Amazon Is Poised to Become A Powerhouse in Tablets

During the last year, Amazon ventured into the world of tablets with the Kindle Fire. It clearly represented their first salvo in this market and according to their extrapolation of current tablet data, this aggressively priced tablet now has 22% of the US tablet market.

Today Amazon became an even bigger player in tablets with three new models that are set to shake up the Android tablet market in a big way. And at the moment, they could even have an impact on Apple’s sales, at least until they introduce the highly rumored iPad mini later this year.

Amazon also introduced a new version of their eInk Kindle eReader that is sure to become the standard in eBooks. Amazon says they have sold over 10 million Kindles already and I believe that the newest model will help them bring more converts into the world of dedicated eReaders.

By now you have probably read many blogs and news reports about the actual products Amazon unveiled today in Santa Monica, CA but there are three products I specifically want to highlight. The first is the new Kindle eReader with what they call the Paperwhite backlit screen. This is a very thin model with an innovative eInk screen that basically triples the data resolution because of the way it renders fonts. And, there are a lot of new fonts you can choose from as well as font sizes that can be customized for individual reading styles. The backlit Paperwhite eInk display is clearly the best screen I have ever seen in an eBook reader.

This one will be a huge seller with people who want a dedicated eReading device. Also, Amazon introduced a new thinner Kindle with the existing eInk screen but with higher resolution that is now priced at $69.00.

The second product I want to highlight is the new Kindle Fire HD. They did show a Kindle Fire that looked much like that last version but with an updated processor, more RAM and new software. But the one that will set a new standard for 7” tablets is the HD version of the Kindle Fire.

The Kindle Fire has a 1280 X 800 resolution screen with a true white polarizing filter, and the new TI 4460 processor. It also has a no air-gap laminated display that includes Gorilla glass. Amazon officials say this gives it 25% less glare than the iPad screen. Since HD content is larger it will come in 16-or 32-GB models . A new DSP chip will support MIMO radios, delivering 40% faster WIFI throughput.

But one feature that makes this the best 7″ on the market, bar none. Amazon has included the new Dolby Digital + sound system that adds greater sound dimension. We got a chance to see it demoed in the Dolby offices two weeks ago and were stunned by the increased sound quality it gives a tablet. Dolby is licensing this to other tablet vendors, but the new Fire is the first to hit the market and the Kindle Fire’s sound quality with its new speakers really sets it apart.

Amazon also includes an enterprise-class Microsoft Exchange-compatible email client and calendar, giving it greater versatility within an Android based OS. In fact, one of the big complaints about Android is its poor email client and Exchange support and the Kindle Fire HD with true Exchange support solves this problem.

Although Amazon has done some great new work with the hardware, they are also innovating in software. And one of the more significant software offerings is Kindle Free Time, a parental control that allows parents to set the time that kids can use the Fire. It also and allows parents to pin only kid-friendly content to this area, barring children from the main Fire content. This is extremely important since 7” tablet are finding their way into more educational settings and these controls are a godsend for parents and schools.

We believe that products that cater to how families use these devices together as a community will be well received in the market place.

But the big surprise in today’s announcement was the new Kindle Fire HD with an 8.9” screen. This larger tablet has a 1920×1200 resolution and sports the new TI 4470, an extremely fast low-voltage processor. It is very thin–just 8.8 mm thick–and is 8% lighter than Apple’s current iPad. A 4G LTE version with 32 GB of storage will be priced at $499, well under Apple’s current pricing for a similar 4G configuration of the iPad. It will ship just before Thanksgiving.

There had been rumors floating around that Amazon was working on a larger Kindle Fire but the details took most of us by surprise. Although not as large as Apple’s 9.7 inch iPad, it will give Android users a larger option to view content on and because of the true Exchange support, they might even want to use in for productivity.

From an analytical viewpoint, the new Kindle Fire HD should have Google very concerned since it easily trumps their new Nexus 7 tablet. Plus, it is tied to Amazon’s great ecosystem of content and in fact, any Android vendor with 7″ or 10″ models should be quaking in their boots if they have to go against Amazon and these new Kindle Fire HD offerings.

