How the Kindle Fire Could Burn the iPhone 5

The Kindle Fire lit up the media yesterday in an announcement of Apple proportions. Immediately people began asking if this was the iPad killer that had been talked about since Apple’s tablet took over the market, there was also talk of cutting into Android tablet sales, but these miss the point.

The iPhone 5 may be the gadget that gets burned by the Kindle Fire this holiday season.

In order to grow from the 28% hold on the market, Apple needs to get more iPhone users. This can be done by poaching from Android, which is a possibility, or by getting new smartphone buyers to pick the iPhone 5 as their first smartphone. The Kindle Fire could steal iPhone 5 sales from this market because it delivers just enough of what these consumers need at an amazing price.

Kindle Fire Hands On – Showing off features that could convince consumers to purchase the Fire over the iPhone 5.

How big is this potential market of non smartphone owners? While it seems that everyone has a smartphone these days, smartphone owners represent only 43% of total cell phone usage. This may hit 50% by the end of the year, but that still leaves a huge segment of the market open to a new gadget — one that could be an iPhone 5 or a Kindle Fire.

How the Kindle Fire Could Burn the iPhone 5

No Data Plan – One of the biggest things keeping first time smartphone buyers from taking the plunge is the data plan. By keeping the Kindle Fire WiFi only, the Kindle Fire is priced more attractive up front, and the total cost is $199, not over $2,000 like the iPhone.

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By removing the need for a data plan, and hitting the rest of these points, the Kindle Fire is an attractive device for the average consumer who has toyed with the idea of getting a smartphone, but doesn’t want to spend money every month on a data plan.

The Ecosystem – The iPhone and iPad enjoy great success because the device gets out of the way and allows you to use the device, but you also have access to movies, music, books, magazines, apps and more. Easy access to content has been one of the biggest problems for Android based tablets and smartphones, but now Amazon has delivered all of this — exclusively to a $200 device.

Kindle Fire

The Kindle Fire Delivers Access to Apps, Music, Movies and More.

Price – On stage Jeff Bezo’s Amazon’s CEO kept hammering home that Amazon was delivering, “Premium products at non-premium prices.” Unlike many times when companies say this, it looks like Amazon may have actually delivered on this promise. The initial reaction of practically every regular consumer I have talked to is, at $200 this is a no brainer. These are buyers who have avoided spending “$600 to $800″ (the prices most often quoted to me) on the iPad.

Kindle Fire Does Most Smartphone Activities - This isn’t going to replace the voice part of smartphones, but if you look at the most popular activities on smartphones, per the Pew Internet and American Life Project research, you’ll see that the Kindle Fire can do almost all of these things. At 7 inches, the device is portable enough to be a constant companion, much like a smartphone. Missing from the list is listening to music, which is not shown below.

smartphone usage infographic

How Most Consumers Use Smartphones

Consumers can download the TextPlus app from the Amazon App store to handle text messaging on the Fire, or use other similar apps.

Will the Kindle Fire “kill” the iPhone 5? Definitely not, but at the current price it arguably poses a bigger threat to iPhone 5 purchases by new smartphone buyers, which Apple wants to bring on board.

Apple is holding an iPhone 5 event on October 4th at the Apple Campus. This iPhone event is where we expect Tim Cook to announce the iPhone 5 details and iOS 5 release date. This is Cook’s first time pitching an iPhone on his own, after Steve Jobs resigned. We may also see an iPhone 4S and a new Assistant feature that lets you control your iPhone with your voice, which could be exclusive to the iPhone 5.

Update for clarification: In this scenario I still see consumers keeping their flip phone for calls, much the way I keep a smartphone and a tablet. Two devices, but a different featureset for for each.

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Infographic via Tatango

Comments

  1. Johnsmith says

    how could you compare a phone to a tablet. great price for a table no doubt , perhaps you should compare a motorola, samsung table to a Kindle

  2. Dgtiii2000 says

    Ummmm….except the iPhone 5 remains a PHONE, i.e., a communications device, while the Fire clearly is not. You are comparing apples (no pun intended) to oranges here – how can you compare a media-centric tablet to a smartPHONE???

  3. Anonymous says

    There is indeed significant overlap between smartphones and tablets. Especially 7″ tablets, which are much more portable than 10″ ones. especially, they’re usable one-handed, which 10″ers aren’t.

    I my case, I got a 10″… which i use a lot less than I anticipated:
    – it’s unusable on the road (metro, walking…): using it requires both hands, hence requires being seated.
    – even inside, I find I use my smartphone most: it’s more handy, it’s OK for most stuff (messaging, skype, RSS, ebooks, music, emails) though not for Web and Comics; both are bad for video since they can’t access my NAS.
    – I can’t sync states across devices. It’s a pain to switch devices in the middle of an ebook, audiobook, video…

    I’m not sure a 7″+barebones smartphone is better than a high-end smartphone:
    – you’re dependent on (have to carry around 
    -and not in your pocket- , charge…) 2 gizmos instead of just one, and the tablet won’t charge off USB
    – specs for low-end tablets are actually lower than for high-end phones (CPU, GPU, resolution, even ports)
    – you still have the synching problem
    – and, though alleviated, the unwieldiness problem.
    – cost works out about the same

    I will be buying a Galaxy Note !

