Apple iPad plus Amazon Fire kill tablet market

September 29, 2011 9:50 AM EDT

Amazon's [AMZN] Kindle Fire is bad, bad news, but not for Apple [AAPL]. Fire won't burn iPad sales but will incinerate the low-end non-iPad tablet market, forcing many players to leave the game.

[ABOVE: Amazon's Kindle Fire ad is not the best thing about the device, in my opinion.]

Amazon, not Android

It's strange -- I can't be unique in considering it most telling that the only Android-powered tablet that stands a cat's whisker of a chance to succeed in the Holiday 2011 market is an Android-powered tablet that, uh, doesn't run Android.

As colleague J R Raphael notes:

"Amazon's Kindle Fire, available for $199 starting November 15, runs on a highly reworked version of Android. You won't even recognize the interface -- which isn't necessarily a bad thing, of course, depending on what you want."

[ABOVE: An Apple iPad ad. It's slightly more ambitious, right?]

Your tablet, your way

Tablets aren't just about interfaces. In a sense they are mirrors, like any mirror they reflect who you are. The iPad is you, or anything you want it to be, not because of all its tech specs or its iOS or its cloud or its storage, but because there's usually an app to help you make your very own unique use of the device. You just need to find out what you want it to do. Your iPad (usually) then becomes a unique reflection of you.

Amazon's offering isn't as personal. It isn't intended to be a mirror. It's for watching TV, movies and listening to music. It's for reading books.

In previous tablet tales I've talked about how the people making non-iPads are locked in savage competition for a tiny slice of the Apple-dominated market. I've also spoken about the inevitability of consolidation since before Nokia and Microsoft got unexpectedly chummy, since before Google bid billions for Motorola Mobility, and since before HP bought Palm.

This consolidation isn't over yet. With its limited media consumption features, Kindle Flame sales will eat the low-end market. For everyone except Apple, Amazon has added to the misery.



On October 4, Apple will respond, likely introducing new iPhones, a new and much faster iPod touch, and perhaps dumping all the less smart iPod products, though I'll miss the Classic.

Might Apple also pop a 7-inch iPod touch/iPad device? There's been no rumors to suggest this, but if it were to do so it would be better-featured, lighter, and thinner than the Amazon Fire. It won't be cheaper.

Amazon v. iTunes

Amazon's model is to subsidize Kindle in hope of generating money on content sales via its store. Amazon has an existing operation which enables it to secure the best possible deals from content providers. That power to get great deals is why books on Amazon are cheaper than on Apple's iBooks service.

You can't underestimate the value of the content connection: The iPod, iPhone and iPad's huge success is partially due to the iTunes Store.

Caveat emptor: once you have a collection of Apple-provided content for your Apple device you don't want to move to another platform because you'll have to replace some of your Apple-provided stuff.

Amazon's offering is slightly better than iTunes. That's because, conceivably, you'll be able to access your Amazon digital content from Amazon's cloud using any device capable of running Amazon's Kindle software. Even your iPad...

That availability of music, movies and other content will help Amazon sell Kindles. I think many Apple users will purchase a Kindle as a family media device. Amazon's digital sales will climb, Apple's may slide slightly.

A game of consequences

Beyond Amazon and Apple, sales of other tablets will hit the ground.

If I'm right, we can expect consequences such as:

Expect: Large retailers will return unsold inventory of non-Apple, non-Amazon tablets in the coming weeks, in order to bring in better-selling Christmas stock.

Expect: Fire sales on stock in hand as retailers and manufacturers ape HP's move to bring in as much money as it could when it realized its TouchPad hadn't made the grade.

Expect: Dents in company financial accounts across the tech sector, with weak PC sales, disappointing tablet sales and "the economy" footing the blame.

Expect: Many big name PC players will retire from attempts at the tablet sector in order to focus on the ultranotebook market, taking Intel's subsidies and attempting victory against Apple's ultranotebook device, the MacBook Air.

Expect: More consolidation next year. When will RIM be sold? Will Microsoft acquire Nokia? Will Google pay IP licenses? Did Apple really steal the idea of the iPad from Stanley Kubrick?

Summing-up: Amazon's Fire is a contender: cheap, robust-seeming and capable, it's not a top-tier luxury product and lacks many of the bells and whistles of an iPad, but its content connection and cloud-based support make it an affordable choice for media junkies.

Fire won't burn Apple's iPad sales, but it will savagely incinerate sales of every other tablet out there. The sad truth is that in the tablet wars, for many, the sobbing will continue until morale improves -- unless you work for Apple -- or Amazon...

What are your thoughts? Speak up, I'm interested.

Got a story? Drop me a line via Twitter or in comments below and let me know. I'd like it if you chose to follow me on Twitter so I can let you know when these items are published here first on Computerworld