Amazon says they still have a ways to go to even come up to where Apple is with the iPad, but even Apple has to look at these new offerings from Amazon and be impressed. Of course, this edge for Amazon especially in the smaller screen tablets could be short lived if Apple does introduce their own version of a mini iPad at very aggressive prices. And we don’t know what Apple has up their sleeves for a new iPad that will debut early next year. Yet, the Kindle Fire 7″ will hold its own thanks to increased media available to Amazon Prime customers and at the very least will be a worthy competitor to any smaller iPad Apple might eventually introduce.

There is no question in my mind that Amazon is in the tablet/hardware business for keeps. They clearly understand the value of owning the hardware, software and ecosystem and are clearly on track to emulate Apple’s own strategy of owning and controlling their hardware, OS and services strategy.

These new offerings from Amazon, especially the 8.9inch model, should also compete with Windows tablets thanks to the Exchange support and should undercut Windows 8 tablet prices considerably. And while Windows 8 tablets will be squarely aimed at businesses, if the 8.9” Kindle Fire HD picks up steam with consumers, it could become a candidate for BYOD at some point, which could make it even more competitive with Windows 8 tablets in IT.

This new offering puts Amazon on a whole new map in the tablet world and has now become a force to be reckoned with in this market. And with extremely aggressive price points starting at $199 for the HD 7″ and $299 for the Fire HD 8.9 they are making a compelling case for the Amazon hardware ecosystem.

Published by

Tim Bajarin

Tim Bajarin is the President of Creative Strategies, Inc. He is recognized as one of the leading industry consultants, analysts and futurists covering the field of personal computers and consumer technology. Mr. Bajarin has been with Creative Strategies since 1981 and has served as a consultant to most of the leading hardware and software vendors in the industry including IBM, Apple, Xerox, Compaq, Dell, AT&T, Microsoft, Polaroid, Lotus, Epson, Toshiba and numerous others.

352 thoughts on “Amazon Is Poised to Become A Powerhouse in Tablets”

  1. Very interesting report, Tim. I bought a dedicated book reader as my touch was too small and the iPad too heavy for leisurely reading. I wonder if these introductions might not spur the Apple price on the iPad families, south, a little. And if it encourages Apple to improve the sound for music on its products, we all win.

  2. You wrote, “It clearly represented their first salvo in this market and according to their extrapolation of current tablet data, this aggressively priced tablet now has 22% of the WW tablet market.”
    Yes you note Amazon’s alleged 22% of the tablet market as Amazon’s own extrapolation but with your excellent reputation for knowing what is going on I believe Amazon’s “alleged market share out of nowhere” gets an endorsement for its veracity by you by implication. I think somewhat more skepticism on your part is warranted.
    I am not an Amazon hater, I purchase through their on-line store and enjoy my Kindle 3rd gen 6″ e-reader. I have to agree Amazon **seems** to have done what they do well- blow the top off the existing “how tablets will be sold” paradigm and good for them. A $199 7″ Kindle Fire HD with 16 GB of memory? Oh yeah and watch out Nexus 7! Now for the “road test” results. As shown with the original Kindle Fire, Jeff Bezos can get a great smell and “sizzle” out what turned out to be a fairly mediocre steak as judged by the 1 week’s use and longer reviews.
    Getting back to my original point, I just like to think I can tell when I am being sold something and that is certainly the case with this 22% market share malarkey when no sales figures have ever been reported and North America and the UK are Amazon’s only markets or this product.

    1. I think Horace over at Asymco did a good estimating how the 22% number can make sense. From internal data I have seen the number of Kindles Fire’s sold is about 5 million. So if US sales of tablets in 9 month’s is 44 million that 5 million is 22%. I think that seems plausible. We have sold many more worldwide but based on forecasts for this year and what Apple has disclosed publicly 44 million in US seems reasonable.

      http://www.asymco.com/2012/08/31/how-many-kindle-fires-were-sold/

      1. Ben,

        Thanks for the quick reply! I’ve read your reply twice but can’t get 5 million out of 44 million to equal 22%. I get 11.36%. Is some part of your reply missing?

        Read the link you provided. The assumptions seem sound is all I can say but that type of fuzzy thinking made the flat earth society sound convincing until, approximately, the beginning of the 16th century.

        As someone with past marketing experience on the national level I subscribe to the maxim, “In God we trust, all others must bring hard data.”

