3 Companies Hating Jeff Bezos Right Now

The Kindle Fire is coming, and it's going to be a headache maker for its competitors. The dirt cheap $199 price, the cloud-based ear and eye candy, and Amazon.com's (Nasdaq: AMZN  ) ability to canvas its landing page with promotional salvos will be huge.

"Kindle Fire brings everything we've been working on at Amazon for 15 years together into a single, fully integrated experience for customers -- instant access to Amazon's massive selection of digital content, a vibrant color IPS touchscreen with extrawide viewing angle, a 14.6 ounce design that's easy to hold with one hand, a state-of-the-art dual core processor, free storage in the Amazon Cloud, and an ultra-fast mobile browser -- Amazon Silk -- available exclusively on Kindle Fire," reads Bezos' letter that popped up on Amazon's home page this morning.

The new gadget won't ship until Nov. 15, but it's never too early to crank up the hype.

Amazon's gains will come at the expense of others, naturally. Let's take a look at the three companies with the most to lose.

Barnes & Noble (NYSE: BKS  )
Few saw the $199 price coming. The floor seemed to be the $250 that Barnes & Noble charges for the Nook Color, and the two most popular estimates called for either $300 or a match to the Nook Color.

It was nice knowing you, Nook Color.

Making things worse for the giant bookseller, Amazon is also lowering the price of its traditional Kindle to $79, while introducing a touch-based e-reader at $99 for Wi-Fi or $149 for 3G. In short, Barnes & Noble is getting smacked around from all over. The retailer has no choice but to respond with price cuts of its own, weighing on already meager margins.

Apple (Nasdaq: AAPL  )
Everything leading up to this morning's reveal made it seem as if Amazon was gunning for the iPad 2 rather than the Nook Color. This will dent Apple's chunky market share, but the Kindle Fire is no iPad 2.

There's no camera. There's no microphone. We're looking at a seven-inch screen that is larger than a traditional Kindle e-reader, but much smaller than the iPad.

However, the Kindle Fire is a multimedia beast. It streams video and music, plays games, downloads apps. The dual-core processor and beefed up mobile browser will also make it a decent surfing gadget -- and not just through Amazon's virtual storefront.

Unlike the countless other tablet manufacturers that have butted heads with Apple and lost, Amazon has the ecosystem in place to deliver all of these digital goodies (and to profit from them). Many iPad owners won't be able to live without the FaceTime and GarageBand apps that just aren't possible given the Fire's limitations, but a 60% cheaper tablet will turn heads in this soft economy.

Netflix (Nasdaq: NFLX  )
Will there be a dedicated Kindle Fire streaming app for Netflix? It may not matter. Amazon is giving every Kindle Fire buyer a 30-day free trial to Amazon Prime, the loyalty shopping club where active buyers pay $79 a year for free two-day shipping on the site. A Prime perk that was introduced earlier this year was unlimited streaming on a limited catalog of videos. That digital vault is now up to 11,000 titles.

Since a lot of the folks preordering today -- as I did earlier this morning -- are already Prime members, this translates into the ability to stream thousands of videos at no additional cost as long as there's a Wi-Fi connection around.

The selection on Netflix.com is considerably better, but only one of the two services is now available at no extra cost to millions of members and also offers new releases as a la carte streams.

Smaller headaches
It's not just Barnes & Noble, Apple, and Netflix that are cursing under their breath today. Research In Motion (Nasdaq: RIMM  ) began slashing PlayBook prices to beat the iPad on value, but what's it going to do now? Every iPad competitor is now going to have to find a way to differentiate its tablet from both the iPad and the Kindle Fire. It won't be easy.

How is Microsoft (Nasdaq: MSFT  ) feeling about Amazon Silk? The proprietary mobile browser that accelerates page loading times is a Kindle Fire exclusive, but what if Amazon has bolder ambitions here?

Amazon is a major disrupter today. Board rooms at several tech titans are no doubt loading up on aspirin bottles in response.

If you want to see how the tablet wars play out heading into the holidays, consider adding Barnes & Noble, Amazon.com, and Apple to My Watchlist.

The Motley Fool owns shares of Apple, Research In Motion, and Microsoft. Motley Fool newsletter services have recommended buying shares of Netflix, Microsoft, Apple, and Amazon.com. Motley Fool newsletter services have recommended creating a bear put spread position in Netflix, as well as creating a bull call spread position in Microsoft and Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story, except for Netflix. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.


Read/Post Comments (7) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 28, 2011, at 12:42 PM, jdmeck wrote:

    When it comes to Pads, it's now a 2 company race. All others are history... for now. I don't see this hurting Apple much. Most people buying the fire probably never would have bought the iPad anyway.

  • Report this Comment On September 28, 2011, at 1:05 PM, AlbertHall wrote:

    You're not the first Fool to suggest headaches for Apple from some product. Apple just keeps laughing all the way to the bank!

  • Report this Comment On September 28, 2011, at 2:00 PM, dmburke11 wrote:

    I don't see how anyone could suggest that this does not affect Apple.

    It seems extremely plausible that some people who were trying to convince themselves to spend $500 on an iPad, would definitely be willing to spend $200 on this.

    It's not like anyone is saying Apple is in trouble, but it's crazy not to think that Amazon could cut into some of Apple's growth opportunity.

  • Report this Comment On September 28, 2011, at 2:31 PM, setht23 wrote:

    I would have to agree with jdmeck. The Kindle Fire sounds like a great budget tablet. But someone who was going to buy the Ipad2 isn't going to settle for the Fire. The hardware, and capability gaps are just too big right now.

  • Report this Comment On September 28, 2011, at 2:36 PM, kariku wrote:

    "...people who were trying to convince themselves to spend $500 on an iPad, would definitely be willing to spend $200 on this."

    ROFL

    So I'm trying to convince myself to buy an Audi that costs 50k. Next day, Fiat releases a new model that costs 20k, so I immediately buy it instead of the Audi...

  • Report this Comment On September 28, 2011, at 6:04 PM, ConstableOdo wrote:

    I wouldn't buy no damn Fiat in place of an Audi. I'm smart enough to realize that the Audi will hold it's value higher than a Fiat over the long term. And I damn sure wouldn't buy some product that has no track record even for one-third the price. Consumers that would buy the Kindle Fire from Best Buy and Radio Shack are not going to get decent customer support and no one yet is going to be able to vouch for the Kindle Fire quality, either.

    I realize I don't represent every consumer out there, so I need to see actual sales results before I start counting the Amazon tablet as a failure. I wouldn't buy it, but there are plenty of cheapskates in this world who would. I'll admit I'm a bit surprised that there are going to be a lot of consumers that want to view movie content on a 7" tablet, but who knows. If something is cheap enough, maybe consumers will put up with it. When the iPad was first announced, the pundits were howling that nobody wanted to watch content on something the size of the iPad when they had HDTVs in their houses. The pundits were wrong. So maybe I'm wrong to say they won't watch movie content on a 7" display.

    As far as the $199 price is concerned, I still think you're getting what you pay for. 8 GB of memory seems rather paltry when it comes to storing 720p movies or high-quality mp3 files. I'm not saying it's a dealbreaker but it doesn't seem that impressive at all. The Fire honestly seems like a tablet equivalent of a Chromebook. So, let's see what consumers have to say because they're the ones that will be buying it or not. I'm not in the market for a poor man's iPad, so I'll pass.

  • Report this Comment On October 01, 2011, at 10:13 PM, Johnf30 wrote:

    The fact that everyone is praising apple means one thing: Sell the stock, it's going to crash soon.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1560863, ~/Articles/ArticleHandler.aspx, 10/25/2014 3:21:14 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement