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...
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%.
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.
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.
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.
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.
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.
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.
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".
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.
"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.
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.
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.
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.
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?
Comments
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...
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%.
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
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.
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).
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.
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.
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.
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.
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.
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.
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.
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.
consumers, not fans will use the best price-to-value rationale/logic to make their choices.
Seems they're already doing that.
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.
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".
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.
"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.
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.
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
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
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?