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Amazon Kindle Fire HD called 'ambitious,' but unlikely to dethrone Apple's iPad

post #1 of 89
Thread Starter 
Amazon's new Kindle Fire HD lineup offers a variety of options at aggressive price points, but Apple's iPad — particularly with the anticipated October launch of a so-called "iPad mini" — is expected to remain the market leader.

Analysts on Wall Street reacted to Thursday's news of a new lineup of Kindles, declaring the hardware an improvement over the previous generation Kindle Fire and suggesting the latest devices could provide stiff competition for the Google Nexus 7 and Microsoft's forthcoming Surface lineup. But market watchers don't expect that the Kindle Fire HD will have much of an effect on Apple's iPad, which currently controls a majority of the tablet market.

Shaw Wu with Sterne Agee said on Friday that Amazon's new lineup, led by the 8.9-inch Kindle Fire HD, is "ambitious." He believes the new tablets will make it more difficult for the competition, including Samsung, HTC, and Research in Motion, to gain traction in the market.

"We believe the Nexus 7, which has seen strong sales since its introduction in mid-July, could see competitive pressure with the new 7-inch Kindle Fire HD, which has the same price point at $199 but sports an additional 8GB of storage for a total of 16GB," Wu said.

An even greater pressure has been placed on Microsoft and its Surface lineup, which he believes will be need to be priced at $299 or lower to have a chance at success.

Kindle Fire HD


In Wu's opinion, the endgame in the tablet market is that no hardware makers will be profitable outside of Apple due to Amazon's aggressive pricing. With that in mind, he said he's unsure about Amazon's content reselling business model.

"We question the company's stance where it believes it can make profits on content is the right business model, as reselling someone else's content has historically proven to not be a very profitable venture," he said, noting that Apple makes very little profit from iTunes and the App Store.

Brian White with Topeka Capital Markets also weighed in and said he believes Amazon's new, expanded Kindle Fire lineup will be no match for Apple's iPad experience. He said investors should simply "sit back, relax, and wait for the 'iPad Mini.'"

"Apple still rules the tablet world and we believe the soon to be launched 'iPad Mini' at a $250-$300 price point (possibly a bit lower) will expand the company's addressable market opportunity significantly with a 7.85-inch tablet, and potentially even surpassing sales of the regular-sized iPad," he said.

In White's view, a new, smaller iPad will give Apple a larger addressable market, potentially boosting sales in developing countries as well as schools.
post #2 of 89
Amazon's tablet business model consists in selling at loss the equivalent of an Amazon's credit card. I am not interested, thanks.
post #3 of 89
It doesn't "need" to dethrone the iPad. There's room for tablets other than the iPad in this market.

I'm just glad that there's some good competition out there.
post #4 of 89
I see no reason for this Kindle not to be win for Amazon, despite that bezel. I also see no reason for its success to be determined by Apple faltering when this market is growing so quickly.

I do wonder if Apple has prepared for Amazon's offerings or if they will have to adjust features and/or price points for their rumoured iPad mini. We're still hearing 1024x768 for a 163 PPI display whilst this Fire HD has an impressive, at least on paper, 1920x1200 at 254 PPI for a good price. This is the best competitor we've seen to the iPad.

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post #5 of 89
For the first time in a long while, I agree with Wu.

Amazon's business model makes no sense at all. It'll take a few quarters to show up as an earnings blow up, but it will.
post #6 of 89
These tablets are very aggressively priced, even outside of the US. Apple does little more than replace the $ sign with a £ sign when choosing a price of their products in the UK. Not so with Amazon's new tablets - there's virtually no difference in price between countries once you've taken tax into consideration.
post #7 of 89

And, since Google gave Amazon the Android operating system for free, Amazon didn't have a lot of cost there.  It's a shame that Google subsidizes Apple's competitors by giving them something for free.  Apple spent millions creating the IOS.

post #8 of 89
[quote name="AppleInsider" url="/t/152385/amazon-kindle-fire-hd-called-ambitious-but-unlikely-to-dethrone-apples-ipad


"We question the company's stance where it believes it can make profits on content is the right business model, as reselling someone else's content has historically proven to not be a very profitable venture," he said, noting that Apple makes very little profit from iTunes and the App Store.


