Amazon Lights a Fire in the Tablet Wars

by Krishna on September 28, 2011

It was not much of a prediction when I wrote this in May, but finally Amazon has announced their competitor to the NOOK Color in the form of the Kindle Fire. Call that more of a terminator rather than a competitor, because I cannot see the $249 NOOK competing with the $199 Kindle. Also, say goodbye to many of the sub-$300 Android tablets that have been available online and at places like CVS Pharmacy.

Today’s announcement is a big deal and a serious game changer. The most important aspect is not the new tablet itself, but the fact that Amazon has now placed a device at different price points between $79 and $199. Now, of course, the cheaper Kindles are mostly e-readers, but it effectively squeezes the market for any entrants because they cannot tap into the book reading public who make up a big chunk of the tablet population.

Also to like was Jeff Bezos’s letter on the home page which started with this:

There is no mystery as to who Bezos is referring when he mentions the first type of company. The Apple iPad, a technologically superb device, retails at $499. John Gruber's take on this is optimistic with respect to Apple’s chance in the new landscape:

 Apple and Amazon are approaching this tablet territory from opposing sides. The iPad takes it on from the high end. It’s the best possible device in that price range from the world’s best maker of devices. The Kindle Fire takes it on from the low end. The iPad is a credible laptop replacement for many people — and with iCloud and another year or two of hardware improvements, that’s going to be true for more and more people. The Kindle Fire is a laptop replacement for almost no one. It’s a peripheral, not a second computer — and it’s priced accordingly.

I am not so sure about Apple’s fortunes here. I thought that the MacBook Air was a much more credible laptop replacement than the iPad. Are there many people owning Macs who use their iPad to do their work? OK, there is a major price point difference, but Mac owners generally tend to be less price conscious and more quality conscious.

People seem to use tablets mostly at home and for reading, browsing or watching videos or letting their children play with it, instead of starting up a laptop and lugging it around. Most of these functions can and could be done by the Kindle Fire and similar devices. There is a lot to make up for the $300 premium for the common man.

But Apple’s predicament is nothing compared to the seemingly biggest loser, which is Microsoft. The next operating system Windows 8 is at least a year away, and although there is a lot to like in the new Metro interface, the market may have moved a lot along when Windows 8 comes out. On the other hand, quite a few of the existing vendors may have gone under by then, leaving Microsoft with only Amazon and Apple to compete against.

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