2) The Kindle Fire may be able to put itself into a profitable sapce with economics of scale. All these devices are risk but this is the first non-iPad tablet that seems to be carving out a sizable unit share niche. If they can get the OS updated in a reasonable time and with a reasonable amount of usablity enhancements I think the Fire has a chance of being the most popular $200 class notebook on the market, though this will end up hurting all the standard Android-based solutions that try to enter the market? but that doesn't concern me
Amazon is the only tablet maker that has the one thing Dell, HP, Motorola and all the others don't have: an ecosystem.
All those can companies play down the ecosystem and preach "open is better" all they want but it's one of the major reasons that Apple is crushing it in the tablet market.
I'm surprised at two things:
1) why it took Amazon so long
2) They could have done a little better than the Fire (although they had to make that low price point to *really* compete)
2) They could have done a little better than the Fire (although they had to make that low price point to *really* compete)
This info doesn't seem to be well known: It's based on RiM's PlayBook. Looks like they smartly reduced a lot of HW features but the PlayBook HW seems pretty solid. Also, there is some weak evidence to suggest it's an earlier board than what RiM uses in their PlayBook.
The Kindle Fire is only good for Apple if it really does fragment Android. But if the Fire unifies Android by essentially killing all other Android competitors, then the Fire would be very bad news for Apple, because then Apple would be fighting a single, integrated platform rather than a rag-tag mess. If the Fire is able to sustain its success Apple might want to come to terms with Samsung over Samsung's tablets just to help keep the Android ecosystem fragmented.
Also -- don't make the mistake of thinking that Amazon can never have any other business model for the Fire than the one they have right now. Just because they are treating the Fire as a loss leader today, doesn't mean they always have to.
Similarly, just because Apple has no loss-leader iPads today doesn't mean they can't in the future. In fact, if it looks like Amazon is moving from fragmenter to dominator of the Android world, then Apple might want to introduce some kind of subsided iPad (either subsidized by carrier contracts or iCloud/iTunes contracts).
The bottom line here is that this is a platform war, and platform success depends on economies of scale. Right now Apple has a big lead in economy of scale. It's really important that Apple do everything possible to prevent anyone else from achieving similar economies of scale (I'm speaking as an Apple shareholder). If that means admitting somebody else has come up with a business model worth copying, at least in part, so be it.
Dell makes the vast majority of its money in the corporate/enterprise sector these days. As they have been moving more and more in that direction Apple has moved the other way.
Just wondering here. Since Amazon forked Android, is it still really an Android OS? I mean the chances of Amazon re-forking newer versions of Android is possible, but could be very time consuming and expensive. Updating the Fire OS, whatever Amazon does, will not track to Google's releases of new Android versions. Bad for Google.
2) The Kindle Fire may be able to put itself into a profitable sapce with economics of scale.
The problem with this is zero times 1,000,000 still equals zero. Unless Amazon can match Apple's economy of scale, their hardware profit will always be zero!
The problem with this is zero times 1,000,000 still equals zero. Unless Amazon can match Apple's economy of scale, their hardware profit will always be zero!
Economics of scale, not making up profit of thin-margin with bulk sales. I'm talking about the cost of the Fire going down substantially if Amazon can put in orders for larger and larger component, manufacturing, and shipping, thus reducing the cost. There is also reduced costs per unit for the OS and SW development as they sell more units. In 6 months we'll know if they made this gamble on this model or if they should have followed B&N's lead with a still very low $250 device.
Economics of scale, not making up profit of thin-margin with bulk sales. I'm talking about the cost of the Fire going down substantially if Amazon can put in orders for larger and larger component, manufacturing, and shipping, thus reducing the cost. There is also reduced costs per unit for the OS and SW development as they sell more units. In 6 months we'll know if they made this gamble on this model or if they should have followed B&N's lead with a still very low $250 device.
I think the Kindle Fire is alot like gaming consoles. Its not about selling the hardware its about having hardware that works well with content. To me the Fire was clearly developed to sell content.
Even before the Fire, Kindle software and apps were available on just about everything, Amazon seems to be focused on selling content to make the profit not hardware.
Secondly, it seems to me that Kindle Fire's sale numbers are being inflated a bit. People keep comparing Fire sales to iPad and other tablets, but I'm curious how much Amazon has cannibalized their own sales. You'd have to take into account all the Kindles that Amazon would have sold without the Fire before getting a real sense of how much ground the Fire is taking in the tablet market.
+1
I agreed that they are cannibalizing their Kindle profits hoping to make money on content. I don't think this is a sustainable business model. It would had been better to upgrade the software & hardware in the Kindle and opened it up the developers. This way they could still make money on content without losing it on hardware.
