90. Amazon's Tablet Poised to Take a Bite out of iPad Sales?

[Article first published as Amazon's Tablet Poised to Take a Bite out of iPad sales? on Blogcritics.]

OK we’re going to do a little bit of word association.  I’m going to say a word and then you tell me what the first thing that comes to your mind is.  The word is…

TABLET.

So what image flashed across your mind?  The Ten Commandments? The Rosetta Stone?  Nah, chances are, for the majority of you I would think, the image you saw in your head was that of an Apple iPad.  And that makes sense.  When it comes to tablet computing the iPad is in fact the most popular device currently available on the market, with 29 million sold in just the first 15 months the device was on the shelf.   

And the masses love it for a number of reasons, whether that has to do with actual user need and functionality, cool factor, Apple fandom or simply being able to say “I have an iPad.”  So it sells.  At a $499 price point for the entry level model, it’s not really a tough sell to most folks either.  But what if you wanted a tablet but didn’t want an iPad?  What were the options that were available?  Windows 7-based slates were buggy and DOA to begin with.  Android-based units like Samsung’s Galaxy Tab and the Motorola Xoom couldn’t compete on price.  HP’s WebOS-based TouchPad tanked and triggered a fire sale.  Other cheaper models couldn’t compete on quality. 

So there the iPad sits, atop the stack of available tablets, on its golden mobile apple-shaped throne.  All of this bolstered, of course, by Apple’s ferociously loyal fanbase in the cult of Mac.  But I won’t deny the genius of Jobs.  He created a sub-market of computing that there was no real need for by introducing a product, and letting consumers create that need themselves.  Brilliance.  So now we have the current tablet market.  Out-speccing the iPad creates a disadvantage on price, outpricing it means lower quality, and no one has figured out a way to strike that balance and see the same level of success.

As my gaming roots run deep in Street Fighter, this is where I picture “here comes a new challenger!” flying across the screen at the prospect of a new tablet officially being announced this week by Amazon in a Wednesday press event.  And this fight card is shaping up to be a good one as both companies are doing well financially and have strong customer bases.  Both Apple and Amazon have first to market titles for different devices – Apple’s iPad for modern tablet, and Amazon’s Kindle as a modern e-reader.  The real difference between the two giants is tactics and content.

Apple has hardware, and that’s what brings in their dollars.  There’s a healthy amount of profit from hardware sales from the iPad, with Apple pulling down about $200 for each $499 iPad sold.  This contrasts sharply to Amazon’s Kindle strategy, who sells the WiFi model of their Kindle at a loss for $139.  They rely on sales from Amazon.com for their money making, which includes not only e-books, but video streams and music as well.  Logic would dictate that this is the same strategy will be used for the upcoming tablet, and with a projected $249 price tag, that seems highly plausible.

While sales tactics are at opposite ends of the spectrum, it’s going to be content that puts at least a dent in the iPad’s numbers, due in part to delivery through their Amazon Prime subscription program.  I myself am an Amazon Prime customer, and have been for a while so I could save money on 2-day shipping and get a deep discount when I need next-day air.  But over the last year, the Prime service has added a library of on-demand video streams of movies, documentaries and television programs for Prime Customers, which now makes the subscription more than worth the money in my eyes.  Recently they even inked a deal with Fox to add programs like the X-Files and Arrested Development to an already impressive lineup, making the $79/year fee a pretty good deal.  On top of that there’s a lot of potential of that kind of content paired with a mobile Android device for viewing it.  And let’s not forget that it’s sure to have a built in Kindle book reader.

Tablet users generally don’t use their devices for anything heavy or resource intensive, so after email, web, social apps and casual games, my guess is that next on the list is video and music, if my own use of my Droid X is any indication.  If that’s the case then the Kindle Tab doesn’t even have to come close to matching the iPad on specs, as long as it can deliver media content the way I think it can.  I’m not saying it will dethrone Apple on the tablet front, but it has the potential to at least pick up a decent chunk of prospective tablet buyers that were eyeing the iPad.  It’ll be priced right and have an extensive library behind it.