.[/quote]

Ok for the second sentence. The first one is more questionable ...

Some economic activities have always been strange to me : eg selling money which you do not even own, or sell debt ... But those msyteries are beyond my comprehension, I admit ...
post #9 of 89
Quote:
Originally Posted by SolipsismX View Post

I see no reason for this Kindle not to be win for Amazon, despite that bezel. I also see no reason for its success to be determined by Apple faltering when this market is growing so quickly.
I do wonder if Apple has prepared for Amazon's offerings or if they will have to adjust features and/or price points for their rumoured iPad mini. We're still hearing 1024x768 for a 163 PPI display whilst this Fire HD has an impressive, at least on paper, 1920x1200 at 254 PPI for a good price. This is the best competitor we've seen to the iPad.

All those ads Amazon will plaster on the device will look real good

The resolution on the 7" I believe is substantially less. Closer to 1200 x 800. Still better, but close enough

Amazon's cash balance and working capital has dropped dramatically. They have .5% net profit margin. They are one mistake away from some serious issues. They better hope this content model works for them

A lot of folks are going to buy and root them to remove all the Amazon crap ware. I bet this becomes a cottage industry with lots of YouTube how to guides

If I'm Google, I'd ask WTF and figure out a way to shut Amazon off from future Android versions

As an Apple investor, I think this is overall a very good development. Amazon effectively cuts Google/Mot/Samsung and Microsoft off at the knees. They have just removed any chance of them making any money in tablets. And Amazon is not capitalized in the longer run to take on Apple worldwide.

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post #10 of 89
Why is it only compared to the iPad? It seems to me it's just as much (if not more so) competition for the Nexus 7 and the slew of OEM Android/Windows RT tablets. If its all about price, who would buy a Samsung or Asus tablet when they can get a Fire for $199?
post #11 of 89
Big problem with Amazon's business model is their Fire's are ad-supported (on lock screen) and they are banking on purchasing of their own content. If their content was exclusive to their own devices, this wouldn't be an issue but they released apps for their content on their competitors devices.

I mainly bought my Kindle Fire for the Prime Video Marketplace but then they released the app for the PS3, Xbox and the iPad! Sadly my Fire now just collects dust.

Another mistake is the very limited Amazon App Marketplace and locking out Google Play. The selection in their app store is but a fraction of Google's and too frequently they are a few versions behind and don't receive updates as often. And let's not even begin to compare either to the size of Apple's App Store.

I understand they are giving more hardware bang for the buck but with very little exclusive and Apple having the "best of both worlds" experience having Amazon's own apps, they will do little to harm Apple's or Google's market share.
post #12 of 89

Apple will continue to rock the tablet world, but the introduction of new, useful, inexpensive tablets is nothing but awesome.  B&N will now have to respond, as will Google.  And eventually Apple.  People knock Amazon for their approach, but this is misguided.  When tablets become low cost commodities - and that day will be here pretty soon - the value will need to be derived from content for the manufacturers to stay whole.  I can imagine a day where Amazon simply gives you a tablet with the purchase of $150 worth of books or something.  Bezos is no Bozo.
 

post #13 of 89
Haters are going to hate, but this is a very nice improvemt to their original Fire offering. Amazon is not going anywhere and I believe will be the number 2 tablet brand even after Surface launches.

