I hope that J.P. Morgan analyst Mark Moskowitz wears flame retardant briefs and slacks, because after his recent statement regarding the Kindle Fire and iPad, he’s going to need protection from the fire and brimstone Apple-haters everywhere are going to be spewing at him. According to All Things D, after meeting with Apple CEO Tim Cook and CFO Peter Oppehheimer, Moskowitz wrote a note to clients:
“If anything, we think that Apple views the Kindle Fire as a device that stands to bring incremental consumers to the tablet market, and here, these consumers could gravitate to more feature-rich experiences. We think that Apple is not seeing much pressure from lower-priced tablets.”
If Moskowitz is correct in his assessment of Apple, there seems to not to be a lot of concern surrounding the mountain of Kindle Fire purchases, believed to be somewhere around 6 million. It may come as a surprise that Cupertino does not view the Fire as a threat a to the iPad, and that it may even believe the iPad will eventually benefit from Kindle Fire sales. Could Amazon’s tablet in fact end up being a boon to the Apple’s device? It’s more likely than you might think.
Despite doing things very differently on a physical and software level, the iPad and Kindle do have a shared strength: Their ecosystems. Apple has iTunes and the App Store, and Amazon has their own stores and integrated services. There are arguments for either being the better ecosystem, so why would a consumer switch to the more expensive tablet? Why would users choose to switch from one rich ecosystem for another? What is ultimately comes down to is how tablets are used. Although conventional wisdom says that tablets are media consumption devices for voraciously consuming music and video, is that true? Yes, tablets are used for that kind of entertainment, but the majority of their use is actually rather mundane. Take a gander at the chart below and you’ll notice some very striking statistics:
Look at the two major uses: Browsing the Internet, and reading and sending email. Those two activities compose 40% of the time spent on tablets, and they’re activities that the iPad arguably does much better than the Fire, which didn’t even launch with a native email application. Certainly, there will be Amazon customers who love the Fire experience and will not want to leave it, but for the majority of the use-cases listed above, the iPad is simply a better option. This brings it down to an issue of cost. As consumers generally become more acquainted with the technology, the price barrier will become less of an issue. Initially, the Fire has been a great success, no doubt buoyed by it’s incredibly low price-point and integrated Amazon services, but in time, those services and that price will not be enough to convince users to settle for the current, mediocre Fire.
That leads us to the very next point, which is that Amazon is rumored to very soon release a second generation Fire. According to a variety of sources, it would be a larger tablet made to compete more directly with the iPad. It may seem awfully soon to consider another iteration, but some of the impetus to put out the Fire was likely driven by the desire to get the product to market before the holidays. But if we’re to expect a completely revamped Kindle Fire that would be able to compete with the iPad, we’re forgetting what Amazon’s purpose behind the tablet is. They’re not selling a physical device, they’re selling services, and that’s where Apple and Amazon differ. Simply making the tablet bigger will not be enough, and until Amazon is willing to build a device that is competitive in the real areas of tablet use, it will risk being the Big Wheels of the tablet family.
A few days earlier, Moskowitz put forth a similar metaphor:
“We think that, over time, consumers may come away disappointed with the Kindle Fire’s lack of functionality and smaller screen size. In our view, the Kindle Fire is the current Netbook of the media tablet market. The bigger question is whether the Fire evolves into a bona fide tablet in its next-generation release.”
The Fire in its current iteration is not a long term problem for the iPad, and it could, in a strange spark of fate, serve to kindle sales of Apple’s dream machine. Unless the Fire is revamped to provide greater day-to-day usability, it may eventually be seen as the beginner’s tablet.
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