        1. Sorry, to be clear its not of 44 million its of 22.7 roughly. 44 Million is the rough estimate globally where 22.7 million is the rough estimate of US based tablet sales over the last 9 months.

          Horace fleshed that out with this statement.

          “22.7 million tablet devices sold in the nine months ending June. Applying the 22% claim to that total gives a Kindle sales total of 4.987 million. That’s awfully close to a round number of 5 million.”So 5 million Kindle Fire sales equals 22% of US tablet sales ONLY over the past nine months.
          This is the only way saying 22% makes any sense.

  3. From the Amazon press release – “In just 9 months, Kindle Fire captures 22% of U.S. tablet sales”, not world wide tablet sales as indicated in the article.

    1. Thanks Greg, fixed them both. Sorry, we don’t employ editors and wrote a flurry of content as we were doing analysis for clients and for our sites.

      You work for a great company. My firm, Creative Strategies, has done some market analysis and market intelligence work for Deloitte before and I always enjoyed the people we worked with.

  4. Good overview of the announcements and superficial implications but don’t fall for the absurd 22% number. It is baseless and unsupportable. It seems most likely that they made 5million of them (unused playbook capacity) and that was it.
    Amazon Prime is a market irrelevance. I would bet not more than a few hundred thousand members worldwide (I am one and know no others amongst my Amazon buying friends). They will also not be a world tablet power until they distribute the devices and their content stores in more than a few markets. Amazon are on their way (added UK et al) but it is a long and expensive journey and with 1% margins, they can’t invest too much too fast.
    It is a massive step change improvement for Amazon but it is premature to suggest that this is a market gamechanger. It certainly kicks the Nexus in the unmentionables but the iPad mini is still the great unknown as you say. It it comes in at $250, it nicely bisects the 2 HD Kindles with a vastly superior global ecosystem. It will also be available in many countries soon. If it comes in at $299 with an unappealing base version spec, it will leave a large door for Amazon to walk though and park up.

    1. I think Horace over at Asymco did a good estimating how the 22% number can make sense. From internal data I have seen the number of Kindles Fire’s sold is about 5 million. So if US sales of tablets in 9 month’s is 44 million that 5 million is 22%. I think that seems plausible. We have sold many more worldwide but based on forecasts for this year and what Apple has disclosed publicly 44 million in US seems reasonable.

      http://www.asymco.com/2012/08/31/how-many-kindle-fires-were-sold/

      1. I wrote the reply before you edited for US only (but it only posted after you changed the article). We don’t disagree. Amazon made 5million and sold them all in 9-11 months. Decent but hardly super impressive especially since they sold most of those in 1Q and probably are not counting the returns we heard about in Q2. They clearly aslo want to suggest that they have 22% of the installed based which is also rubbish since it ignores all sales before and after.
        Obviously 22% of 44M is not 5 million so I think you mean 22M sales in the US since the Kindle was released.

        1. Yes, sorry. You are right it is not 22% of installed base, it is 22% of US devices sold in the last 9 months. So we are only talking about US tablet sales over the last 9 months. This is where Horace makes the point in the Asymco article..

          “22.7 million tablet devices sold in the nine months ending June. Applying the 22% claim to that total gives a Kindle sales total of 4.987 million. That’s awfully close to a round number of 5 million.”

          So 5 million Kindle Fire sales equals 22% of US tablet sales ONLY over the past nine months.

          But I do expect them to more than double that number with the new Fire’s over the next 12 months. I may do an official forecast on the 7 inch sector once we see what Apple does. I think its logical either way that Amazon could sell 20million Fires between the several devices total over the next year.

          http://www.asymco.com/2012/08/31/how-many-kindle-fires-were-sold/

  5. To quote from another poster, Amazon has very small margins combined with very large patience. Amazon’s competitors need to be at the top of their game.

  6. I have one concern. Aren’t all the articles on the new Amazon tablets made from specs alone. Were any analyses made from hands on experience? If not, is this usual/unusual?

  7. “this edge for Amazon especially in the smaller screen tablets could be
    short lived if Apple does introduce their own version of a mini iPad at
    very aggressive prices”

    Well, that’s just it, isn’t it? I’ve been an Apple (and Windows) user since the 80’s, and Apple has NEVER released a product “at very aggressive prices”. They are and have always been a “premium product at a premium price” kind of company.

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