Apple keep looking in your rear view mirror and remember there are some competent alternatives out there looking for a slice of the pie...
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post #14 of 89
Quote:
Originally Posted by Red Oak View Post

All those ads Amazon will plaster on the device will look real good
The resolution on the 7" I believe is substantially less. Closer to 1200 x 800. Still better, but close enough
Amazon's cash balance and working capital has dropped dramatically. They have .5% net profit margin. They are one mistake away from some serious issues. They better hope this content model works for them
A lot of folks are going to buy and root them to remove all the Amazon crap ware. I bet this becomes a cottage industry with lots of YouTube how to guides
If I'm Google, I'd ask WTF and figure out a way to shut Amazon off from future Android versions
As an Apple investor, I think this is overall a very good development. Amazon effectively cuts Google/Mot/Samsung and Microsoft off at the knees. They have just removed any chance of them making any money in tablets. And Amazon is not capitalized in the longer run to take on Apple worldwide.

Google don't plan on making money from the nexus or android for that matter. Its all about tracking and selling to advertisers
post #15 of 89
This thing looks like crap to me, I would bet money that it actually is crap.  
The last model was crap and didn't sell well.  Yet here we are again a year later with the media falling all over itself to maintain that Amazon is some kind of big threat, or in this case, telling us that it's okay because the threat probably still won't let them "win."  
 
In reality, almost the only success Amazon has had with the kindle Fire, is that it has successfully convinced the media that it has had success with the kindle Fire.  
post #16 of 89
Quote:
Originally Posted by razorpit View Post

Haters are going to hate, but this is a very nice improvemt to their original Fire offering. Amazon is not going anywhere and I believe will be the number 2 tablet brand even after Surface launches.
Apple keep looking in your rear view mirror and remember there are some competent alternatives out there looking for a slice of the pie...
I don't think Apple can completely ignore Amazon but I think other companies will be directly impacted by their low cost tablets more than Apple will be. On several tech sites ie seen post from people saying they were going to purchase a Nexus 7 but now decided to wait for the new Fire instead, Will anyone even care about Windows RT tablets?
post #17 of 89
Quote:
Originally Posted by Red Oak View Post

Amazon's cash balance and working capital has dropped dramatically. They have .5% net profit margin. They are one mistake away from some serious issues. They better hope this content model works for them

When I look at the Kindle being the de facto eReader and a world filled with ads (including this site and forum) I have to wonder if that is deal breaker for the majority.

As for Amazon's margins, they are laughably low. I've worked at non-profits that had a higher profit margin than that*. I agree they are a mistake away from a catastrophe but I also see an opportunity in this risk. They are doing what HTC, RiM, HP, Moto, Samsung, MS et al. couldn't do. They are competing in the tablet market with a real product that was announced yesterday with real specs, real demos, real ship dates, and real price points. This is something we don't much of outside of Apple.

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post #18 of 89
Quote:
Originally Posted by Mazda 3s View Post

It doesn't "need" to dethrone the iPad. There's room for tablets other than the iPad in this market.
I'm just glad that there's some good competition out there.

 

Yes, it'll keep Apple on its toes (not that I think they need much of an incentive to do that).

post #19 of 89

I know one person with the now previous Fire. He is the cheapest man on Earth. He hates his Fire, and so does his family he shares it with. But he says it's cheap and that's the most important feature in a device to him.

 

So, there is an audience.

 

(His wife whispered to me that she was going to get the kids, iPad Minis for Christmas)

 

 
post #20 of 89
Quote:
Originally Posted by Gazoobee View Post

This thing looks like crap to me, I would bet money that it actually is crap.  
The last model was crap and didn't sell well.  Yet here we are again a year later with the media falling all over itself to maintain that Amazon is some kind of big threat, or in this case, telling us that it's okay because the threat probably still won't let them "win."  
 
In reality, almost the only success Amazon has had with the kindle Fire, is that it has successfully convinced the media that it has had success with the kindle Fire.  

The problem with all the cheap tablet are they're cheaply made. There's 2 fandroids in my house. 1 with an Acer tablet and 1 with a kindle. After months of hearing how Android tablets were so much better than my second hand eBay bought iPad 2 both of them died. Now I'm the only one with a tablet that works. Can't return them as they were bought from overseas, cost outweighs value
post #21 of 89
Quote:
Originally Posted by geoadm View Post


Google don't plan on making money from the nexus or android for that matter. Its all about tracking and selling to advertisers

And they don't get that on KF.

post #22 of 89
Quote:
Originally Posted by anantksundaram View Post

 
For the first time in a long while, I agree with Wu.
Amazon's business model makes no sense at all. It'll take a few quarters to show up as an earnings blow up, but it will.

