Why Amazon's Kindle Fire Is Not a Threat to Apple or Google

Source: Amazon

The Kindle Fire line of tablets from Amazon (NASDAQ: AMZN  ) seems like an incredible bargain compared to higher-priced options. The latest entry, the Kindle Fire HDX, has technical specs that rival or surpass the new iPad Air from Apple (NASDAQ: AAPL  ) in most areas, while selling for a significantly lower price. The lower-end models are outrageously inexpensive for a tablet, with the most basic version selling for just $139. But a tablet is more than just technical specs, and in the case of the Kindle Fire, you get what you pay for. While the Kindle Fire seems to be a big threat to Google's and Apple's mobile business models, it's really nothing more than a niche product. 

Limited price, limited options
Amazon sells its tablets essentially at cost, looking to make money when people use the tablets to buy things like movies and books. Kindle Fire tablets run an operating system based on Google's (NASDAQ: GOOGL  ) Android, but heavily modified to allow Amazon to control the experience. The tablets are built specifically to sell content through Amazon, and they work wonderfully for that purpose.

But the low cost comes at a price. There's no Google Play store, meaning that all apps must come from Amazon's app store. This means that Amazon has direct control over what apps you'll be able to use, and some significant omissions may be enough to avoid the device entirely. There are ways around this, but nothing the average consumer could pull off.

First, users have absolutely no choice when it comes to the browser. All Kindle Fire tablets run Amazon's Silk browser by default, and it's not possible to download an alternative from Amazon. Also missing are most of Google's apps, like Gmail, Maps, and YouTube, as well as apps like Dropbox. Again, it's possible to install these apps using various methods posted on the web, but it seems simpler to just buy a normal Android tablet and avoid the hassle.

One of the reasons why Android has been so successful is because it's open. Anyone can build an app and put it in the app store, even if it competes with a Google product. Imagine if Google banned the Dropbox app because it competes with Google Drive, or if it banned the Pandora app because it wanted people to use its own music service. Android users would not be happy.

Since Google gives its Android operating system away for free, the company relies on selling apps through the Google Play store -- as well as getting people to use its services -- in order to monetize the platform. With the Kindle Fire bypassing Google Play and not offering Google's services, Amazon's tablets represent a threat to Google's mobile business model. If the Kindle Fire were to pick up a significant share of the tablet market, Google would essentially be subsidizing a major competitor.  

For Apple, the threat comes from the Kindle Fire HDX matching the high-end specs of the iPad while selling for a far lower price. The iPad is a premium product, but when a Kindle Fire tablet with the same or better hardware sells for a significantly lower price, it brings into question whether Apple will be able to maintain its premium pricing.

The good news for both Google and Apple is that the Kindle Fire's software, with the lack of major apps and the Amazon-centric design, makes the line of tablets undesirable to anyone looking for the full tablet experience. The hardware isn't the main selling point of a tablet, the experience is, and both Android tablets and iPads trump the Kindle Fire in that regard. The Kindle Fire is a niche product at best, and Amazon investors should be questioning the wisdom of selling hardware at-cost when Amazon's apps are already available on Android and iOS.    

Who, exactly, needs Mayday?
One of the biggest new features to come with the Kindle Fire HDX is the Mayday customer service feature. By tapping on the Mayday button, users will be connected with a customer service representative within 15 seconds, with a live video popping up on the screen. This representative can help users by explaining a feature, drawing things on the screen, or taking over the tablet and doing things directly. "Revolutionary" is the word used by Amazon to describe the feature.

But here's the problem: Mayday is an admission that the Kindle Fire is not intuitive enough to use. The user interface should explain itself, and the fact that people even need the Mayday feature is an admission that this isn't the case. Or it's an admission that Amazon thinks its customers can't figure out a simple touch-screen device. Either way, it's more pointless than revolutionary.

Why do iPhones and iPads not have a feature like Mayday? Because they don't need it. The devices are intuitive, and it's simple to figure out how things work. The goal of UI design is to not need to explain how to use the device. If I were an Amazon investor, I'd be questioning why the company was spending money on the Mayday system at all. When customer service is the most-touted feature of a device, something is seriously wrong.

