Tablet wars set for Apple vs Amazon head-to-head
Content is king. Especially if it subsidises hardware
If Amazon makes enough tablets and prices them right, the company will sell lots of the gadgets, according to Forrester Research's Sarah Rotman Epps.
"If [Amazon's tablet] is launched at the right price with enough supply, we see Amazon's tablet easily selling 3m to 5m units in Q4 alone," she said.
Apple sold 7.3m iPads in Q4 2010, and is likely to sell a whole lot more in Q4 2011.
But Rotman Epps has a point. Amazon could be a very strong threat to the iPad's lead in a way that no over tablet has yet shown itself to be.
Amazon, like Apple and unlike most tablet makers, sells content. [Samsung does so too, but it relies entirely on third-parties.]
Unlike even Apple, Amazon reasons it can sell more hardware if it sells the gadgets cheaply, funded by the profits it makes selling e-books and such.
Hence the £111 Wi-Fi only Kindle - and the even cheaper-but-advertising-funded one it sells in the States. Sceptics sometimes suggest all these Kindles are being used by freetards who've Torrented e-book compendia, but Amazon says it is selling more e-books than paperbacks in the States, and more of the digital volumes than hardbacks here in the UK.
Of course, if Amazon decides it can price its tablets to match or beat Apple's only slightly, Rotman Epps may be disappointed. But only numerically. Whatever the price of its tablets, Amazon's Kindle brand is strong, and the company will, like Apple, spend much more on advertising than other tablet sellers. ®
Cheap Android tablets sell well
Cheap Android tablets sell well in Brazil, Russia, India and China. That's where nearly half of the people in the world live. They sell so well that hundreds of manufacturers are killing each other with low margins to get market share, or just even a little profit. Some of their output is even leaking out here on eBay. Cheap Android tablets sell well in other places too, but in BRIC they're rocking the world.
Android tablets may be the platform that brings the rest of the world online. It's got everything: low power, long battery life, low cost, high utility, wifi, carryability, hideability. Some of them can be read in harsh sunlight. Yes, the poor response of the resistive displays and low-spec processors make Transformer's poorer cousins unsat for Western use. But if your village has poor or intermittent power and you need to Google how to pump a well or find out if these red bumps on your skin are fatal, you don't care if the thing can play Angry Birds. In a nation of the blind, the one-eyed man is king. To most folks in this world the ability to Google stuff is of far more value than NetFlix, iMovie and GarageBand.
When they come online I, for one, am eager to hear what they have to say - to meet them online and engage with them. They have as many smart people among them as we do, and the global conversation may be improved. I hope we don't scare them off.
And in those nations amongst the few who have good money, the iPad sells well too, as it should - it's nice gear. Where most of the world lives money isn't something easily got for most people so for the rest it's nice there are these other things that can be had that are so useful.
We don' need no steenkeen titles
Mike, I think you're vastly overestimating the number of Xooms and Tabs that have actually sold (as oppose to being sat on warehouse shelves). Plus it would be amazing if ASUS were selling 1M transformers a month given they said a couple of months back they were only making 300,000 a month. I think it's likely ASUS are selling about that many.
Apple has (depending on your source of information) between 80 and 95% of the existing in use tablets, and they're selling as many as they can make too, which I suspect may be as many or more than ASUS can make. Samsung are selling no Tabs at all in the EU thanks to Apple's legal attack dogs and the Xoom... did the Xoom ever actually launch in the EU at all?
Ask yourself : how many iPads do you actually see people using, and how many of the competition?
I agree with your fundamental point though - there's a bare minimum cost for making a tablet that doesn't feel like a piece of crap and if you want to compete with the iPad, your tablet has to not feel like a piece of crap. The problem is then being able to do it cheaper than Apple, who benefit from massive negotiation leverage with suppliers.
I make technology product that people will like
I market said product in way that appeals to all ages
I put a decent price tag on item to bring in a nice profit margin
I develop my product lines in keeping with changes in consumer needs and requirements
I will be > all tech companies in the world.
I will fail like the rest.
you forget amazon tends to sell things at a loss, just like games consoles, money is made on content
The reason why Amazon can sell the Kindle so cheap is (wait for it) because it's cheap. If HP can't get the bill of materials for the OuchPad much below that of an iPad, then how exactly are Amazon? I bet HP buys a tonne more components than Amazon ever do.
But wait, they can subsidise it with content! Again, how? What content does Amazon have access to that Apple don't? It's essentially the same music, books and films from the same media companies as Apple. So, I don't suppose the wholesale price is going to be much different. And we know that Apple doesn't really make much profit on the content -- it's used more as a reason to support their hardware business. So, how is Amazon going to reverse this model, while still keeping the content competitive withApple? Answer, they can't.
The only thing I can see the, doing is some sort of subscription pricing. But then, surely the network operators would be more successful selling tablets today, if this is how people wanted to subsidise a tablet...
Has this Forrester researcher actually done any sums?