Amazon.com Inc. (Nasdaq: AMZN) may have what it takes to take on Apple Inc. (Nasdaq: AAPL) in the handset market, according to a Forrester Research Inc. analyst. In fact, Amazon is better positioned to lop off a chunk of the market controlled by Apple than many of the major competitors in the tablet sector, including Samsung, Motorola Mobility, and HTC.
Sarah Rotman Epps, a Forrester researcher, said in a report that Apple is about to face a "nasty competitor" willing to "sell hardware at a loss." She said further:
With 28.7 million iPads sold worldwide to date, Apple's lead in the tablet market looks invincible. Enter Amazon.com, whose tablet can compete on price, content, and commerce. If it's launched at the right price with enough supply, we see Amazon's tablet easily selling 3 million to 5 million units in Q4 alone, disrupting not only Apple's product strategy but other tablet manufacturers' as well. Apple will maintain a strong lead in market share, but Amazon will gain ground quickly and give product strategists from media, software, retail, banking, and other firms a reason to kick app development for Android tablets into high gear.
Epps' comments confirm that Amazon may be planning to get into the tablet PC market. It has sold millions of its Kindle reading device, and it makes sense to expand the functionality of that unit to make it competitive against the iPad or any other tablets in the market. Amazon cannot continue selling a single-use device when the reading functionality of its Kindle is being incorporated into gadgets from rivals.
It's also highly likely that Amazon -- if it introduces a tablet -- will use the Android operating system from Google (Nasdaq: GOOG). To gain market share, though, it will have to be willing (as Epps pointed out) to accept a lower margin on its tablet. The company has demonstrated a willingness to do this -- it has used that strategy effectively against other e-reader rivals, because it also sells e-books and can spread out its costs over both hardware and software.
A price war is, in my opinion, inevitable in the tablet market. (See: Apple Can Be Beaten.) Rivals are envious of Apple's huge market share, and now that it's obvious they can't win on design, spin, and functionality, they will most likely expand their arsenal to include pricing and lower profits. I am convinced this is inevitable because the tablet is potentially too critical to future growth strategies at PC-centric OEMs for Apple's rivals to give up. They must compete harder and expect Apple to respond in kind.
This brings me to what may be the sole fault line in Epps' argument. Apple is not winning just because it has the best product or the greatest ecosystem. It is also arguably price-competitive with its iPad. This has become even more obvious as competitors have failed to introduce devices that are cheaper than Apple's. Devices from Samsung and Motorola Mobility, for instance, have been in the same price range as the iPad.
Lastly, a price war will not hurt only Apple. If Amazon enters the tablet market with devices that are much cheaper than the iPad, this will also hurt other contenders for its market share. Consumers will be the biggest winners here, but component and contract manufacturers should brace for a bruising squeeze.
Well, the current Kindle is not in the same league as any tablet. It's a book reader with very limited apps.
I don't know how many people use their tablets to actually read books (exclusively), but from what I've experienced angry birds is doing pretty well with the iPad!
What will be Amazon's innovative contribution? It should not be very difficult to understand consumer need and innovate new unique features. What processor will they use - will it be MIPS or ARM? Is Amazon interested in RIM takeover. It will help them in tablet market.
Amazon might make itself different from Apple and other android tablets, thanks to its strong cloud-based services. However, the device itself will not be any better than iPad.
True, and raises the question of whether an "Amazon Store" might be in the works along the lines of the Apple stores. Now may not be the time for Amazon to open storefronts for their devices in California. The sales/use tax dispute surrounding Amazon has led to a bill to limit the ballot initiative process.
Kindle and iPad should both be financial successes. But competition between the two will only get fiercer as the market for e-readers and tablet computers heats up...
Didn't see that one coming...still think of Kindle as an e-reader. I've also read that with some downlaodable software a Kindle can gain much of the same functionailty of an iPad. So it makes sense this could happen, but I wonder about the support infrastructre Amazon provides. For better or worse, Apple still supports its products really well.
It would be interesting to see Amazon bringing out a new tablet on to market. This shouldn't be like a simple kid on the block. This tablet should have Android and equal performance hardware like ipad. I do not think they can have too low prices but a 100$ below ipad could help.
I read an interesting article about the tablet war on The Economist. This article goes into some details about the price disparity and consumer psychology. It seems not only Amazon but Barnes&Noble's Nook can become a competitor to iPad. Amazon is also entering into cloud service and is providing 5 GB of data storage for free for music collection. So, it seems that Apple will face some competition in coming times.
It will be a great delight to see the price of ipad3 come down, but it is not likely. For purpose of argument, the competition will now be between the e-readers and the ipad enthusiasts. Apple and Amazon will now have to compete for those who are either new to the two or just plain frugal and do not need all the frills that ipad has.
By moving to the core of the industry and offerings services that keep the system humming, a group within the electronics market has rendered irrelevant the question of ownership and control of the supply chain.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
To save this item to your list of favorite EBN content so you can find it later in your Profile page, click the "Save It" button next to the item.
If you found this interesting or useful, please use the links to the services below to share it with other readers. You will need a free account with each service to share an item via that service.
Tweet This