The bottom line
The market share that the Kindle fire can attain is limited by the crippled functionality of the devices. If you want to buy an Amazon store front, the Kindle Fire is perfect for you. I suspect that most people would prefer to pay a bit more for an Android tablet or an iPad and be able to download any app that they want. Amazon's strategy of selling the devices at cost prevents the Kindle Fire from offering all of the features of normal tablets, since that would defeat the purpose of Amazon selling tablets in the first place. The Kindle Fire is not a real threat to Apple or Google because, ultimately, most people won't accept the restrictions that come with it.

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Read/Post Comments (5) | Recommend This Article (3)

Comments from our Foolish Readers

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  • Report this Comment On January 09, 2014, at 2:48 PM, ticker987 wrote:

    The author claims the biggest shortfall of this kindle fire is it's limitations. I would disagree with you. Apple has severe limitations compared to Android and yet Apple is selling tons. As Apple has shown people just want a simple streamlined experience when using electronic items. And they like to shop. When you mix the two, you end up with a product people will like, as Amazon has shown. If it was simply about the limitations, then Android would have bankrupted Apple by now. A family can only have so many tablets. As soon as someone buys a kindle, that eliminates a potential Apple of Google customer. SInce kindle fire has become the third most popular tablet sold, it's obvious that it is ALREADY a threat to Apple and Google. Only time will tell what happens in the future BUT, from the past, only the company with most cash on hand (to handle mishaps - as they ALWAYS happen sooner or later) will win in the long term. Apple has had a history of storing massive cash piles in the past. That's what helped them survive those decades of declining business. But they are loosening their purse strings with the construction of the most massive complex in Cupertino, CA to house all their employees. Google is just plain dumb when it comes up with all the ways to spend their cash. But Amazon isn't really any better in this aspect since most quarters it loses money by cutting prices to get more customers. People behave in surprising ways and, as we've seen MANY TIMES, it's not always the technically superior product that wins out. The only way to REALLY see if it's a threat is hindsight. Just like Cray Computer didn't think IBM was a threat until it was too late. IBM didn't think Microsoft didn't think Google was a threat until it was too late. Google didn't think Facebook was a threat until it was too late. Facebook didn't think Twitter was a threat until it was too late. Twitter didn't think Snap Chat was a threat until it was too late. Like I said, only time will tell.

  • Report this Comment On January 09, 2014, at 7:58 PM, dinkeldoo wrote:

    This may be true currently, but I bet you as usual Jeff is looking 5 years down the road. Let's revisit this in a couple of years and see what you think. I'll bet you things will look substantially different in that time frame.

  • Report this Comment On January 10, 2014, at 11:20 AM, outtaammo wrote:

    If "Mayday is an admission that the Kindle Fire is not intuitive enough to use", then what is the Genius Bar at Apple stores?

    The writer's position that "When customer service is the most-touted feature of a device, something is seriously wrong." only demonstrates that he's never been on the delivery end of technical customer support.

    Most users need help once in a while.

  • Report this Comment On January 11, 2014, at 9:43 AM, Opticalinch wrote:

    Most users are incapable of finding Settings and turning on "allow apps from unknown sources?" C'mon. The HDX's processing benchmarks smoke the Nexus 7's, but so many authoritative sounding reviews veer off into la-la land to paint the Fire as something that's inherently inferior to its competitors.

    Tell me what I'm missing out of by not having the Nexus 7? I bought one for my wife before the HDX came out and, other than using the google play store as an alternative to Amazon or 1mobile, I can't find any reason to use inferior hardware that's not premised on emotional appeal.

  • Report this Comment On January 30, 2014, at 4:22 AM, shenmue wrote:

    "Who, exactly, needs Mayday?

    Why do iPhones and iPads not have a feature like Mayday? Because they don't need it. The devices are intuitive, and it's simple to figure out how things work."

    From an anecdotal point of view you'd be surprised. I work in a library and some of our most popular books from the computer section are books on how to work you're iPad. We run internet taster sessions and plenty of people come in with their iPads needing help. Our ebook service works with the iPad and yet we still have people coming in wanting help to set it up.

    Obviously this doesn't just happen with the iPad, we have people coming in for books on Windows, Android and Kindle Fire books too. And these are just the ones who admit they need help and don't have anyone else to turn to.

    Enough people are coming in to make me think Mayday is a good idea and some people both need and appreciate the extra help that is there

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