad at $99 indefinitely.
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post #8 of 157
All this sounds well and good, but where is his evidence to back up his statement? Why would anyone pay for an analyst's statement unless he can back up his hypothesis?

Seems like it's all too easy to call oneself an analyst these days.
post #9 of 157
Quote:
Originally Posted by ConradJoe View Post

ANALists.

I call them ANALysts myself too sometimes, but you gotta admit, even a broken clock is correct twice a day, and in this case, the analyst happens to be right!

I'm not claiming that the Kindle Fire is going to flop, far from it. I'm sure that there are plenty of poor people around, especially in this economy, who are going to be attracted to such a device. But, this Amazon mini Android tablet won't have any effect on iPads.
post #10 of 157
Considering that Amazon never reveals how many Kindles it sells, we may never know if it's a blockbuster or a dud.
post #11 of 157
It's also a slim slice/"noise"of Amazon's own pie. Like a $99 ATV- how much does Apple make on that? These are both merely vending machines/jukeboxes for their respective makers.
Think of it as Jeff's /Amazon's hobby.
post #12 of 157
New tech is funded by the sale of previous tech. In order for Amazon to evolve their "fire" their stuffy azz consumers will have to be progressive enough to always buy new Kindles all the time. I don't see that happening. Grandpa and grandma ain't playing that game. They aren't Android fanboys. That is just my two cents.
post #13 of 157
wtf is wrong with this analyst.

first off, the iPad2 shouldn't be compared to the Kindle Fire. They're at two completely different price points.

secondly, the device isn't out yet to the masses. this guy is full of shitso.

finally, NEVER, EVER, confide in analysts statements.
post #14 of 157
In a way, Kindle Fire and iPad sit on the opposite spectrum. Apple provides contents ecosystem to make money from the hardware business. Amazon sells cheap hardware to make money from the contents business. So if you want good hardware and wide range of contents, you pay more and buy iPad. If you want cheap hardware and contents from Amazon, buy Kindle Fire.
post #15 of 157
Quote:
Originally Posted by Apple ][ View Post

I call them ANALysts myself too sometimes, but you gotta admit, even a broken clock is correct twice a day, and in this case, the analyst happens to be right!

I'm not claiming that the Kindle Fire is going to flop, far from it. I'm sure that there are plenty of poor people around, especially in this economy, who are going to be attracted to such a device. But, this Amazon mini Android tablet won't have any effect on iPads.

The Kindle Fire isn't even aimed at poor people in my opinion. This is for educated wealthier over 30 people. Poor people want a device for $149 or less. Younger people want a device to do more... this is the smart phone generation.

I agree with you that it won't be a flop but it also won't be a screaming success.
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post #16 of 157
Quote:
Originally Posted by filburt View Post

In a way, Kindle Fire and iPad sit on the opposite spectrum. Apple provides contents ecosystem to make money from the hardware business. Amazon sells cheap hardware to make money from the contents business. So if you want good hardware and wide range of contents, you pay more and buy iPad. If you want cheap hardware and contents from Amazon, buy Kindle Fire.

+1

Well said. Now.. what content does Amazon have the majority share on besides books?

iTunes Music vs Amazon Music?
Netflix vs Amazon Prime?
Android App store or iTunes App store vs Amazon App store?

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post #17 of 157
It will be a flope but Bezos and company will report in adjectives and adverbs. Better than expected. Best product sales. Bezos will never give a number of units sold.

The esteemed and honorable gentlemen will echo the same thing anmd provide hilarious estimates as to what sales are.

The SEC is inutile (by design or by incompetence).
post #18 of 157
Quote:
Originally Posted by snova View Post

+1

Well said. Now.. what content does Amazon have the majority share on besides books?

iTunes vs Amazon mp3?
Netflix vs Amazon Prime?
Android App store vs Amazon App store?


Amazon owns the biggest movie rental company in Europe, who also offer streaming movies just like Netflix do:

http://en.wikipedia.org/wiki/LoveFilm
post #19 of 157
Quote:
Originally Posted by ConradJoe View Post

ANALists.

It does help to spell well.
post #20 of 157
Quote:
Originally Posted by filburt View Post

In a way, Kindle Fire and iPad sit on the opposite spectrum. Apple provides contents ecosystem to make money from the hardware business. Amazon sells cheap hardware to make money from the contents business. So if you want good hardware and wide range of contents, you pay more and buy iPad. If you want cheap hardware and contents from Amazon, buy Kindle Fire.

This is what I don't understand. Apple claims that they don't make any money from iTunes sales. Amazon sells the same content, often at slightly lower prices. So, Amazon cannot be making much from its contents business. Amazon Prime at $79/mo is a fantastic deal for the customer. Must be a money loser for Amazon.

Now, Apple has 35% plus margins on its hardware sales. If Amazon will be selling the Kindle Fire at a loss, its entire contents business (including hardware) will be a money loser for quite some time.