I think the Kindle Fire is alot like gaming consoles. Its not about selling the hardware its about having hardware that works well with content. To me the Fire was clearly developed to sell content.
Even before the Fire, Kindle software and apps were available on just about everything, Amazon seems to be focused on selling content to make the profit not hardware.
Sure, but I guarantee you that $50 loss per device (if true) is not sustainable and that Amazon will be fighting to make this at least a break-even product. Making Apple's margins simply aren't feasible from any angle I look at it, but I think Dell and HP cheap PC margins are.
It would had been better to upgrade the software & hardware in the Kindle and opened it up the developers. This way they could still make money on content without losing it on hardware.
They might do that, but that's not easy. Look at Apple with their iOS SDK and Palm with WebOS SDKs. How long before Google had a native SDK for Android?
The one thing Amazon has knowledge of is the store end, but I would be surprised if they opened it to any 3rd-party devs is less time than Palm (with their 2nd SDK) and Apple.
Economics of scale, not making up profit of thin-margin with bulk sales. I'm talking about the cost of the Fire going down substantially if Amazon can put in orders for larger and larger component, manufacturing, and shipping, thus reducing the cost. There is also reduced costs per unit for the OS and SW development as they sell more units. In 6 months we'll know if they made this gamble on this model or if they should have followed B&N's lead with a still very low $250 device.
I just don't see Amazon being able to do that with scaling components to lower the unit price, particularly that Apple scoops up most these components now. I hope they can win because there is a segment of the tablet market that will never be able to afford iPad prices.
Some people say that Amazon will recoup the money they're losing on every device sold through content purchase, but that remains to be seen.
People are attracted to the Kindle Fire just because it is cheap. There is no logical reason to claim that cheap people will be buying lots of content.
Many of these people will be downloading the free app of the day and that's probably about it.
People who are so cheap that they whine about a few hundred dollars are not going to be buying hundreds in content. We shall see if Amazon's plan works out. I have my doubts.
The real message here is 'forking Android'. If Amazon can do it, everyone can do it.
As this is a platform war of closed ecosystems, other players will be forced to
A) build their own ecosystem
close it up
Facebook might be next to fork Android, HTC, Sony, Samsung, Nokia around the corner. In this game all Apple has to do is keeping the current status quo where consumers decision is 'choose Apple or something other'.
Currently there is no one who can compete with Apple where mobiles are starting to become the 'personal technological hub' for everyone: you can buy thousands of accessories plugging and playing with your mobile: from wristbands to Airplay-equipped AV receivers, car stereos, TVs, blood pressure measuring, etc etc. The sheer mass of iDevices together with Apples conservative and well predictive product cycles regarding screen sizes, -resolutions, connectors, comm protocols makes it attractive for all industries to develop for.
Dell introduced its Streak 5 (originally named Mini 5) as a hybrid small tablet/smartphone in May 2010, with both a 5 inch display and 3G calling features that placed it somewhere between Apple's iPod touch and iPad. It also introduced a 7 inch Streak, which has featured 4G connectivity.
I remember when the 5" came out. It was one of the first Android devices to be sold by ATT.
It was a POS then, and it is now an obsolete POS. Good riddance.
The 5 inch model is the wrong size to sell with calling features. It doesn't work well as a tablet either, as even 7 inch tabs are a bit small. The 7" Streak may be OK, but even so, there are many better ones to choose from now.
The 5" was an early stab by Dell. It didn't work. The 7" was just uninspired, with nothing to particularly recommend it.
I just don't see Amazon being able to do that with scaling components to lower the unit price, particularly that Apple scoops up most these components now.
From the teardown details Apple doesn't seem to be affecting the Kindle Fire much. Perhaps with NAND, but they aren't using that much per unit. Even the Galaxy Nexus comes with 32GB internal as standard, which is a nice trend for a non-iPhone smartphone.
Most of the other components don't seem to be a direct comparison to what Apple is using across the board.
I hope they can win because there is a segment of the tablet market that will never be able to afford iPad prices.
I'll still have hope for Amazon until I see major negative shift in their focus on the Fire, but I am not sure the cost of the iPad is a deal breaker.
My reasoning is that $500 PCs are well below the average PC cost and probably what Americans spend when they are going for a cheap notebook. Of course, the desktop and notebook PC markets aren't the same as the tablet market in the way we see their cost and value. But I think that is changing. THe iPad is now fully independent of a traditional PC, and though syncing with iTunes is likely the norm I know plenty of people that simply don't use their iPhone or iPad for iTunes stored content and have moved almost completely to the iPad for the majority of their computing needs.
