Amazon Kindle Fire HD called 'ambitious,' but unlikely to dethrone Apple's iPad
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.
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.
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.
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.
Comments
I'm just glad that there's some good competition out there.
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.
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.
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.
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.
"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 ...
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.
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.
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.
Apple keep looking in your rear view mirror and remember there are some competent alternatives out there looking for a slice of the pie...
Google don't plan on making money from the nexus or android for that matter. Its all about tracking and selling to advertisers
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.
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.
Quote:
Originally Posted by Mazda 3s
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).
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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)
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
Quote:
Originally Posted by geoadm
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.