When Apple introduced its second-generation iPad earlier this year, then-CEO Steve Jobs used the word “flummoxed” to describe his company’s erstwhile competitors in the tablet market. He was right; the competition has been scattered, and mostly inept.
Until now? Perhaps so, with Wednesday’s launch of the Kindle Fire, Amazon’s entry into the market. But this device, at just under $200, is to the iPad (about $500 in its least expensive version) as a cheap sedan is to a Lexus SUV: functional and useful, but nowhere near as elegant or powerful.
Indeed, the Fire, Amazon’s first effort in this genre, is plainly not intended to compete head-to-head with the iPad. It’s smaller, much less capable in terms of features and hardware – and 60% cheaper. [For the sake of disclosure: I own some Amazon shares.]
The Fire is just one of several devices Amazon announced at a New York event. But it’s by far the most important, for what it says about the tablet marketplace. The market, at least for the time being, is bifurcating between the luxury models (iPad and, in distant runner-up position, high-end Android tablets), which can do many things well, and utilitarian models (such as Fire, running a modified version of Google’s Android, and a number of other, pure-Android devices), which are intended mainly as media-consuming devices.
I haven’t gotten my hands on the Fire, but I have no immediate plans to buy one. Not quite a year ago, I purchased a Samsung Galaxy Tab with a 7-inch screen. It has become my main mobile media device, for getting news, reading books (including Kindle files), and watching movies in particular, plus as an occasional email and social-media connector. It has a camera and microphone I hardly ever use. (The Android operating system needs updating, yet Samsung and its telecom partner for the one I bought, T-Mobile, have declined to provide the update – a classic demonstration of vendor contempt for customers.) The Tab, still relatively expensive, was grossly overpriced at the time I bought it – curse of the early adopter – but it’s still working well enough for now.
For my purposes, the 7-inch size is ideal. That’s why I believe Amazon is doing the right thing with its first tablet by keeping it small, especially given that Amazon’s major goal is to have customers use it as a media consumption device, which also runs Android games and other apps. I will also take bets that Apple, despite Jobs’s pronouncement that he would never sell a tablet of that size, will reconsider and do so at some point; the value proposition is too obvious.
The Fire’s relatively low price reflects Amazon’s business model, and the company’s insistence that the devices should be seen as one element in a larger collection of services. It has a growing collection of media it can sell or rent to its customers. To some degree, Apple’s media sales and rentals are aimed at selling expensive hardware, but Amazon’s experience with the Kindle has been more about selling cheap hardware to sell more books. (The word “sell” is questionable in digital media, which so often comes, as on the Kindle, with severe restrictions on what a customer can do with it after “buying” the media file.)
The big loser in the Amazon announcement could be Barnes Noble, which should have been the major competitor to Apple. The Nook Color, a 7-inch tablet launched last year by the bookstore chain, costs a competitive $250 and has decent hardware for the price. Yet Barnes Noble made strategic error. Even though the Nook Color – created by a talented Silicon Valley team the company assembled – runs on Android, the operating system was deliberately crippled, preventing it from running a customer’s choice of Android apps.
I would guess – Barnes Noble has declined to discuss its reasoning – that the Android Kindle app was uppermost in the minds of the corporate strategists who made this decision. Users quickly found ways to hack the Nook Color to turn it into a for-real Android tablet, but Barnes Noble should never have forced them into this position.
Amazon has also heavily modified Android, and like Barnes Noble, it’s telling customers to use its own app store. This is regrettable, but Amazon may get away with it, having created a fairly robust store and having tons of available media – not to mention gazillions of customers, all of whom have stored credit-card information with Amazon, for the many other products it sells.
Other 7-inch tablets are on the market and on the way, and none looks very competitive with the Fire, at the moment. It’s probably too late for Barnes Noble to try, but if I had the ear of the company’s executives, I would suggest opening up the upcoming second-generation Nook Color, lowering the price and positioning it as a Fire alternative that shows more respect for customer choice.
The Amazon moves are also a problem for Google. By creating what software developers call a “fork” – a version of the open-source Android that is plainly moving down a different road – Amazon is challenging Google’s primacy with the OS it originally developed. Google cannot be happy about this, but all it can do – until someone hacks the Fire to free it from Amazon’s restrictions – is keep its own apps and app marketplace off the devices, which is counterproductive in its own way.
If the Fire pre-empts the non-iPad competition, as it may, might Google feel obliged to create its own branded tablet? I would not bet against it.Comments (0)