 

Sounds like Denial. People have been saying that every quarter for the last 17 years and calling Bezos crazy, yet they continue to grow, are the world's largest e-tailer and are 1/4 of the enterprise cloud computing market. 


Edited by thataveragejoe - 9/7/12 at 6:30am
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post #23 of 89
The $499 tablet appears to be plastic and has a $200 premium over the wifi only model. Is the cellular radio the only difference between the two?
post #24 of 89

The 4G version with data plan of $50 per annum  is very attractive.  Amazon is very creative to price the data plan: probably part of the $500 asking price will be allocated to the data costs, and it probably assumes that machine will not last for too long before someone replaces it with an updated version.  Hat off to Bezo for thinking out of the box.    

post #25 of 89

I'm loving it! Apple will have to price iPad mini very carefully now, and my wallet is ready.

post #26 of 89
Quote:
Originally Posted by rsdofny View Post

The 4G version with data plan of $50 per annum  is very attractive.  Amazon is very creative to price the data plan: probably part of the $500 asking price will be allocated to the data costs, and it probably assumes that machine will not last for too long before someone replaces it with an updated version.  Hat off to Bezo for thinking out of the box.    

Really? I think the $199 one is the most attractive. With this kind of device I don't think you need cellular at all.

post #27 of 89
Quote:
Originally Posted by Rogifan View Post

Why is it only compared to the iPad? It seems to me it's just as much (if not more so) competition for the Nexus 7 and the slew of OEM Android/Windows RT tablets. If its all about price, who would buy a Samsung or Asus tablet when they can get a Fire for $199?

 

 

I agree that they are going to hurt Microsolft  and the android tablet crowd more than Apple, BUT make no mistake, it will hurt Apple too.  The price gap between the ipad and the new tablets is getting to big, so Apple need a lower price offering more than ever. With no low price device, Apple is set to lose the ecosystem war in the long run.

 

imo Apple need to price its new 8" tablet at 249$, right between the 7" kindle at 199$ and the 9" kindle at 299$.  This will ensure Apple spreads its ecosystem at the lower end.

post #28 of 89
Quote:
Originally Posted by SolipsismX View Post

I see no reason for this Kindle not to be win for Amazon, despite that bezel. I also see no reason for its success to be determined by Apple faltering when this market is growing so quickly.
I do wonder if Apple has prepared for Amazon's offerings or if they will have to adjust features and/or price points for their rumoured iPad mini. We're still hearing 1024x768 for a 163 PPI display whilst this Fire HD has an impressive, at least on paper, 1920x1200 at 254 PPI for a good price. This is the best competitor we've seen to the iPad.

 

No doubt. There's the whole ecosystem thing and apps that tilt in the iPad's favor, but this higher res screen on a really competitively priced tablet sounds good. And the data plan beats the PANTS off of whatever AT&T and Verizon are gouging with on the iPad side (through no fault of Apple's). And of course Amazon is pricing to effectively no margin on the hardware (or maybe even a loss???), but cheap (and seemingly pretty good) hardware + cheap data network definitely doesn't suck.

post #29 of 89

Seeing how Nexus Pad and Kindle change into, it might be a good thing that Android tablets and iPad are now part ways and found their own customers. Android tablets for media consumptions. Kindle for Amazon's contents. iPad morphing into baby laptops.

post #30 of 89
Quote:
Originally Posted by rsdofny View Post

The 4G version with data plan of $50 per annum  is very attractive...  

