On Kindle Fire Vs. iPad

September 29th, 2011

Addendum to the previous post containing thoughts on the Kindle Fire. Notice folks wondering how it will affect Apple’s iPad; if this is the long-awaited iPad “killer.”

First, the Kindle Fire is going after a different consumer than the iPad: eBook readers. They will likely check out the cheaper, eInk Kindles and be upsold to the Fire. But their primary purpose is buying a device to read eBooks sold by Amazon, and as a side benefit get to watch videos, listen to music, surf the web, etc.

Meanwhile, on the iPad, reading books isn’t the main purpose, although it’s possible through the Kindle app, or Apple’s iBooks. The iPad’s selling point is the iOS app ecosystem, playing back Apple iTunes content, email, websurfing, etc.

Sure, the Kindle Fire runs Android and there will be apps available from Amazon’s own app store, but I don’t think most mainstream consumers will be buying the device because of Android. And Amazon seems to agree, since Android was barely mentioned in the introduction. They’re keeping this thing simple as they should: its primary purpose is reading.

There’s also content lock-in. It’s a safe bet your iTunes-purchased movies won’t load on the Kindle, and likewise, you won’t be watching streamed Amazon Video on an iDevice anytime soon. So folks heavily invested in Apple content may be reluctant to get a Kindle Fire over an iPad.

Amazon is also undercutting the iPad, going after a price range of below $400. Apple tends to maintain a lowest price point and rarely go under, avoiding the margin-squeeze game. The best example is the whole netbook market — Apple has never released a sub $1000 portable computer, and left that entire cheaper range for others to play in and slaughter each other. Instead, Apple relentlessly releases more capable models at that cheapest price point, forcing everyone below to keep up. The iPhone’s value is firm at $199 (with contract), the Mac Mini at around $600, etc. Once you drop a price it’s extremely difficult to go back. The only concession Apple makes is introducing a different model — they’ll add an “iPad Nano” before lowering the price of the base iPad.

And so I expect Apple to do the same with the iPad — sticking with the $499 price point, but adding more features. The iPad 3 is right around the corner, and it will certainly have a better camera, more storage, a faster chip, new iOS features and apps, and who knows what else, making it worth the price premium over the Kindle Fire.

So all in all, I don’t think Apple has much to worry about with the Kindle Fire. I actually think it’s going to do far more damage to other Android tablet makers who now have to contend with the price of $199 as the new standard. It depends on what is a stronger selling point for cheap tablets: reading, or running Android apps. Based on the number of Kindles I see on a daily basis, I can see many consumers going for the former, and their desire for a cheap tablet indicates they weren’t in the market for an iPad anyhow. And Amazon can afford to sell the hardware at a cheap price since they will make up the difference through content sales.

Meaning, the Kindle Fire may result in some “fire sales” of Android tablets early next year.