Amazon’s new “Fire” Android tablet is turning the tablet marketplace upside down. First the device, which uses Google’s mobile OS in the background, has absolutely no branding for Google or Android on the device, and Amazon is using its own browser for web access. In addition, the 7 inch tablet is priced miles ahead of its competitors. So low in fact that it’s expected that the competition won’t even be able to match and compete at Amazon’s price of $200. Some are saying that this Amazon tablet is an “iPad killer”, but Apple certainly has the means to aggressively compete with Amazon especially since it easily holds the number one spot of tablet sellers. For now the main difference between the iPad and the Fire is that the Fire is only 7 inches, but rumors are already floating about Amazon potentially releasing a 10 inch version to compete with the iPad.
by Greg Sterling
Amazon’s new “Fire” Android tablet is an incredible act of audacity that thumbs its nose at Google, while using Google’s mobile OS in the background. Nowhere does the Google or Android brand appear on the device. Amazon has even created its own browser (“Silk”) for mobile web access.
Fire is an Android tablet without the Android Market or Google branding, though Google-branded apps are going to be available on the device.
Many headlines this morning tout the Fire as an “iPad killer.” The 7-inch device, built by the same folks that built the unsuccessful RIM Playbook, may impact iPad sales at the margins but it definitely won’t “kill” the Apple tablet. By contrast the Kindle Fire may have a profound impact on Android tablet sales by other OEMs.
The Kindle Fire’s price ($199) will mean that other 7-inch Android tablet makers (RIM, HTC, Samsung) will have to match or beat that price. And since Amazon is widely suspected to be subsidizing the Fire that feat will be next to impossible or impossible. However the Fire’s pricing will also affect larger Android tablets as well.
Most 10-inch Android tablets didn’t sell because they were a poor imitation of the iPad. Amazon’s aggressive pricing, content and software, together with its brand strength, will mean that 10-inch Android tablets will have to bring down their pricing to below $350 and more likely below $300 if they hope to survive.
But Samsung, Motorola and others are going to be hard-pressed to take such slim margins on tablets. They don’t have the content and services that Amazon has to recoup what they don’t make on hardware sales. It creates a real dilemma for them.
The forthcoming 7-inch Motorola tablet will now have to be repriced. So will the sub-$400 7-inch Toshiba Thrive. And the 7-inch HTC Flyer is now dead at $499. Neither Motorola nor Toshiba thought they’d have to sell their tablets for $199; but they will have to reprice them or they won’t sell — let alone “thrive.”
In fact, most people aren’t even going to look at other Android tablets now. The no-name Android devices that had been selling for at the low end (e.g., Archos) are now effectively dead because of quality issues and a lack of brand strength. These are strong statements but I suspect I’ll be proven right six months from now.
Only the iPad will be able to charge premium prices and withstand Amazon’s pricing strategy. However, if Amazon comes out with a 10-inch tablet and prices it as aggressively that would affect the iPad and force Apple to lower prices. (You can probably bet that a larger tablet is in the works.)
If Amazon becomes the dominant seller of Android tablets — it probably will now — that creates problems for Google on several levels. Google won’t control the Fire’s browser and apps will be sold or made available through Amazon’s App Store not Google’s Android Market. Microsoft could pay Amazon (speculating here) to make Bing the default search engine on Fire, and so on.
My prediction is that Amazon Fire will destroy all other Android tablets in terms of sales. Google will be forced to respond by building its own tablet, like the Nexus smartphones, and sell it at break even or a loss. Paradoxically, the iPad emerges as a much more “Google-friendly” device than Amazon’s Android tablet.
Read more here