’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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information