  4. Bill_taylor21 says

    all the comments are silly so far…

    what the writer was pointing out is the potential “NEW” smartphone users who have been hesitant to buy a smartphone over the basic phone they already have. And the price of 200 vs 2000 for owning an iphone to have the same features minus the camera will be quite tempting for them’  They already have a phone.

    and in Apple losing 2-1 in marketshare that could be critical to them in losing out on a certain field of potential consumers.

    Nice article…

      • Anonymous says

        Surely a crucial thing to have is portability? I feel like I need to double check to see if they’ve got anything special going on with the wifi – otherwise if you’re out of the house you’re just fishing around aren’t you, these days there’s not much open wifi out there. Or are you supposed to spend more $’s ‘tethering’ your phone and using it as a router?

  5. Snowboard141 says

    Wow Josh Smith, this is one of the dumbest articles I’ve ever (sorry to say the following) read. What a waste of my life… I hear that the new Ford Hybrid vehicle will cut into helicopter sales this Sunday between the hours of 3:00 and 5:00 am.
    “These are buyers who have avoided spending “$600 to $800″ (the prices most often quoted to me) on the iPad” – Really? What, you don’t do any research at all? You know, you can use this thing called “the internet” and find out that the iPad starts at $499.
    PLEASE DO NOT waste any more time writing something like this. Now, I thought you were a writer, behave like one! There is no substance to this article.
    I have never really criticized a “writer” but dude, I think you might want to find a career that fits you…

    • Yogh says

      I’m sure you and I and Mr. Smith all know that the iPad starts at $500.  What that side note was pointing out is that that is the price the common person whom Mr. Smith talks to associates with the iPad.  As we have seen many time perception is far more important than fact with gadgets.

  6. Anonymous says

    OK, so I am NOT Josh Smith’s friend, but I agree with Bill_taylor21.  Maybe the author could have laid out his point better, but I got it and agree.  YMMV and it remains to be seen – time will tell.

  7. Mike says

    I’ve never been on this site before, and don’t know the author, but i think he has raised a very good point that has made me think a lot.  As someone who is very conscience of his budget and was getting ready to make the move from bb to iphone, maybe i DON’T need to spend all of the money on data plans etc for an iphone and i can get a basic $40 a month cell phone plan.  That is, if in fact the kindle fire can do most of what the iphone would do (besides making calls, obviously)

    I thought this was an excellent article.  i’m glad i read it

  8. Youredumbifyoubuythat says

    Uummm isn’t this the same as the ipod touch? Which is below 200. It has all those applications, internet access, etc. AND with wifi you can technically make calls through some applications. Furthermore it’s smaller and fits in your pocket, AND has a camera. No brainer there…

  9. Popitwhite says

    There is no way that anyone would, in there right mind, walk around with a cheap phone that does not fulfil their full needs and substitute that lose with a second device. It’s as simple as that. There is no was to compare two products that are not in the same category.

  10. techuser says

    I remember when the Kindle reader first came out and they positioned this simplistic reader against the iPad.  What?!?  They have no clue as to how to position their product.  50% of all smartphone users plan to buy the iPhone 5.  And then they’ll buy iPads and Macbooks and iMacs and iPods.  Why?  Because the products work, they’re geared to the user, and Apple markets their products to sell.  Apple is a juggernaut.  Someone someday will slow them down.  It won’t be Kindle

  11. Anonymous says

    I think it’s a great article!   I have a Droid 1, and keep thinking of upgrading…but I want a bigger screen!  An when I really think about it, how often do I web surf, etc where their is not wifi?

    No often at all.   So now I’m thinking drop Verizion, and go back to my free company phone.

    Yes, I’ve pre-ordered the Fire, and it has stopped me dead in my tracks from getting a new Smart Phone!

  12. SerenaXx107 says

    This article makes perfect sense! You can compare apples to oranges if you have the mind to do so. He’s simply saying if you’re buying a smartphone so you can use the internet there’s a way to get a portable device that gets internet without all the extra fees. The reason I don’t have a smartphone is because with my unsteady income I can’t guarantee I can pay for a data plan each month. But if I drop $200 on the kindle, I can get internet and not worry about a data plan. Sounds like a great idea to me!

  13. Shirfire218 says

    I would do exactly what a few of the above commentators have indicated “no one would do”, and in fact I probably will.  What I need to do on wi fi, can be accomplished on the Kindle Fire; and I can get rid of a $40/month data plan charge that I do not want, need or desire and that is just taking advantage of the consumer in the first place.  The attractiveness of a zero monthly fee device is HUGE!  I think alot of people are sick of getting nickeled and dimed to death by Verizon, etc.

  14. Noneya Business says

    I own iPhone 4, iPad, and now a kindle fire. The price of kindle fire is attractive; however, the apple products are by far easier to use and access apps and information. I wish I would have bought the iPad mini instead.

  15. William says

    a couple things. 1) the kindle fire is a tablet, not a smart phone. 2) Until Amazon makes changes to the effect of working with Google so that its users have access to Google Play market place out of the box, accessibility to apps are limited at best and thus user experience suffers as a result.

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