 

Interesting that all the articles on the new Kindle are glossing over this.   The cheapest Verizon plan is $360/year for an ipod.    Granted it's only for 250MB, but I think a lot of your tablet users out these spend 90% of their tablet time checking email or surfing the web.  This could open the door for a new kind of tablet audience.   (Maybe even Mom, who has no computer or wi-fi...)

post #31 of 89
Quote:
Originally Posted by Red Oak View Post


Amazon's cash balance and working capital has dropped dramatically. They have .5% net profit margin. They are one mistake away from some serious issues. They better hope this content model works for them

 

I certainly wonder how in the world Amazon has managed to have a P/E on their stock of 312. If they were trading at the same P/E as Apple, they'd collapse from $255 a share to about $13.

 

Truly one of the strangest stocks out there and a great demonstration of how manipulated some stocks are. FB is clearly losing its air (should be at $7-8?), and to be fair AMZN really should too. Alternately Apple should be trading at $13,000 a share, but that's assuming fairness.

post #32 of 89

Amazon is attempting to follow the xbox model which took Years for it to begin paying back to M$. I would be curious to see how much M$ invested over all the years to truly see if it paid off the total investment. I suspect not since they never really reports all the numbers for the xbox.

 

I have to agree kindle has an issue with content. My wife loves her since it just replaces her having to carry books around. However, after some initial purchased form Amazon she has not been back since we found we can check out e-books from the library and convert them to mobi format and put them on the kindle. Also we get content elsewhere and convert it. Beside a few initial purchase they have not made much form us. I know others are doing the same thing so we not alone in this.

 

I personally never understood the give something away in hopes it makes you money elsewhere. I know inkjet printer do well in this model, HP and Epson make far more money on the ink than the printer itself but it does not work in all cases.


Edited by Maestro64 - 9/7/12 at 7:15am
post #33 of 89
WOW! first the Nexus 7 comes out at 199$ with great hardware 8g and now Amazon Kindle HD 7" with better hardware, retina display, front facing camera and 16g at 199$ plus Kindle HD 9" 299$...

INCREDIBLE price with hardware!
besides the 150$ old kindle fire(over price) and the ridiculous LTE version
(250$ more for an LTE is DOA for 50$ you can buy 2 wifi Kindle HD's) plus US exclusivity
this is a game changer for the tablet market. Nexus hardwear is sub par and
Samsung tablets are to expensive compare to Amazon offerings.
Plus the Amazon android skin makes it easier for normal consumers and exempt of law suits.

Now Apple has to choose to dominate the Tablet market or allow Amazon to take huge
margins of the market this Holiday season like Samsung did on the smart phone market.
It can release the iPad mini at 199$ (even without retina with its ecosystem it will beat kindle HD 7") and cut 100$ to ipad 2 $299(less powerful than kindle HD 9" with no retina but 1" larger screen and the apple ecosystem)
ipad 3 at 399$.

Microsoft will never be able to compete with the Surface RT at this prices because it does not have Apple volume purchase of parts cheap.

The Tablet Wars is between Amazon and Apple Both have the Ecosystem and simple OS, is on Apple to compete on price and dominate the Tablet market Both in the consumer market and educational or Open the door to Amazon...


P.S. in the next 12 months Tablet Sales will be Bigger than PC sales and Windows 8 Tablets wont be in there in big numbers because they wont even be close to these prices. In 2 years the Tech World will be VERY DIFFERENT. Exiting times are ahead...
post #34 of 89
Quote:
Originally Posted by herbapou View Post

 

 

I agree that they are going to hurt Microsolft  and the android tablet crowd more than Apple, BUT make no mistake, it will hurt Apple too.  The price gap between the ipad and the new tablets is getting to big, so Apple need a lower price offering more than ever. With no low price device, Apple is set to lose the ecosystem war in the long run.

 

imo Apple need to price its new 8" tablet at 249$, right between the 7" kindle at 199$ and the 9" kindle at 299$.  This will ensure Apple spreads its ecosystem at the lower end.

 

But then that'd hurt Apple's margin a lot.

 

You see, $249 for 8"? or $499 for 10" iPad? Take the 8", no brainer.