Their strategy seems to be to increase share even if they lose money for a while. Pretty risky, I think.
post #21 of 157
Quote:
Originally Posted by island hermit View Post

The Kindle Fire isn't even aimed at poor people in my opinion. This is for educated wealthier over 30 people. Poor people want a device for $149 or less. Younger people want a device to do more... this is the smart phone generation.

I agree with you that it won't be a flop but it also won't be a screaming success.

If somebody is wealthy, educated and over 30, then they probably already have an iPad!

The original Kindle definitely caught on with people who were probably well educated and had money, because people who read a lot of books tend to be smarter than people who don't. That's just a personal observation. But I wonder if many of them will be attracted to the color Kindle, because I'm pretty sure that what made the original Kindles good was the e-ink screen and the huge battery life.
post #22 of 157
Quote:
Originally Posted by Tallest Skil View Post

Losing around $50 on each, I thought was the consensus.

Nope. Not a consensus. Just one lone analyst. Just one bit of the "noise" JP Morgan speaks about.
post #23 of 157
As multimedia tablet at 40% of the iPad's lowest price point I think the Kindle Fire stands an excellent chance of competing with the iPad in unit sales in the long run. It does have a much more limited usage range than the iPad, but the iPad was also doomed to fail by analysts because it didn't offer the full range of OS capabilities of desktop OS.
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post #24 of 157
Quote:
Originally Posted by AppleGreen View Post

This is what I don't understand. Apple claims that they don't make any money from iTunes sales. Amazon sells the same content, often at slightly lower prices. So, Amazon cannot be making much from its contents business. Amazon Prime at $79/mo is a fantastic deal for the customer. Must be a money loser for Amazon.

Now, Apple has 35% plus margins on its hardware sales. If Amazon will be selling the Kindle Fire at a loss, its entire contents business (including hardware) will be a money loser for quite some time.

Their strategy seems to be to increase share even if they lose money for a while. Pretty risky, I think.

It will be interesting to see how Google responds. They have all the same kind of Content. Now that they have Motorola maybe we will see a $199 competitor built by Motorola.

Let them go at it I say. It would be entertaining.
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post #25 of 157
Quote:
Originally Posted by Apple ][ View Post


I'm not claiming that the Kindle Fire is going to flop, far from it. I'm sure that there are plenty of poor people around,

Don't for get all those horrible people who just simply hate anything Apple. And all of the good kind people that the greedy salesmen talk into buying one because it is "just like an iPad".

It worked in the smartphone biz, so why not the tablet biz?

Poor.
Bad.
Gullible.

Pick one or more to explain why Android is kicking Apples butt in the phone market, and then extend that to the tablet market. Maybe Apple should have stuck with selling to elite people instead of Grandma.
post #26 of 157
Amazon wants to open a few more branches. The kindle fire is just another shop front.

Owners of Android devices spend far less on paid content than do owners of iOS devices. If kindle fire owners don't buy much from amazon, what are they going to do with their new toy?

Amazon's business plan with the kindle fire is the exact opposite of Apple's. Apple sells content at break-even and makes money on the hardware. Amazon aims to break-even or possibly takes a loss on the hardware in order to make money on content sales.

If anyone can pull it off, it is Amazon, if they don't loose too much money on the hardware.
post #27 of 157
Quote:
Originally Posted by Apple ][ View Post

If somebody is wealthy, educated and over 30, then they probably already have an iPad!

That was actually my point.

Quote:
The original Kindle definitely caught on with people who were probably well educated and had money, because people who read a lot of books tend to be smarter than people who don't. That's just a personal observation. But I wonder if many of them will be attracted to the color Kindle, because I'm pretty sure that what made the original Kindles good was the e-ink screen and the huge battery life.

... and that was another of my points. Amazon will definitely sell plenty of e-ink devices.

I'm lazy and don't feel like researching it but can anyone tell me if Amazon sells its content (other than books) through any other device maker (ie. Samsung smartphones or tablets)?
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post #28 of 157
Quote:
Originally Posted by ConradJoe View Post

D
Pick one or more to explain why Android is kicking Apples butt in the phone market, and then extend that to the tablet market. Maybe Apple should have stuck with selling to elite people instead of Grandma.

please explain to me how market share translates to kicking Apple butt? Don't forget the bottom line. Dont forget to look at Nokia market share of all phones worldwide.

valuation at close of market today:
Apple value: $362.1 Billion
Google value: $179.3 Billion
Microsoft value: $213.2 Billion
Nokia value: $21.4 Billion
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post #29 of 157
Amazon need to sell around 2 million units a year to take second spot. If that isn't a lock then I don't know what is.

Daring Fireball's analysis is much better than anything on Wall Street.
post #30 of 157
Quote:
Originally Posted by ConradJoe View Post

Don't for get all those horrible people who just simply hate anything Apple.

