’s New Smartphone Might Not Play Out Like the Kindle Fire

Although's Fire Kindle tablet has generally under-performed in the market, that does not necessarily mean that the company's new smartphone will follow the same path.

Jun 10, 2014 at 1:30PM

Speculations abound about the new smartphone from online retail giant (NASDAQ:AMZN), expected to launch on June 18, 2014. Some see it as a potential threat to Apple's (NASDAQ:AAPL) iPhone, while others draw a corollary from the less-than-ringing success of Kindle Fire as a sign that the smartphone won't go very far, either.

However, drawing comparisons between tablets and smartphones is fundamentally flawed, as the market dynamics for the two mobile devices are very different.

First-mover advantage
The concept of the tablet has been around for more than two decades, but failed to take off earlier as a consumer product, primarily because early tablets were too heavy and cumbersome to be comfortably held in the palm. Apple's iPad was a revolutionary tablet, the first to gain wide acceptance by consumers.

Looking at the current market shares of the largest tablet vendors, a strong correlation exists between the date of release and the respective tablet market share. The early launchers (Apple and Samsung) enjoy a considerably bigger share of the market compared to the late comers ( and Microsoft). Android has been steadily eating away at Apple's tablet share, simply because it has more device models that help it to exploit a wider range of price points. But, Apple still remains the largest tablet vendor.

Apple had an 83% media tablet market share in 2011, but just 32.5% in the first quarter of the current fiscal year.


1Q14 Unit Shipments

1Q14 Market Share

1Q13 Unit Shipments

1Q13 Market Share

Year-over-Year Growth






























Source: IDC Worldwide Quarterly Tablet Tracker (April, 2014)

The iPad enjoyed a virtual monopoly in the market for close to one-and-a-half years, during which it became the de facto standard by which every other tablet was later measured. However, it would be unfair to say that Apple and Samsung are simply enjoying first-mover advantage. Having a great product has undoubtedly been helpful, too.'s Kindle Fire might be a good product, but it came to the market too late, when early leaders had already set the tempo, which explains its under-performance. The same holds true for the Surface Tablet; as Microsoft must have learned by now, having brilliant people who can whiteboard solutions to complex algorithm problems does not always translate to success.

Market saturation
Another very important reason why tablets and smartphones are not in the same league relates to their potential markets. Tablet sales are already showing signs of a decline, with global sales falling 5% in the first quarter of 2014. Longer tablet ownership cycles, and the popularity of phablets, are to blame for this trend.

The market for tablets is much smaller than that for smartphones. According to Gartner, seven smartphones will be sold for each tablet sold this year.

Developed markets are close to hitting a saturation point as far as smartphone and tablet sales are concerned. Growth will, therefore, mainly come from emerging markets. This is great news for's new smartphone, since it will likely be Android-based, and Android smartphones already dominate emerging markets. Moreover, has shown a willingness to sell its hardware at a small loss, as it did with the Kindle Fire, to gain traction.

The concept of first-mover advantage is less apparent when it comes to smartphones, as Windows Phone, the latest entrant into the smartphone market, has succeeded in gaining meaningful traction since its launch, and is growing its share at the fastest pace among all mobile operating systems.

The fact that's smartphone is late to the game might, therefore, not be a major deterrent to its growth.

Foolish bottom line
The fact that's tablet sales have remained sub-par does not automatically mean that the same will happen with its new smartphone. The market dynamics for smartphones are quite different from those of tablets. The features of the new smartphone, and its price points, are likely to play a bigger role in determining whether the new phone becomes successful or not.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Joseph Gacinga has no position in any stocks mentioned. The Motley Fool recommends and Apple. The Motley Fool owns shares of 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.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers