New Kindle Fires Can't Hold a Candle to the iPad

As expected, Amazon.com (NASDAQ: AMZN  ) announced an updated Kindle Fire lineup this week. The new devices range in price from $139 for a 7-inch Kindle Fire HD with 8 GB of storage to $579 for an 8.9-inch Kindle Fire HDX with LTE and 64 GB of storage. (It also costs an additional $15 to opt out of "special offers," advertisements that automatically display on the lock screen.)

The new Kindle Fire HDX tablets. Photo: Amazon.com.

As always, Amazon's strategy with the new Kindle Fires has been to pack in as much performance per dollar as possible. This is part of a broader philosophy of aiming to earn money when people use their devices, rather than trying to earn big profits on the initial sale.

However, compared to Apple's (NASDAQ: AAPL  ) iPad, the new versions of the Kindle Fire are likely to be just as unsuccessful as previous iterations. While the new Kindle Fires sport good-looking hardware specifications, Amazon's software ecosystem is vastly inferior to Apple's. As a result, most consumers have been willing to pony up an extra $100-$200 for an iPad, and this will probably remain true this fall.

Performance boost
Amazon's new Kindle HDX line of tablets offer a higher resolution than the Kindle Fire HD line introduced last year: 1,920 x 1,200 for the 7-inch model, and 2,560 x 1,600 for the 8.9-inch model. These compare to a 1,280 x 800 resolution on the 7-inch Kindle Fire HD.

To support these new "Retina"-type displays, Amazon has upgraded from a dual-core 1.5 GHz processor supplied by Texas Instruments to a quad-core 2.2 GHz Qualcomm Snapdragon 800 processor. The new processor is three times more powerful than the Kindle Fire HD processor and is also expected to provide better graphics performance.

New features
Amazon has also added some new features this year. One feature is the "Mayday" button, which instantly links you to live tech support (24/7) on a video call (although the tech support person cannot see you). The tech support agents will be able to walk customers through solutions for any problems they encounter, and will even be able to remotely control the tablet if necessary.

Amazon is also adding new features for watching TV and movies. First, Amazon will allow Prime members to download Prime Instant Video content to their tablets, enabling offline viewing. Amazon also introduced a feature called "Second Screen," which will beam video content to a TV while allowing the user to do something else on the tablet.

Still not a competitor
Many media outlets have portrayed the new Kindle Fire lineup as a significant threat to Apple. However, I see no reason to believe that this iteration will be any more successful than the last batch.

First, Amazon has followed Google by raising the starting price of its 7-inch Kindle Fire HDX tablet to $229, the same price as the new Nexus 7 tablet. This moves it $30 closer in price to the iPad Mini. (People who are really looking for a budget tablet will drop down to the $139 Kindle Fire HD, but those people would never have bought an iPad anyway.)

Amazon hopes to win some customers away from Apple's iPad Mini. Photo: Apple.

Second, Amazon cannot match the iPad ecosystem. Canalys recently condemned Android tablets for having much lower-quality tablet apps, not to mention a huge numerical deficiency (375,000 iPad-optimized apps, vs. less than 100,000 tablet-optimized Android apps).

Unfortunately, it gets worse. Amazon does not allow Kindle Fire users to access the Google Play store, sending customers to the Amazon app store instead. Kindle Fire tablets therefore have an even worse selection of apps than other Android competitors such as the Nexus 7.

The result is a huge customer preference for the iPad. The overwhelming popularity of the iPad repeatedly shows up in web usage statistics. While the U.S. is by far Amazon's top market for Kindle Fire tablets, iPads represent a whopping 84% of U.S./Canada web traffic, compared to less than 6% for Amazon tablets!

No threat at all
Amazon will probably sell 5 million to 10 million tablets this fall and then very little thereafter, as has apparently been the case during the last 2 product cycles. By contrast, Apple sold nearly 23 million iPads in the 2012 fall quarter despite severe supply constraints. With Apple expected to release a 5th-generation full-size iPad and a 2nd-generation iPad Mini next month, there is every reason to believe that it will surpass last year's total this fall.

Amazon's new tablets may be worth a look for Prime members who watch Prime Instant Video a lot and don't want to pay much for a tablet. However, they are not likely to have a major impact on Amazon's revenue or earnings, and will not win many customers away from Apple's iPad.

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Read/Post Comments (3) | Recommend This Article (3)

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 26, 2013, at 6:21 PM, Shiroto wrote:

    As Wozniak noted, to really appreciate an Apple product you need to hold it in your hands, and I suspect that many people will continue to appreciate the craftsmanship of Apple's iPad, as well as the ecosystem benefits you mention, over competing products.

    I do find the instant help button sort of amusing, since it tends to suggest that Kindle users are more likely to need such assistance with their device. I have never found such a resource necessary for my iPad or my iPhone. At the same time, however, I am sure its a reassuring idea for those uncomfortable or unfamiliar with computer type devices, and I can see other mfg's, including Apple, adding at least an instant tech support messaging function.

  • Report this Comment On September 26, 2013, at 6:35 PM, IloveLinux wrote:

    Hi, Adam. Apple has real world stores where consumers can see new products, ask questions of their minions and play with the devices. Compare that to my trying to see a Nexus 7 at Staples this week. It was broken and their other tablets like the New Samsung had been locked by other customers.

    I rooted a tablet a few days ago. It wasn't a name brand but now it will only work with the stock ROM. The CM ROM I had used no longer works nor will any other ROM. There is a fix but if this was a iPad I could un jailbreak it and pop into a store for FREE help. That said, I love Android but Apples help and product quality is a big advantage. Those who don't care about tech help or focused just on price can avoid Apple.

    The eco-systems are mostly equal as most of the best known apps exist on the Play store. Amazon's new tablet is aimed at Amazon users.

    Best is subjective and based on a person needs. The iPad Mini has 512 mg RAM and a slower processor then even a first generation Nexus 7 and its a turtle compared to the new Fire. We have choices and that helps us all.

  • Report this Comment On October 11, 2013, at 12:22 PM, mmeytin wrote:

    The one big reason I pre-ordered Kindle HDX, as compared to getting iPad Mini is availability of Amazon FreeTime, i.e. ability to setup separate profiles for children in the family, including time and content restrictions, and support for separate profiles on the device. I understand that Apple is trying to get every person in the household to own an iDevice, but it's just not going to happen in many families with children. If Amazon plays it right, this could be a big selling point for their tablets.

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