Not too many of those kind of people actually exist. There are a few loud, ignorant individuals on the internet who would fit into that deranged category, but their numbers are small and they have zero effect on the market.
post #31 of 157
Quote:
Originally Posted by Tallest Skil View Post

Losing around $50 on each, I thought was the consensus.

You know this is a bunch of crap yet you posted it anyway. If they are losing anything per tablet I doubt it's much. If it is the case anyway it's tied to high manufacturing costs early on.


Quote:
Originally Posted by AppleGreen View Post

This is what I don't understand. Apple claims that they don't make any money from iTunes sales. Amazon sells the same content, often at slightly lower prices. So, Amazon cannot be making much from its contents business. Amazon Prime at $79/mo is a fantastic deal for the customer. Must be a money loser for Amazon.

Now, Apple has 35% plus margins on its hardware sales. If Amazon will be selling the Kindle Fire at a loss, its entire contents business (including hardware) will be a money loser for quite some time.

Their strategy seems to be to increase share even if they lose money for a while. Pretty risky, I think.

I didn't know Apple claimed that. Amazon never claimed it was a loss on each. An analyst did so with whatever numbers they used to calculate manufacturing costs. I highly doubt they've set this up to be a loss leader.


What I've noticed here is that when these analysts say something bad about Apple (I can't actually think of one of their reviews that has been correct), everyone gets angry. I thought the analyst that claimed Amazon was losing significantly on these was one with a poor track record on their predictions.
post #32 of 157
Quote:
Originally Posted by island hermit View Post

I'm lazy and don't feel like researching it but can anyone tell me if Amazon sells its content (other than books) through any other device maker (ie. Samsung smartphones or tablets)?

They sell everything that they carry through the iPad.
post #33 of 157
Quote:
Originally Posted by snova View Post

please explain to me how market share translates to kicking Apple butt?

I meant kicking Apple's butt WRT market share. Android outsells iOS at a greater than 2 to 1 ratio.
post #34 of 157
Quote:
Originally Posted by filburt View Post

In a way, Kindle Fire and iPad sit on the opposite spectrum. Apple provides contents ecosystem to make money from the hardware business. Amazon sells cheap hardware to make money from the contents business. So if you want good hardware and wide range of contents, you pay more and buy iPad. If you want cheap hardware and contents from Amazon, buy Kindle Fire.

I notice the word good was missing from the Amazon side of the equation, replaced by cheap.

And in relation to the hardware too, where cheap has meant bad things for the Android tablet market so far. This alleged "tablet" isn't even running the tablet version of Android!
post #35 of 157
Quote:
Originally Posted by snova View Post

valuation at close of market today:
Apple value: $362.1 Billion
Google value: $179.3 Billion
Microsoft value: $213.2 Billion

That's equal to the number of shares multiplied by the price per share which doesn't really tell us about the specific markets they are in. There are very specific stats that show that Apple is leading the handset, tablet, PMP, and personal computer markets in every relevant sense. Most notably they get an overwhelmingly high profit of all these market segments while most vendors using Android can't even seem to get in the black and the others seem to barely be able to tread water. Now that they have the additional weight of the MS, Oracle and Apple looming and Google unwilling to back them we may see these vendors start to drop Android in short order or fork it so they can distance themselves from the costly penalties associated with stolen goods.
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post #36 of 157
Quote:
Originally Posted by Apple ][ View Post

Not too many of those kind of people actually exist. There are a few loud, ignorant individuals on the internet who would fit into that deranged category, but their numbers are small and they have zero effect on the market.

So then why are Android phones outselling iOS phones at a greater than 2 to 1 margin? Are they all selling to poor people?
post #37 of 157
Quote:
Originally Posted by neiltc13 View Post

Amazon owns the biggest movie rental company in Europe, who also offer streaming movies just like Netflix do:

http://en.wikipedia.org/wiki/LoveFilm

And I can watch Lovefilm on a bigger screen, on my iPad. Amazon doesn't own the content in Lovefilm, so they still have o be careful not to piss off the content owners with their ways (a la cloud player).
post #38 of 157
Quote:
Originally Posted by ConradJoe View Post

I meant kicking Apple's butt WRT market share. Android outsells iOS at a greater than 2 to 1 ratio.

Google nor Apple sell those OSes.
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post #39 of 157
Quote:
Originally Posted by AppleInsider View Post

Moskowitz said he believes users have come to expect certain features in a tablet.

Like flash support?
post #40 of 157
Quote:
Originally Posted by solipsism View Post

As multimedia tablet at 40% of the iPad's lowest price point I think the Kindle Fire stands an excellent chance of competing with the iPad in unit sales in the long run. It does have a much more limited usage range than the iPad, but the iPad was also doomed to fail by analysts because it didn't offer the full range of OS capabilities of desktop OS.

It's 40% of the iPad's price, but it's also only 40% of the size, and has about 40% of the features. Together, that may be enough to satisfy some. It also my wet their thirst for the real thing.
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