Then you have to consider those that are thinking about buying a new cheap PC for $500-700 but decide to get an iPad instead for the same money. I think that could be common, too. Overall I hope Amazon can make this work because I think the cheap tablet they offer, while not great ormagical could be a trainer tablet for many who realize the form-factor works for them but decide they want to get a better tablet for their next option. This is why I expect Amazon to push their OS further and eventually offer a larger option.
Some people say that Amazon will recoup the money they're losing on every device sold through content purchase, but that remains to be seen.
People are attracted to the Kindle Fire just because it is cheap. There is no logical reason to claim that cheap people will be buying lots of content.
Many of these people will be downloading the free app of the day and that's probably about it.
People who are so cheap that they whine about a few hundred dollars are not going to be buying hundreds in content. We shall see if Amazon's plan works out. I have my doubts.
I'm not disagreeing with what you're saying. The cheapos are just that. But there is another variable. Poorer families and elderly people on fixed budgets still can buy reasonably priced content. They just can't manage larger priced items like an iPad. This segment can make Amazon's gamble work. I see these people always picking through the $5 video bin at Walmarts and they buy a lot in the long run for their children or themselves.
I think the Kindle Fire is alot like gaming consoles. Its not about selling the hardware its about having hardware that works well with content. To me the Fire was clearly developed to sell content.
Even before the Fire, Kindle software and apps were available on just about everything, Amazon seems to be focused on selling content to make the profit not hardware.
The difference is that game consoles sold cheap (often loss leader) hardware to an audience that was compelled to buy $50-$70 games in an environment where the only alternative to buying those games was to buy PC games for the same price.
Additionally, PC game makers license their software to build in a platform tax, both during development and in the retail sale. Even so, Sony and MS and Nintendo are not doing really well in making lots of money on console games.
The Kindle Fire is designed to enable users to buy $1-4 apps, rather inexpensive / low margin ebooks and magazines, and browse the web and listen to music. There's plenty of free apps and free music (and most people already have digital music collections). The web is free. There are lots of significantly better clients for browsing the web for the same free cost of doing so.
Amazon has no way to significantly "tax" sales of content. So it can only charge the razor thin margins it has been, which are much lower than general retail. Apple itself takes only a 30% cut in iTunes, and that just better than breaks even Apple's operational expenses.
Amazon is not going to make any money on the Kindle Fire. It's hoping to stay relevant and afloat. The Kindle is looking into the face of death and trying to survive. It is being described as an iPad killer. It is most certainly not.
It's more like Amazon is under siege and has resorted to eating its own children to stay alive. It's desperate.
Apple could not have sent a more accurate missile into the heart of Google's tablet plans. The Fire is going to single-handidly destroy the Android tablet market
Comments
2) The Kindle Fire may be able to put itself into a profitable sapce with economics of scale. All these devices are risk but this is the first non-iPad tablet that seems to be carving out a sizable unit share niche. If they can get the OS updated in a reasonable time and with a reasonable amount of usablity enhancements I think the Fire has a chance of being the most popular $200 class notebook on the market, though this will end up hurting all the standard Android-based solutions that try to enter the market? but that doesn't concern me
Amazon is the only tablet maker that has the one thing Dell, HP, Motorola and all the others don't have: an ecosystem.
All those can companies play down the ecosystem and preach "open is better" all they want but it's one of the major reasons that Apple is crushing it in the tablet market.
I'm surprised at two things:
1) why it took Amazon so long
2) They could have done a little better than the Fire (although they had to make that low price point to *really* compete)
2) They could have done a little better than the Fire (although they had to make that low price point to *really* compete)
This info doesn't seem to be well known: It's based on RiM's PlayBook. Looks like they smartly reduced a lot of HW features but the PlayBook HW seems pretty solid. Also, there is some weak evidence to suggest it's an earlier board than what RiM uses in their PlayBook.
How can Dell kill something that was already dead?
Also -- don't make the mistake of thinking that Amazon can never have any other business model for the Fire than the one they have right now. Just because they are treating the Fire as a loss leader today, doesn't mean they always have to.
Similarly, just because Apple has no loss-leader iPads today doesn't mean they can't in the future. In fact, if it looks like Amazon is moving from fragmenter to dominator of the Android world, then Apple might want to introduce some kind of subsided iPad (either subsidized by carrier contracts or iCloud/iTunes contracts).
The bottom line here is that this is a platform war, and platform success depends on economies of scale. Right now Apple has a big lead in economy of scale. It's really important that Apple do everything possible to prevent anyone else from achieving similar economies of scale (I'm speaking as an Apple shareholder). If that means admitting somebody else has come up with a business model worth copying, at least in part, so be it.
