The case against the Kindle as a low end tablet disruption

http://www.asymco.com/2011/09/30/the-case-against-the-kindle-as-a-low-end-tablet-disruption

by tylerrooney • 15 years ago

30 22 15 years ago

brudgers• 15 years ago

>"Disruption requires asymmetry but it also requires the ability to go up a trajectory of improvement along the basis of performance that a majority of users demand"

The premise upon which this depends requires construing the Fire as Amazon's ground zero entry into the segment and dogmatic acceptance of the standard narrative in which the market segment for tablets or slates did not exist prior to the introduction of touchscreen devices in the form of Apple's iPad.

But neither is the case, just as smartphones were available for years before the introduction of the iPhone, likewise, the Fire is an extension of Amazon's well established product line - an extension which given the naming convention Amazon has employed (Kindle -> Fire), one may reasonably suspect has been on the drawing board for quite some time.

Another way to look at the potential for disruption which the Fire may hold is to consider it as an extension of the disruption Android caused in the smartphone market; i.e. making touchscreen smartphones ubiquitous commodity devices. Indeed, Amazon's agenda with the Fire (and Kindle) is more analogous to Google's with Android than to Apple's for the iPad.

cowkingdeluxe• 15 years ago

Most articles I've read on this subject state that the new tablet will be sold at cost - a few dollars, not cost - $50. Which of these estimates is most likely correct?

chomkian• 15 years ago

Estimate says Amazon will be making a $50 profit: http://www.eetimes.com/electronics-news/4228505/Kindle-Fire-...

Estimate from iSuppli (yes, the infamous iSuppli) claiming loss: http://www.isuppli.com/Teardowns/News/Pages/Amazon-Sells-Kin...

Make of that what you will.

anactofgod• 15 years ago

> "The iPhone is also a subsidized product and it seems very successful. How come it won? The answer is in details."

One of the other relevant details is that any subsidies that are provided are done so by the wireless carriers, not Apple. Apple gets paid in full for each iOS device sold, either by the carrier (iPhones), or by the customer direct (the other iOS devices). By being immediately profitable on each iOS device, Apple has no "subsidy variables" to factor into its profitability -v- product lifecycle calculations.

chugger4• 15 years ago

I'd choose an iPod Touch or an iPad 1 over a Kindle Fire any day.

chugger4• 15 years ago

The Kindle Fire really has nothing going for it except for the large screen and the price.

jgroome• 15 years ago

I'd say it certainly appeals to people who can see the advantages of a small tablet computer but don't want to put down $600 on an iPad 2.

raganwald• 15 years ago

Hang on a second. What about Silk? Think about this for a moment: Who wins if web browsing is ridiculously fast?

Amazon is presenting this as a win for users. Perhaps, but not only so. It’s also a win for people who build complicated web applications. Such as... Drum roll... Amazon.com.

What the Kindle claims to have going for it is that I as a consumer can buy a low-end device but enjoy a high-end experience when I use a non-trivial web application such as online shopping.

WalterBright• 15 years ago

I have an ipod touch and I ordered a kindle fire because:

1. I want the larger screen. The ipod's is too small for comfortable reading.

2. I want to be able to transfer books to the device without having to go through itunes. Isn't it mysterious that I can copy pictures from the ipod using a usb cable, but cannot copy anything to it?

3. I'm hoping Fire's browser will be able to see shared files on my LAN. Safari on the ipod mysteriously won't, although Safari on the Mac will. This limitation severely limits the usefulness of the ipod, as it cannot see my local shared books, pictures, or music.

I have an older Kindle, which I like very much, but it won't see shared files either. But at least they labeled it's browser as "experimental", so I had no expectations. And I can transfer books to it via usb from my desktop without needing to install anything on the desktop.

Don't get me wrong, I like the ipod a lot. But I want a fire, too [stamps feet].

chugger4• 15 years ago

New/refurbished iPad 1's are available online starting from $200.

atirip• 15 years ago

Let's see how long that price is sustainable. There's no point to buy Kindle and not to buy any books, so subsidied Kindle will earn money to Amazon. But not so with Fire, you can (and there will literaly be millions and millions of cheapskates who will do exactly that) buy it and not buy anything from Amazaon after that. So I predict that Fire will be Amazons Bing.

codex3• 15 years ago

Moreover, Google (through Motorola) will soon make an as-good-or-better tablet at the same price point as the Fire. The Fire is a direct threat to Google's tablet ambitions, and Google has much more cash with which to subsidize tablets. In addition, Google has a monetization strategy (ads + content) which is better than Amazon's (content). Heck, even search ads alone is probably better than Amazon's content model. Amazon's ad. monetization is weak because they don't have a search engine nor a real locality ad. platform.

codex3• 15 years ago

However, one way in which Amazon can make a ton of money on the Kindle Fire is to use their Silk browser to replace ads in search results and web pages on Fire devices. They can do this because Silk is effectively a rewriting proxy. Customers may stick with Silk anyway because the pages will load more quickly. There will be backlash, but Amazon may decide to do this anyway. Obviously, they would only replace a small percentage of the ads so as not to be cut off. Alternatively, they can use Silk data to better target Fire ads. to users outside of the browser, or with interstitials.

ippisl• 15 years ago

For amazon, the tablet is a also way to get many people to subscribe to prime. prime users buy 3x-4x than normal amazon users. So they might have better subsidy model than google.

The future opportunities in controlling digital content and mostly e-commerce are huge.Wal-mart size huge.New prime customers really help amazon fight for those opportunities. Losing a bit of money on tablets is just small investment, nothing more.

jerrya• 15 years ago

Amazon certainly makes money on Kindle Fire when you buy books, or music, or rent movies, but also, when you impulse buy anything from Amazon rather than waiting till you get back home and rethink it, or leave the library or class or work and stop at Target on the way home.

azulum• 15 years ago

a fascinating thing about amazon is that they move inventory so quickly that they collect money from customers before they have to pay their suppliers—they have a cash float† they can actually sell products for a loss and still make money—especially if there is growth. it's like a ponzi scheme that actually works.

that said, maybe it will be amazon's bing, but bing buys microsoft insurance that may be much less costly to them than the risk of a google owned future.

my take with the fire is that amazon wants people to move from physical goods to electronic goods—they know that not everyone who owns a fire will consume their goods, but they also know that the more accessible the means to consume those goods, the more business for their core business—the one that makes them money, even if just for 20 days.

† http://www.usablemarkets.com/2009/06/18/amazons-float/

sliverstorm• 15 years ago

The margins on folks who do buy Amazon content are probably pretty good, helping make up for those that don't buy any content. For example, there is a strong incentive to subscribe to Prime once you have a Fire, which not only brings in some good money but also encourages you to start buying things on Amazon.

The case against the Kindle as a low end tablet disruption

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