Of Course Amazon Kindle Fire Cannibalizes the Apple iPad
One way I test and gauge insights is to engage in and monitor social media. It’s certainly not the only way, but it is one of many ways. One very interesting discussion I am monitoring is the Amazon Kindle Fire versus Apple iPad. There are definitely two camps that exist and not a lot in-between. So what will really happen between these two tablets?
One thing everyone needs to realize is that there are many different kinds of consumers with very different needs, wants, drivers, and checkbooks. Sure, our friends and family kind of seem like us, but that’s because its human nature to surround ourselves with people similar to ourselves. We may think that we are a lot different from our friends, but statistically, we are very similar. Let me give you just one example….. According to the U.S. Census bureau, the median household income in 2010 was pegged at $49,445. Do you make a lot more… a lot less? You get the idea.
As it relates to the iPad, there are consumers who would have stretched up to buy a $499 iPad 2 who will, instead, buy the $199 Fire.
Different Needs, BUT
The Fire and the iPad are also architected to address different needs, but that doesn’t necessarily dictate exactly what a consumer will do with it. Tech.pinions colleague Tim Bajarin nailed it when he talked about the differences in content creation and consumption on the iPad versus Kindle. One thing to be careful with however, is what we mean exactly by content creation. Is creating an email content creation? Is cropping a photo content creation? I happen to think it is and I believe that those who buy a Kindle will, in fact, be creating emails and cropping photos. Why, because it’s the best available device they have to do that with at that moment.
Here’s the analogy, and it’s a personal one. My teenagers don’t own a tablet, and therefore they watch videos and read books on their iPhones. It’s the best device they have at the moment, even though it would be a much more enjoyable experience on the iPad. Problem is, Dad (me) is too cheap to buy another one. Those who have a Kindle will be creating light content because it’s the best device they have at that moment.
It Won’t Matter This Holiday Season
In the end, none of this discussion is relevant this holiday selling season. Based on information from my contacts, both Apple and Amazon have been conservative in their production forecasts. Apple doesn’t want to get stuck with potential inventory before their next iPad and Amazon took a cautious tone given it’s a new product and they barely break even on the gross margin side with an untested video and music upside content model.
Net-net, for the holidays, both will sell out and we won’t be able to see who will be the finest cannibal. BUT after the holidays, when inventories are adjusted and there isn’t a line for either, if Apple either doesn’t adjust their pricing, introduce a lite-iPad, a 7″ iPad, or a new kind of subsidized business model, they will lose out in volume to the new class of 7” tablets, not only from Amazon, but also from Barnes and Noble.
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