Tech Fortune’s Apple 2.0 blog reports today that Forrester analyst Sarah Rotman Epps has said that Amazon’s forthcoming Android tablet will be a worthy competitor for the iPad in terms of “price, content, and commerce.” She predicts that the Amazon tablet, if launched at a suitable price, could sell between three to five million units in Q4, enough to disrupt the product strategy of not just Apple, but other tablet manufacturers. She also says that the fact that Amazon is able to sell its hardware at a loss, which it did with the Kindle, makes it a “nasty competitor.” According to Epps, the fact that most of Apple’s revenue still comes from hardware also gives Amazon an advantage, because it does n't have to make a profit from hardware sales. Finally, Epps makes the bold prediction that in a year’s time, “‘Amazon’ will be synonymous with ‘Android’ on tablets, a strong second to Apple’s iPad.”

Source: Forrester: Amazon's tablet will bury the iPad - Apple 2.0 - Fortune Tech
http://blogs.forrester.com/sarah_rot...ts_new_frenemy

Amazon could certainly sell their tablet at a loss in order to try to gain market share, but seriously, is that a viable strategy with a tablet?

With a Kindle you have a captive book purchasing consumer who will be forced to purchase books from you at a 90% profit margin so you can afford to sell the hardware at a loss as you will make it up on book sales.

Unless they lock down the tablet and force everyone to buy apps through amazon, AND figure out a way to get several hundred thousand apps in their app store to compete with Apple, what's the draw that will guarantee you a profit in the hardware+software purchase combo?

Even Amazon cannot afford to lose money on 5 million tablets and not have a plan to recover that...

-t

Perhaps Amazon can give developers free or substantially discounted "Cloud Space"? That would be a significant benefit to developers. For "Cable Cutters", Amazon's TV season pass is cheaper than iTunes and the pricing structure is much more affordable. If they can connect their Instant Video to their tablet, it would be successful. For the most part, all of their media is cheaper. They have the pieces they just have to put it together.

If the price fixing lawsuit is successful, this could help their tablet efforts. Obviously, that is a BIG "IF"!

But you can't lose money on every tablet sold and make it up in volume...

If they lose $100 on every device sold - enough to make price a viable attraction - and their App Store uses a 30% margin model like Apple's does, then in apps alone they would need to sell $300 worth to EVERY customer just to break even, not to mention make a profit...

Seems like a tough way to enter the market.

How do you fund development and upgrades?

-t

Originally Posted by thewitt

Amazon could certainly sell their tablet at a loss in order to try to gain market share, but seriously, is that a viable strategy with a tablet?

With a Kindle you have a captive book purchasing consumer who will be forced to purchase books from you at a 90% profit margin so you can afford to sell the hardware at a loss as you will make it up on book sales.

Unless they lock down the tablet and force everyone to buy apps through amazon, AND figure out a way to get several hundred thousand apps in their app store to compete with Apple, what's the draw that will guarantee you a profit in the hardware+software purchase combo?

Even Amazon cannot afford to lose money on 5 million tablets and not have a plan to recover that...

-t

You're assuming that "Amazon Tablet" owners won't buy books. In fact, the same model that works with the Kindle will apply to Amazon tablet sales.

No, that model does not work.

With the kindle, the customer is captive and the device is worthless without constantly purchasing new content - that is books.

If you stop buying new books your kindle is dead full of already read content.

The same is not true of a tablet.

- t

Originally Posted by thewitt

No, that model does not work.

With the kindle, the customer is captive and the device is worthless without constantly purchasing new content - that is books.

If you stop buying new books your kindle is dead full of already read content.

The same is not true of a tablet.

- t

You make a strong point, but I doubt that at the prices being discussed this will be an ordinary Android tablet. Albeit subtley, it will almost undoubtedly be locked, in more ways than one, to Amazon's retail operation. Judging from what we have seen in the past, it's bound to contain *something* really special that is going to please a lot of us.

Hmm. We'll see. Lots of competitors say they're going to kill the iPad, and they haven't yet!

My brother drug us into the Best Buy Mobile store in the mall tonight and, yep, still happy I picked the iPad!

Originally Posted by info

You make a strong point, but I doubt that at the prices being discussed this will be an ordinary Android tablet. Albeit subtley, it will almost undoubtedly be locked, in more ways than one, to Amazon's retail operation. Judging from what we have seen in the past, it's bound to contain *something* really special that is going to please a lot of us.

If your success model is to lose money on the hardware and try to make it up on software and content - AND you are going up againt the most successful hardware and software model in the last 25 years, that's a very tall order.

Apple has amassed a huge pile of cash because they make a great product, and make money on the hardware, software AND content...

-t

Originally Posted by GoPackGo

Hmm. We'll see. Lots of competitors say they're going to kill the iPad, and they haven't yet!

My brother drug us into the Best Buy Mobile store in the mall tonight and, yep, still happy I picked the iPad!

Definitely. I don't think for a moment that it will hold a candle to the iPad, rather it will more likely enhance the experience of using Amazon.