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Apple suggests that popular Kindle Fire will hurt Android

Thus far Samsung Electronics Comp., Ltd. (KS:005930) has been the only Android tablet maker to make major inroads against the wildly popular Apple, Inc. (AAPL) iPad's dominant market share.  But that situation is about to change thanks to Amazon.com Inc.'s (AMZN) new Android-powered Kindle Fire tablet.  Priced at $200 the tablet is the cheapest Android tablet to hit the market yet, and its specs are surprisingly respectable.  Driven largely by the attractive price, the tablet was registering pre-orders of 50,000 units a day in lieu of its November 15 launch.

Of all companies, you would think this would be most concerning to Apple.  However, Barclays analyst Ben Reitzes claims that Apple's top executives are entirely unphased by the Fire's success.

In fact, he says that in a recent meeting he had with Apple CEO Tim Cook and CFO Peter Oppenheimer, he was told that Apple was pleased with the Kindle Fire's success, which they felt would fracture the Android market and solidify their lead.

He recalls:

While the pricing at $199 looks disruptive for what seems to be the iPad’s most important rising challenge, the Amazon Fire – it is important to note that it could fuel further fragmentation in the tablet market—given it represents yet another platform. While compatible with Android, the Apps work with Amazon products. The more fragmentation, the better, says Apple, since that could drive more consumers to the stable Apple platform. We believe that Apple will get more aggressive on price with the iPad eventually but not compromise the product quality and experience.

Usually when critics of Android talk about "fragmentation", they're referring to the fact that different handsets are running different version of the base OS tree, as Google Inc. (GOOG), the maker of Android, relies on carriers and hardware partners to push out updates (and some updates are compatible with older handsets for hardware reasons.

The "fragmentation" created by the Kindle Fire is a bit different.  The tablet does not run  a standard build of Android at all.  Amazon branched the OS before Android 2.1, and thus has written much of the interface itself.  It's added in multi-touch and a new browser.  
Kindle Fire in bag

Many argue this is a selling point.  Apple apparently thinks its disastrous for Android.  

Of course the Apple brass's objections could simply be sour grapes.  Some believe that in eschewing the baseline Android, Amazon made itself harder to sue -- Apple's favorite technique to try to stifle would-be Android competitors.

But with Amazon cranking up production and at least one analyst predicting sales of 5 million units this holiday season, we're guessing Amazon and Google aren't losing any sleep over the tablet's success.  Clearly, one man's fragmentation is another man's differentiation.

Source: Business Insider



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By fteoath64 on 11/5/2011 5:39:05 AM , Rating: 2
Little do they realize that price is the most important point to address in the market when a device commoditise in functionality. Any usable tablet priced correctly like the FIRE, will sweep a huge market share. This means Apple's market share people.Why are these executives blind ?.Android market share is minuscule compared to iPad market share.

Then you have the size factor which is not to be under estimated. The majority of young users prefer the 7-8 inch screen compared to a 9 to 10 inch screen. Also, the weight and battery life plays into it.

From a price viewpoint, for almost-the-same-thing, the iPad cost 2.5 times *more* than the FIRE. The market will adjust for sure as it is a known dynamic factor. Apple will have to cut $200 or more in 2 quarters to be competitive.




"There's no chance that the iPhone is going to get any significant market share. No chance." -- Microsoft CEO Steve Ballmer














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