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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