The problem with the Amazon Kindle Fire is that it’s not really a tablet. Oh, it’s big enough for a tablet, and it’s categorized as a tablet, but it’s not really a tablet at all. And this isn’t some snarky bit about the flavor of android running under the hood. It’s all about what a tablet is. Put simply, a tablet is an iPad.
That might seem like an exaggeration, but just look at the numbers. Pre-iPad, the tablet market, if you could call it that, was a moribund graveyard of expensive laptops jimmied up with a clunkier version of Windows (nobody thought that possible, but hey, they did it anyway) and a pricetag that could buy you a pair of netbooks and then some. Post iPad, well, all that’s pretty much sold well has been the iPad. And then the best selling tablet of all time came out, the iPad 2. What’s the current market share? 85%? So I don’t think I am going that far out on a limb when I say a tablet is an iPad.
And the manufacturers agree, they’ve all been gunning at the same specs. Galaxy Tab, Playbook, HP Touchpad, etc. Nearly equivalent specs, nearly equivalent price, nowhere near the same success. Which makes perfect sense. Can’t compete on price, those parts are expensive. Can’t compete on OS, Apple has been developing iOS for several years now (and as RIMM and Palm/HP/Android have discovered, making a tablet os is hards, yo). And can’t compete on ecosystem, there’s an app for that, but it’s on iOS.
What are you going to do, make marginally better hardware for a higher price and try to top the luxury brand and category leader? After a certain price point, all you’re selling is an ultraportable laptop, and oh yeah, Apple owns that category too.
The key, therefore, is not to make a tablet.
The smartphone market is already kinda crowded, and if it weren’t for carriers desperate to grab subscribers and lower their churn rate, it’d be a pretty pricey market too. Thanks to carrier subsidies, prices hover around the $0 to $200 level, so they’re oddly considered “cheaper” then tablets. But that’s just the subsidy distorting the hardware market. Why not subsidize a $700 smartphone by $500 when you’re signing up suckers to a 2 year commitment of $2400, and that’s assuming they never go over their data/sms/minute/roaming caps. Thanks to fat profit margins, the market’s already got plenty of players.
What’s still wide open then? Why, the not a phone / not a tablet market, of course!
Wha?
You heard me.
Not a phone, not a tablet. But something that maybe plays some movies, maybe some music, Angry Birds (of course), and some basic web surfing. Not as pricey as a smartphone or a tablet, so the profit’s not there either. But that’s OK, because if there’s no fat margin to be had, Apple’s not interested, and that means the market is wide open.
And that’s right where Amazon has put itself with the Kindle Fire. It’s got a color screen, you can watch movies, you can surf the interwebs, and you can play Angry Birds. It’s also where the Nook color is, the Kobo is, and where a dozen other android faux-tablets are at. It’s also where the iPod touch is at, and that, btw, is the real competition for the Kindle Fire. But more on that in a second.
The sure sign that the market is open is that there’s no standard, no category defining product. Is it 10″ tablet lites? Is it 5″ iPod Touch-ish personal media players? Is it 7″ hybrids? Is it about being portable? Is it about staying at home? Is it a netbook, briefly creating a new category before being cannibalized by subsidized smartphones on the low end, and iPads on the top end?
Who knows, but it’s a category searching for answers and consolidation. Amazon Fire makes a very strong case for defining the category. Amazon can loss lead the hardware for back end software sales. But Apple’s Q3 revenue numbers belies how hard that is. App store and iTunes combined don’t rival any one of the hardware sales units, and that’s with the category leading online music store and category leading app store ecosystem. To cut costs, fancy tablet features had to go, including the cameras, the 3G, the processing power (it’s no slouch, but why do you think there’s a middle layer of Amazon could services between the Kindle Fire and the internet at large).
Apple too seems to be struggling with their entry. iPod touch packs much more raw processing horsepower and front and rear cameras, but at the expense of puny memory and smaller form function. Most disappointingly, the latest hardware upgrade involves no upgrade. Up the memory on the entry level iPod Touch to come close to matching the Kindle Fire, at the smae price point, and you have a very compelling product. But besides a big price drop, no major changes, which suggests Apple is struggling to hold onto profitability without ceding the category to budget players like Amazon.
And that’s where I find myself longing for an HP Touchpad. The ebay price for the hardware is $250, a little on the high end, but what you get is the best of both worlds. Hardware and camera that are competative, and a third choice in software that’s not as locked down as iOS, but still friendly enough for mom, unlike GingerHoneySandwich 7.2.13b. The only problem, of course, is that HP never sold them at that price, doesn’t make any more, and may or may not support webOS going forward while HP crubles apart, Yahoo style.
It’ll be interesting to see where the market takes us a year from now in the not a tablet / not a smartphone category.
Posted by larimdame 
