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

While Amazon's Kindle Fire tablets offer impressive hardware specifications and low prices, the crippled experience prevents the tablets from being a serious threat to Google's Android tablets or Apple's iPad.

Jan 9, 2014 at 2:00PM

Amzn Kindle

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.

The tech war doesn't end at tablets
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Timothy Green has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Apple, and Google. The Motley Fool owns shares of Amazon.com, Apple, and Google. 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.

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