Dell makes the vast majority of its money in the corporate/enterprise sector these days. As they have been moving more and more in that direction Apple has moved the other way.
No surprises here.
snip
2) The Kindle Fire may be able to put itself into a profitable sapce with economics of scale.
The problem with this is zero times 1,000,000 still equals zero. Unless Amazon can match Apple's economy of scale, their hardware profit will always be zero!
The problem with this is zero times 1,000,000 still equals zero. Unless Amazon can match Apple's economy of scale, their hardware profit will always be zero!
Economics of scale, not making up profit of thin-margin with bulk sales. I'm talking about the cost of the Fire going down substantially if Amazon can put in orders for larger and larger component, manufacturing, and shipping, thus reducing the cost. There is also reduced costs per unit for the OS and SW development as they sell more units. In 6 months we'll know if they made this gamble on this model or if they should have followed B&N's lead with a still very low $250 device.
Economics of scale, not making up profit of thin-margin with bulk sales. I'm talking about the cost of the Fire going down substantially if Amazon can put in orders for larger and larger component, manufacturing, and shipping, thus reducing the cost. There is also reduced costs per unit for the OS and SW development as they sell more units. In 6 months we'll know if they made this gamble on this model or if they should have followed B&N's lead with a still very low $250 device.
I think the Kindle Fire is alot like gaming consoles. Its not about selling the hardware its about having hardware that works well with content. To me the Fire was clearly developed to sell content.
Even before the Fire, Kindle software and apps were available on just about everything, Amazon seems to be focused on selling content to make the profit not hardware.
snip
Secondly, it seems to me that Kindle Fire's sale numbers are being inflated a bit. People keep comparing Fire sales to iPad and other tablets, but I'm curious how much Amazon has cannibalized their own sales. You'd have to take into account all the Kindles that Amazon would have sold without the Fire before getting a real sense of how much ground the Fire is taking in the tablet market.
+1
I agreed that they are cannibalizing their Kindle profits hoping to make money on content. I don't think this is a sustainable business model. It would had been better to upgrade the software & hardware in the Kindle and opened it up the developers. This way they could still make money on content without losing it on hardware.
I think the Kindle Fire is alot like gaming consoles. Its not about selling the hardware its about having hardware that works well with content. To me the Fire was clearly developed to sell content.
Even before the Fire, Kindle software and apps were available on just about everything, Amazon seems to be focused on selling content to make the profit not hardware.
Sure, but I guarantee you that $50 loss per device (if true) is not sustainable and that Amazon will be fighting to make this at least a break-even product. Making Apple's margins simply aren't feasible from any angle I look at it, but I think Dell and HP cheap PC margins are.
It would had been better to upgrade the software & hardware in the Kindle and opened it up the developers. This way they could still make money on content without losing it on hardware.
They might do that, but that's not easy. Look at Apple with their iOS SDK and Palm with WebOS SDKs. How long before Google had a native SDK for Android?
The one thing Amazon has knowledge of is the store end, but I would be surprised if they opened it to any 3rd-party devs is less time than Palm (with their 2nd SDK) and Apple.
Economics of scale, not making up profit of thin-margin with bulk sales. I'm talking about the cost of the Fire going down substantially if Amazon can put in orders for larger and larger component, manufacturing, and shipping, thus reducing the cost. There is also reduced costs per unit for the OS and SW development as they sell more units. In 6 months we'll know if they made this gamble on this model or if they should have followed B&N's lead with a still very low $250 device.
I just don't see Amazon being able to do that with scaling components to lower the unit price, particularly that Apple scoops up most these components now. I hope they can win because there is a segment of the tablet market that will never be able to afford iPad prices.
People are attracted to the Kindle Fire just because it is cheap. There is no logical reason to claim that cheap people will be buying lots of content.
Many of these people will be downloading the free app of the day and that's probably about it.
People who are so cheap that they whine about a few hundred dollars are not going to be buying hundreds in content. We shall see if Amazon's plan works out. I have my doubts.
As this is a platform war of closed ecosystems, other players will be forced to
A) build their own ecosystem
Facebook might be next to fork Android, HTC, Sony, Samsung, Nokia around the corner. In this game all Apple has to do is keeping the current status quo where consumers decision is 'choose Apple or something other'.
Currently there is no one who can compete with Apple where mobiles are starting to become the 'personal technological hub' for everyone: you can buy thousands of accessories plugging and playing with your mobile: from wristbands to Airplay-equipped AV receivers, car stereos, TVs, blood pressure measuring, etc etc. The sheer mass of iDevices together with Apples conservative and well predictive product cycles regarding screen sizes, -resolutions, connectors, comm protocols makes it attractive for all industries to develop for.
