September 5th, 2011

The Amazon tablet. Finally an iPad competitor?

With the industry rife with speculation that Amazon will launch its tablet this autumn, Forrester has predicted that it will sell three to five million units in Q4.

But, Forrester’s prediction comes with two major caveats:
1. It would need a good supply chain to bring it to market.
2. The Amazon tablet would need to be priced below $300.

Whilst the first should be a given, it has been an issue for most tablet hardware companies in the past, especially the need to source parts at a price level low enough to compete against Apple’s iPad. It’s worth remembering that this is seen as Apple’s new CEO’s, Tim Cook, particular area of expertise.

Of course, it would make a lot of sense for Amazon to do what other would-be “iPad killers” have not, and start at a sub-iPad price.
But, previously that has not been the Amazon way. Like nearly every other consumer electronics company it has started at a relatively high price point, then reduced the price over time to increase demand. The Kindle, which was originally priced at $399 in 2007, is now $114.

However, Jeff Bezos, founder and CEO of Amazon, may believe that this time around they have advantages over other Android based devices that negate the need to price low.

What are they? Amazon’s existing web and software infrastructure created to deliver content and process payments; Their proven ability to provide a good user experience online, their access to content – including video, music, ebooks and the recently set-up Amazon app store – and, most importantly, like Apple they are trusted by millions to process payments and hold their credit card details.

And they are important advantages. It is telling that Forrester Senior Analyst, Sarah Rotman Epps, suggests that the best way for Amazon to put distance between themselves and the many unsuccessful Android tablets is not to promote it as an Android tablet.

That’s not just because of the concerns that some manufacturers have with Android – fragmentation across earlier versions of the Android OS, Google’s rules which are intended to improve consistency and quality but, for manufacturers, limit the opportunity for differentiation, and the user experience in the Android Market.

The research on consumers who are considering buying a tablet is also telling. Only 9% prefer an Android tablet — compared with 16% who prefer iOS and 46% who prefer Windows.

Barnes & Noble approached its reader by emphasising its own brand and user experience on the Nook Color rather than the Google or Android brands, even though the Nook is built on Android. Amazon will also need to differentiate its tablet from other Android devices in a similar way. But to be the first tablet to really compete with Apple’s iPad it will have to make the most of its own software, content and payment systems and experience. Otherwise, it really will have to sell on price.

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