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If you take one thing away from the unveiling of Amazon.com's (Nasdaq: AMZN) new tablet it should be this: When Jeff Bezos unveiled the price at today's press conference, the person sitting next to me gasped.
Only $199 for that sharp-looking of a tablet?
If you've been holding out on buying an iPad in hopes of a more viable competitor, your time has come. Today, Amazon unveiled its new Kindle Fire. I was at the press conference where the tablet was unveiled and will have more analysis below, but first, the details:
The tablet also lacks a camera, there's no mention of HDMI out support, and it is Wi-Fi only, meaning users won't have the option of getting 3G data service from telecom partners such as Verizon (NYSE: VZ) or AT&T (NYSE: T). For some, that will be a deal-breaker.
The advantages
The obvious importance of Amazon's tablet is that Apple finally has a competitor in the tablet space that attacks some of its core strengths. Amazon isn't failing to undercut Apple like other (failed) rivals have. It's going for an entirely different price segment. Also, Amazon is really focusing on its media offerings. Poor media management has long been a failing of Android offerings in general and will offer something unique that can compete with iTunes and its grip on digital distribution.
The potential
Last quarter, Apple moved 9.2 million iPads, and in the face of several highly promoted tablet launches with large marketing budgets, grew its market share. The number of iPads sold will only accelerate this holiday season. The hope for Amazon investors is that the Kindle Fire will ride aggressive pricing, marketing, brand recognition with the Kindle name, and its unique offerings -- which make it distinct from other Android tablets -- to become the clear No. 2 behind Apple in coming quarters.
That should be an obtainable goal. Other Android tablets are falling flat and Amazon is offering the best-priced Android tablet (you'd actually want to buy) with the best bundled options. Yes, some missing features will turn users off, but the lower price point will attract more. It's clear Amazon had to cut some corners on the hardware end. Development work was clearly focused on the software side, and that was the right call to best utilize the company's strengths while getting the tablet to market in time for the holiday season. Make no mistake: This is a low-margin Trojan horse to pick up mind share in the tablet race before the game is over.
For Amazon, a tablet is a natural fit for many of its initiatives and has limited downside. Amazon has put big bets behind delivering digital media, but has seen its market share stagnate. For example, in online video-on-demand, even Wal-Mart's (NYSE: WMT) Vudu has caught up with Amazon's market share, while Apple continues to control 66% of the market. Apple has proven that consumers prefer consuming digital content in the mobile space. For Amazon, this is a natural package for pushing several initiatives it has already placed tremendous resources behind. It's an extension of where the company has been headed for years.
So don't judge the Kindle Fire as the "iPad Killer" yet, because in the short run, it will fail to live up to the hype. The key point is that it doesn't need to "kill" the iPad to be successful. By proving itself as the established leader in Android tablets, the company will get more than a good return on its investments even if the space is evenly split. Amazon will increase engagement across its services, and drive adoption of Prime -- a service which drives the holy grail of Internet companies -- reliable, low churn, recurring revenue.
iPad Killer? No. Great product that will rule the Android tablet world? Yes.
To stay updated on all news surrounding Amazon, make sure to add the company to our free My Watchlist feature. It'll provide complete follow-up news and analysis on the company's tablet offerings leading up to the Kindle Fire's Nov. 15 launch. To add Amazon to My Watchlist, click here -- it's free!