Amazon on September 6 unleashed a blistering array of new Kindle Fire tablets (and a new Kindle e-reader device) on the U.S., with CEO Jeff Bezos making his case in front of reporters at a Santa Monica, California press event that “people don’t want gadgets anymore, they want services.”
But it remains to be seen whether Amazon’s new Fire-ing squad will put Apple’s iPad, Google’s Nexus 7, or any other Android tablets in the crosshairs.
The sheer variety in sizes, prices and hardware specifications of Amazon’s four new Kindle Fire tablets — Kindle Fire ($159), Kindle Fire HD 7-inch ($199), Kindle Fire HD 8.9-inch ($299), and Kindle Fire HD 8.9-inch with 4G ($499) — suggest that Amazon is aiming for both the low and high-end of the market as opposed to concentrating solely on the low-end, as it did with its original, $199 Kindle Fire, unveiled in late September 2011.
“At that price, you do almost go head to head with the iPad,” said Paul Semenza, senior vice president at NPD Display Search, a display industry market research firm, in a phone interview with TPM. “I am a little skeptical that they [Amazon] can sell at that price point. I think that’s risky.”
Watch the full video of Amazon’s press conference to unveil the new Kindle Fires below, via Amazon:
Apple’s new iPad retails for $499 new in its cheapest form, which is Wi-Fi only, while the iPad 2, the preceding version which is still on sale, retails for $399 new.
Apple, which is the dominant tablet seller worldwide and in the U.S. according to Apple’s own figures and market research firms, is also anticipated to unveil a smaller version of its iPad, the “iPad Mini,” which would put it in more direct competition with the 7-inch Kindle Fire.
Amazon boasted ahead of the release of the four new Kindle Fire tablets that the original Kindle Fire had sold enough units in the U.S. — the only country in which it was available — to take 22 percent of the overall tablet market share.
Amazon, which is notoriously cryptic when it comes to actual numbers moved, did not respond to repeated requests for clarification and comment for this story.
But respected mobile device analyst Horace Dediu of Asymco analyzed the numbers provided by Apple and Samsung, manufacturer of the Android tablet the Galaxy Tab, to come up with an estimate of the actual number of Kindle Fires sold in the U.S. over the past year: 4.987 million, or just about 5 million.
Compare that to the 16.14 million iPads Apple sold and the 540,000 Galaxy Tabs unit that Samsung sold during the same period, and its clear that at the very least, the Kindle Fire is a formidable sales force, despite Apple CEO Tim Cook’s assertion in January that “there wasn’t an obvious effect” of the original Kindle Fire on iPad sales numbers.
Asked by TPM how Dediu projected the new Kindle Fires would fare, Dediu responded to writing the following blog post on Asymco, in which he explained: “I think the total number of new Fire units to be sold has already been determined by a production order. “
There’s evidence to suggest that may be the case, given that Amazon abruptly announced the original Kindle Fire was “sold out” just days before unveiling the new line of devices under the same brand name. That was widely interpreted by tech bloggers as indication not that Amazon had actually run out of Kindle Fires, but that it simply wouldn’t be ordering more so as to shine the spotlight on the new line.
Indeed, Amazon’s hardware business model overall appears to be the inverse of Apple’s, with Amazon almost certainly taking a loss on each Kindle Fire sold. The difference is reflected in the two companies overall profitability, as ReadWriteWeb noted on Monday.
Still, analysts like NPD DisplaySearch’s Semenza believe that Amazon’s competitive advantage remains selling low-priced tablets.
“If they [Amazon] can keep adding more features to that $199 price point, that would seem to be better for them, as that’s proved to be a very attractive price point,” Semenza told TPM.
At the same time, that price point puts Amazon directly into conflict with Google’s Nexus 7 tablet. Both companies offer tablets starting at $199 and both companies’ tablets are powered by versions of Google’s Android operating system, which Google licenses to other companies and developers.
But Google’s Nexus 7 tablet, manufactured by Asus, contains the latest version of Android, 4.1 Jelly Bean, while Amazon’s Kindle Fires run a heavily modified older version that is nearly unidentifiable as a Google product, because it is so substantially reformatted to reflect Amazon’s online offerings (one tech blogger joked that Amazon’s version of Android ought to be rebranded “Amdroid.”)
It’s precisely Amazon’s dramatically reformatted version of Android that Semenza believes is its strongest selling point.
“Amazon is fighting a multi-pronged battle,” Semenza told TPM. “They are playing a little bit of ‘keep up’ with latest and greatest hardware performance, but they also have new service offerings that are more in line with of a unique Amazon experience.”
Specifically, Semenza pointed to the new Kindle Fires’ “XRay for Movies,” feature, which allows Kindle Fire users the ability to tap over any character that appears in a movie and receive information about the actor playing them from the Internet Movie Database (IMDB), which Amazon owns. Google’s tablets don’t offer a similar feature, nor do those of other manufacturers like Samsung that rely on Google’s Android operating system.
As such, the new Kindle Fires are “a bigger threat to Google and Samsung devices, despite their positioning as going head to head with Apple,” Semenza told TPM.
Still, Google and Apple both have another competitive advantage over Amazon: Their app stores, which offer many thousands of more applications than are currently available in Amazon’s Kindle Fire App Store. But there are signs Amazon is looking to compete in this arena too, offering apps developers the ability to sell physical goods from within apps.