 

In the end, Amazon is not trying to beat Apple, Amazon is trying to destroy the field, so that nobody can make decent money on hardware. That would hurt Apple the most, because other OEMs are not making much in the first place. 

post #35 of 89
Quote:
Originally Posted by SolipsismX View Post

I do wonder if Apple has prepared for Amazon's offerings or if they will have to adjust features and/or price points for their rumoured iPad mini. We're still hearing 1024x768 for a 163 PPI display whilst this Fire HD has an impressive, at least on paper, 1920x1200 at 254 PPI for a good price. This is the best competitor we've seen to the iPad.

 

Amazon's competitor for the iPad mini would be the cheaper 7" Kindle Fire HD, and that is 1280x800 (and no where near 254 PPI): http://www.amazon.com/gp/product/B0083PWAPW/

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post #36 of 89
Quote:
Originally Posted by herbapou View Post


I agree that they are going to hurt Microsolft  and the android tablet crowd more than Apple, BUT make no mistake, it will hurt Apple too.  The price gap between the ipad and the new tablets is getting to big, so Apple need a lower price offering more than ever. With no low price device, Apple is set to lose the ecosystem war in the long run.

imo Apple need to price its new 8" tablet at 249$, right between the 7" kindle at 199$ and the 9" kindle at 299$.  This will ensure Apple spreads its ecosystem at the lower end.
Oh I agree that Apple probably can't go over $299 price point with a smaller iPad. But I find it ironic that the same folks on these tech sites who claim Nexus 7, Windows RT, Transformer Prime, etc. are better than the iPad never compare new offerings to these devices, never seem to wonder how a Kindle Fire will affect those sales. it's all about the iPad. If these new Fires are all that who will give a shit about a Samsung or Asus, or even Windows RT tablet. People might even have second thoughts about the Nexus 7. Who knows. But for all the talk of Apple being a bubble ready to burst what about Amazon. Up $5 this morning. PE over 300 when Apple and Microsoft's is under 16. If any stock is inflated I think it's Amazon's.
post #37 of 89

This is about survival for Amazon. Most of the things they sell are going digital - books, music, movies, games, etc - and the two major mobile platforms have their own stores (iTunes and the App Store on iOS, Play on Android). If Amazon doesn't control their own platform they're totally screwed in the long-run. The pricing is aggressive but you have to wonder if it's sustainable and whether it will scale. Apple famously spends a lot of money to secure components to manufacture devices at scale. Amazon can't afford that. They're not profitable and they don't have a lot of cash left. Amazon isn't a big international player either, so that also limits them as a platform. It'll be interesting to see how this plays out.

post #38 of 89

Kindle Fire HD not compatible with any other Kindle apps or media. You need to re-purchase everything again if you already are using a Kindle. 

To me that's a deal breaker right there. It's also using a modified Android system not compatible with anything else. 

Stick with the iPad people.

post #39 of 89
Quote:
Originally Posted by johnmcboston View Post

 

Interesting that all the articles on the new Kindle are glossing over this.   The cheapest Verizon plan is $360/year for an ipod.    Granted it's only for 250MB, but I think a lot of your tablet users out these spend 90% of their tablet time checking email or surfing the web.  This could open the door for a new kind of tablet audience.   (Maybe even Mom, who has no computer or wi-fi...)

 

Take it from someone who reduced his data plan on his iPhone from 4GB to 300MB because I picked up a 4G LTE Hotspot device, that 300MB is not much and I used it before mid-billing cycle and went back to 3GB/month. A 250MB/month for a LTE device will be nothing and I wonder what overage charges are if they even let you go over.
post #40 of 89
The sucky thing is these cheap devices are going to condition people into thinking all tablets should be $199. The average Joe isn't going to know (or care) that Amazon is selling these things at cost or a loss. All they care about is getting something cheap. But how do hardware companies like HP, Dell, Lenovo, Asus etc. compete with that? Apple might be able to take a hit on margins but they can't.
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