It’s almost guaranteed that Amazon will release a tablet or two to go against the iPad and many analysts believe that Amazon has the best shot at dethroning Apple in this market for multiple reasons. Let’s take a look at how likely it is for Amazon to succeed in the tablet space.
Of course, this is going to be somewhat speculative because the products haven’t even been announced. Rumors suggest that Amazon will release a pair of Android-based tablets by the holiday season which are powered by NVIDIA chips and will have deep hooks into Amazon services. Let’s use that as the jumping off point.
The case for
Amazon has quietly become a high-tech sleeping giant over the last few years. While its warehouse management and e-commerce technologies were always high tech, it didn’t have the same direct-to-consumer coolness that technologies from Apple, Google or even Microsoft had. With its Kindle e-reader apps and devices, instant videos, MP3 store, Cloud Player and Android app store, that has definitely changed.
Unlike nearly every other Android tablet maker out there, Amazon has the potential to fork or highly tweak Android to lose many Google services and the overall user experience wouldn’t suffer. Losing things like the native Gmail, YouTube, Android Market and Maps would definitely hurt but replacing this with a killer e-mail client, (free?) Amazon instant video access, the Amazon App Store and Bing Maps wouldn’t actually be that bad. Heck, a lot of YouTube can be played via the mobile HTML5 site, so users wouldn’t be missing much when it comes to the viral video side and the Amazon App Store even offers a free paid app a day.
The most appealing thing about these Amazon tablets is that the company may sell these devices for hundreds less than the Apple iPad. So far, nearly every single iPad competitor has gone head-to-head with Apple in terms of pricing and Apple will handily win that battle. The Asus Transformer has carved out a nice niche by being about $100 cheaper than the iPad but if Amazon could get a similarly-equipped tablet on the market for $300, analysts suggest it could ship five million units by the end of the year.
Why would Amazon take that kind of hit? Amazon can and would make it up with content purchases of all kind. Having an Amazon tablet would make those customers more likely to buy Kindle books, MP3s, videos and apps from Amazon. It’s not just digital content either, as Amazon has multiple shopping apps which would likely be preloaded and combine this with a free or discounted Prime account and I could see those tablet users ordering household goods from Amazon all the time.
The Amazon tablets would offer an integrated experience on some hopefully killer hardware at a price that could be hundreds of dollars less than the iPad. That does sound like a winning combination to me.
The case against
Unfortunately, it’s not quite that simple, as I’m not convinced that Amazon can or is willing to take that kind of margin hit. The recently-discounted HP TouchPad reportedly cost about $300 to build using almost-top-of-the-line technology but the larger Amazon tablet is supposed to use the new, quad-core Kal-El chip. That means that unless Amazon cheaps out on components or designs, it will likely have to sell its tablet at a loss or with absolutely no margin. Are app, music, videos and physical good purchases going to be enough to make up for that?
This isn’t like the Kindle e-reader, which has relatively low component costs and weak competition. If you’re buying a tablet, the device has to be as good or better than the iPad or most customers will just buy the Apple version because that’s the popular one anyways. If Amazon believes that a cheap tablet that isn’t well-designed and doesn’t have good specs will compete just because it has the Amazon name on it, is cheap and has Amazon services, it will be in for a rude awakening.
There’s a possibility that the 7-inch tablet will be a color Kindle followup that competes more with the Nook Color than the iPad and that would be a useful device but not quite as exciting. This does make it possible for the device to be cheaper and it may even have the built-in 3G if it’s connecting to Amazon services.
Another issue which people seem to overlook is that it’s harder to create and maintain your own operating system than we like to believe. Even with Android as the base foundation, the different UIs we’ve seen from Samsung, Motorola and LG show us that it’s not easy to make a user experience that’s highly compelling and visually attractive. Amazon has shown that it can create some good-looking iPad apps but I’m wondering if a UI that’s designed to push selling contents and goods as much as possible could be more annoying than innovative.
If Amazon forks the Android OS, then we’ll also have to worry about some forms of app incompatibility and if it’s not the latest version of Honeycomb, it won’t have some of the neato features of other Android tablets like USB hosting. We’ve also seen that Amazon still needs some experience running its App Store if it really wants to attract top-tier developers.
What do you want from your tablet?
Over the next few years, I firmly believe that there is going to be a segment of the population that is only interested in the iPad and not tablets in general. That will change soon as the competition gets better and things like pricing, form factor and apps offer clear alternatives. Amazon has the potential to succeed where many others have failed but there are real questions about its ability to design compelling hardware and software.
No matter what winds up happening, we’ll be very happy to see Amazon throw its hat in the tablet ring because the increased competition should only be good for consumers.