Dell introduced its Streak 5 (originally named Mini 5) as a hybrid small tablet/smartphone in May 2010, with both a 5 inch display and 3G calling features that placed it somewhere between Apple's iPod touch and iPad. It also introduced a 7 inch Streak, which has featured 4G connectivity.
I remember when the 5" came out. It was one of the first Android devices to be sold by ATT.
It was a POS then, and it is now an obsolete POS. Good riddance.
The 5 inch model is the wrong size to sell with calling features. It doesn't work well as a tablet either, as even 7 inch tabs are a bit small. The 7" Streak may be OK, but even so, there are many better ones to choose from now.
The 5" was an early stab by Dell. It didn't work. The 7" was just uninspired, with nothing to particularly recommend it.
I just don't see Amazon being able to do that with scaling components to lower the unit price, particularly that Apple scoops up most these components now.
From the teardown details Apple doesn't seem to be affecting the Kindle Fire much. Perhaps with NAND, but they aren't using that much per unit. Even the Galaxy Nexus comes with 32GB internal as standard, which is a nice trend for a non-iPhone smartphone.
Most of the other components don't seem to be a direct comparison to what Apple is using across the board.
I hope they can win because there is a segment of the tablet market that will never be able to afford iPad prices.
I'll still have hope for Amazon until I see major negative shift in their focus on the Fire, but I am not sure the cost of the iPad is a deal breaker.
My reasoning is that $500 PCs are well below the average PC cost and probably what Americans spend when they are going for a cheap notebook. Of course, the desktop and notebook PC markets aren't the same as the tablet market in the way we see their cost and value. But I think that is changing. THe iPad is now fully independent of a traditional PC, and though syncing with iTunes is likely the norm I know plenty of people that simply don't use their iPhone or iPad for iTunes stored content and have moved almost completely to the iPad for the majority of their computing needs.
Then you have to consider those that are thinking about buying a new cheap PC for $500-700 but decide to get an iPad instead for the same money. I think that could be common, too. Overall I hope Amazon can make this work because I think the cheap tablet they offer, while not great ormagical could be a trainer tablet for many who realize the form-factor works for them but decide they want to get a better tablet for their next option. This is why I expect Amazon to push their OS further and eventually offer a larger option.
Some people say that Amazon will recoup the money they're losing on every device sold through content purchase, but that remains to be seen.
People are attracted to the Kindle Fire just because it is cheap. There is no logical reason to claim that cheap people will be buying lots of content.
Many of these people will be downloading the free app of the day and that's probably about it.
People who are so cheap that they whine about a few hundred dollars are not going to be buying hundreds in content. We shall see if Amazon's plan works out. I have my doubts.
I'm not disagreeing with what you're saying. The cheapos are just that. But there is another variable. Poorer families and elderly people on fixed budgets still can buy reasonably priced content. They just can't manage larger priced items like an iPad. This segment can make Amazon's gamble work. I see these people always picking through the $5 video bin at Walmarts and they buy a lot in the long run for their children or themselves.
I think the Kindle Fire is alot like gaming consoles. Its not about selling the hardware its about having hardware that works well with content. To me the Fire was clearly developed to sell content.
Even before the Fire, Kindle software and apps were available on just about everything, Amazon seems to be focused on selling content to make the profit not hardware.
The difference is that game consoles sold cheap (often loss leader) hardware to an audience that was compelled to buy $50-$70 games in an environment where the only alternative to buying those games was to buy PC games for the same price.
Additionally, PC game makers license their software to build in a platform tax, both during development and in the retail sale. Even so, Sony and MS and Nintendo are not doing really well in making lots of money on console games.
The Kindle Fire is designed to enable users to buy $1-4 apps, rather inexpensive / low margin ebooks and magazines, and browse the web and listen to music. There's plenty of free apps and free music (and most people already have digital music collections). The web is free. There are lots of significantly better clients for browsing the web for the same free cost of doing so.
Amazon has no way to significantly "tax" sales of content. So it can only charge the razor thin margins it has been, which are much lower than general retail. Apple itself takes only a 30% cut in iTunes, and that just better than breaks even Apple's operational expenses.
Amazon is not going to make any money on the Kindle Fire. It's hoping to stay relevant and afloat. The Kindle is looking into the face of death and trying to survive. It is being described as an iPad killer. It is most certainly not.
It's more like Amazon is under siege and has resorted to eating its own children to stay alive. It's desperate.
Apple could not have sent a more accurate missile into the heart of Google's tablet plans. The Fire is going to single-handidly destroy the Android tablet market