Amazon's new Fire tablet may disrupt the Android market, but it's unlikely to have a significant impact on Apple's iPad business, analysts have claimed.
Earlier today, Amazon CEO Jeff Bezos introduced the Fire, a 7in backlit-colour screen tablet priced at $199 that will start shipping in mid-November.
The Fire is powered by a customised version of Google's Android mobile operating system, has 8GB of storage - half that of the lowest-priced iPad - and weighs about 33% less than Apple's iPad 2. Amazon will sell only a Wi-Fi version of the tablet.
Experts saw it as a negligible threat to Apple's tablet, and cited a variety of reasons.
"Hardly an iPad killer," said Brian White of Ticonderoga Securities. "While Amazon's price point, installed base, digital content and cloud ecosystem will attract a certain consumer demographic to the Kindle Fire, there is still no real competitor to the iPad 2."
'No reason for Apple to worry'
"I think it's more disruptive of the Android tablet market because of its price point," said Carolina Milanesi, an analyst with Gartner. "Android competitors like Samsung will be impacted by the Fire's price, much more so than something that has the Apple logo on it. So there's no reason why Apple should worry."
Milanesi sees the Fire as "all about consumption and buying behaviour" because of who is selling it, its size and hardware specifications, and the tight integration with Amazon's online markets for apps, books, music and movies.
"A 7in tablet is for content consumption," she said, "not for the kind of content creation that can be done on the iPad."
She also noted that the Fire lacks some of the iPad's features, including a microphone and camera. "There are lots of things that are missing from the Fire," she said.
Not that that wasn't smart of Amazon, which is selling the Fire to push the products and services it sells.
"The point of the Fire is to sell more content, and keep customers within the Amazon ecosystem," she said, pointing out that there's no need for, say, a camera when Amazon can't parley that into a sale of some sort.
Ezra Gottheil, an analyst for Technology Business Research, also thought that the Fire won't pose an instant threat to the iPad. In fact, the Fire's price only reinforces the split nature of the tablet market.
"The under-$200 price point has been thriving, while the Android competitors who have priced their tablets at Apple's range have not," said Gottheil. "What's emerged is a two-level market."
Gottheil cited the success of Amazon's low-priced Kindle e-readers and the race to acquire an HP TouchPad when that company dumped them at fire sale prices last month.
"Is there going to be overlap between the Fire and the iPad? Sure," said Gottheil. "I don't have any doubt that the Fire will have success. But for the most part the market has already bifurcated. And Apple owns, and will continue to own, the higher end of the tablet market."
Some consumers will opt for the lower priced Fire. "There will be a little loss to Apple, but for the most part, consumers will ask themselves this question: 'Do I want a $200 tablet or a $500 tablet?'" said Gottheil.
And those who answer the latter will continue to head to Apple.
Different market than iPad
But both Milanesi and Gottheil acknowledged that Amazon will be the most serious threat Apple has yet faced in the tablet market. And they each cited Amazon's content-selling capabilities as the reason.
"I think this really proves the point that an end-to-end concept is the right one," Milanesi said. "It's not just about the hardware," she added, something that Apple has proven. "It's all about the right ecosystem."
White was more pessimistic about the Fire's chances of unseating the iPad as the tablet leader.
"Essentially, we believe the Kindle Fire addresses a different market than the iPad 2, a tablet-light user on a tight budget that may not have yet purchased a tablet or already use a Kindle," he said.
Longer term, however, Gottheil was ready to predict that Apple will answer the Fire with its own 7in tablet, and price that version of the iPad lower than the current 10in model. "Apple will have a 7in iPad that will be less expensive, but not at the totally lower price point of $200," said Gottheil. "That's not in the company's philosophy."
"Apple won't match Amazon's price point, it will continue to be a premium product," she said. "But at some point, they'll have to offer price points under the current $500."
Small tablets no good - Jobs
Gottheil stood by his prognostication even after being reminded that former Apple CEO Steve Jobs said last year that the company would never do a smaller iPad.
Last October, Jobs pooh-poohed the smaller Android tablets that were then starting to appear.
"There are clear limits of how close you can physically place elements on a touch screen," he said at the time. "We think the current crop of 7in tablets are going to be DOA. Their manufacturers will learn the painful lesson that their tablets are too small and increase the size next year."
"Yes, basically he said there was a size below which they won't go," acknowledged Gottheil. "But he said that because Apple didn't, and doesn't, have a 7in tablet."
But White countered by knocking the Fire's size, other hardware limitations and what he called a "tired" interface.
"We find the 7in screen too small for a tablet device, previously highlighted, while the lack of a 3G connection will keep consumers confined to a Wi-Fi world," said White.
Amazon is now taking pre-orders for the Fire from US buyers on its website, but won't start shipping the tablet until November 15.