A rumor surfaced late last week that Amazon will follow the lead of HP and price its Android tablet (which is expected to be released in either September or October) for a lot less than the iPad: maybe “hundreds” less. If they do, look for it to be the one Android tablet to really compete with the iPad in terms of sales and demand, something no one else has been able to do. The story comes from the New York Post quoting a “source with knowledge of the plans.”
Why would Amazon have a better chance to compete with Apple? After all, the current entrants have struggled to grab significant market share away from Apple.
A few factors make an Amazon Kindle Tablet a potential success story. The first would be price, if this report proves accurate. The other would be content, which is king on this crowded category of computing devices.
Ultra-low Price Wins as a Key Factor
The HP TouchPad lunacy taught us that one of the primary reasons iPad competitors weren’t selling was likely price. When HP lowered their prices drastically, the demand for the product increased. What previously gathered dust flew off shelves. But a $100-$150 price tag meant a huge loss for HP. They were willing to take a massive loss since they were about to write the tablet off. Going forward, no other company can likely meet that price with a quality product.
This generation of tablets all look about the same. The hardware doesn’t seem to be a big factor, but it cannot be junk either. So how do you cut costs enough to be attractive without losing a lot of money? Wireless carrier subsidies haven’t worked because consumers don’t want to pay for another monthly contract for two years. They are savvy enough to know that they are paying more in the long run.
What if you subsidize the price with something else? Amazon can do that with a triple threat in content.
The Triple Threat of Content – Apps, Books and Video
When one company has a significant lead, two things can chip away at the lead – drastically lower price and/or significantly better quality. No one can’t make a significantly better tablet than Apple can at the price people seem to be willing to pay. Besides, with these new consumer slate tablets, the hardware usually serves as a background factor, with the apps being the primary factor leading consumers to buy.
Android tablets in general have a chance against Apple because there are tens of thousands of Android apps that work on these tablets. Android tablet owners usually wish there were more tablet-specific apps. Certain key apps work on some tablets, but not others, with Netflix as one frustrating example. I’ve had an Android tablet for a couple of months, but am only just now able to stream movies with the app. I still can’t download the Netflix app from the Android Market. I have to do a manual install from an unofficial installation file.
An Amazon tablet will have plenty of apps, thanks to the Amazon App Store. An Amazon tablet will have access to two other key forms of content: books and video.
The Kindle was the most successful personal tablet style device before the iPad shipped. People love their Kindles because they were priced right and worked well. Amazon will likely brand their tablet as a new kind of Kindle, and it will have access to tons of books (far more titles than Apple has for iBooks). What’s more they might make periodicals available on the new tablet. I can read my books on my iPad, but I cannot use it to read any of the magazines I’ve subscribed to on my Kindle. Nor can I read them on my ASUS Eee Pad Transformer. A new Kindle tablet might include a version of the Kindle app that works with periodicals, giving it a slight advantage over the iPad and other tablets.
Amazon Prime Membership comes with the ability to stream video, much like one can do with Netflix. You know Amazon will include this with their tablets. I could see them giving customers Prime membership for free or a reduced cost with every Kindle Tablet, giving it another advantage over other Android Tablets. Amazon’s video selection is not as good as Netflix, but if Amazon bundles it, then you get what they do have for little or no more cost.
Amazon already has a large library of video content for purchase and rental. Expect this content to be available on the Kindle Tablet. Add to that the Amazon App Store with the free app of the day, and you have a triple threat to Apple’s dominance in content. Along with a much lower price, the Amazon Kindle Tablet can compete.
Apple Will Still Dominate
Despite all that Amazon brings to the table, expect Apple to still dominate for years to come. Everyone lags so far behind that it will take a major shake up to change the iPad’s dominance. At present Apple owns the consumer slate tablet market. Samsung, Acer, ASUS, Motorola, HTC, RIM and whoever takes over the WebOS platform (if anyone does), will all compete for scraps. When Amazon ships its Kindle Tablet this fall, it will catapult to second place behind Apple and within a year become the first significant challenger to the Apple iPad. I believe a few of those also-ran companies will go the way of HP and wave a big white flag of surrender in the tablet arena within the next year.