27. tablets - the final frontier

apple ipad

these are the voyages of the starship ente... oh nevermind.

tablets, man.  tablets.  they're the latest front on which the mobile wars rage.  desktops and laptops have pretty much become commoditized, and even the cell phone war has been a game of "who can beat the iphone," even though in my opinion the droid x does (shh, don't tell anyone, i'm trying to be impartial).  after the surge of netbooks since 2007, they and their cousins the tablets would naturally have to come next.

so, next question - what the hell IS a tablet?  why are they here?  and what do they want with us?  with the release of the ipad earlier this year, the big tech giants aren't exactly in agreement - steve jobs says the ipad and tablets exemplifies the end of the "mouse and keyboard" pc era, while steve ballmer's opinion is basically that the ipad and other tablet devices ARE, in fact, pc's.  this all aside, "tablets," as they were, have been around for a pretty long time.  we all (well some of us anyway) remember running windows xp tablet edition, waaaay back when the definition of a tablet pc really wasn't much more than a laptop with an outward facing screen and some limited pen input.

that definition has changed from then to now.  a lot.  and it only partially has to do with technology, as far as being an evolution from the netbook.  beyond that, the definition of tablet really changed with an evolved definition of the user. you have your business users, home users and tech enthusiasts - the trinity that ruled consumer electronics for so long, and now a new class - the mobile media user.  these users don't want high-grade graphics and cpu power for gaming or power for editing.  they're not concerned with exchange push or being able to open up office to do some work.  they're on the move - watching youtube on the train or tv through hulu on the bus, running fluff web apps and playing low-res, low-power games (that can still be extremely fun).  so all this considered, what is a tablet, finally?  with all the opinions floating around it's far to say that it's a hybrid.  a "netbook plus," built for media consumption.  less than a laptop or notebook, a low-power device running on something like an ARM or intel atom processors with a light operating system, that doesn't have the power to run high-end games and intensive applications.  more than a cell phone, with larger screens for better media viewing and everyday usability.

android-powered archos 5 tablet

and understanding this concept is what will sell mobile units in today's media-hungry markets.  it's why smartphone sales have skyrocketed in the last few years.  apple does, which is why their ipad is at the forefront of the market.  microsoft on the other hand, does not.  at least to me.  steve ballmer's goal is now to focus a big push on getting windows 7 on a tablet form-factor unit, as is their solution to most things - put some windows on it, to make windows a ubiquitous platform for every user.  not because he thinks it's a viable platform, but because he needs to compete with apple.  from the recent microsoft financial analysts meeting:

"they sold certainly more than I'd like them to sell, let me just be clear about that.  We think about that.  We think about that in competitive sense.  And for us, then, the job is to say, Okay, we have a lot of IP, we have a lot of good software in this area, we've done a lot of work on ink and touch and everything else -- we have got to make things happen."

ironically this comes almost simultaneously to killing the their own courier tablet project, which sucks, because that thing looked straight awesome.  unfortunately their mobile game still needs some work, from what we've seen of the windows phone 7.  yes, "make things happen" indeed.  windows 7 tablets were shown off at CES 10 in january on an hp slate, but they have since dropped windows 7 in lieu of  the (probably) webOS platform, which they now own through their palm acquisition.  HP's not alone in that decision - others have also skipped over windows 7 in favor of the android platform for their tablet - asus, samsung, and archos just to name a few.

ahhh yes.  android.  a light OS.  the mobile OS of champions.  the OS that gives google a real shot here in the tablet market.  coming off extremely impressive sales of motorola's droid x and other android devices,  it's clear that they're here to stay, and will continue to go head to head with apple for the tablet crown through the number of manufacturers that are adopting android.  HP may be the sleeper in this war - now that their slate will potentially run webOS instead of windows 7, they'll have ownership of both their hardware and software, which is an advantage that only apple currently enjoys.

but let's not forget that blackberry is said to throw their hat in the ring with their "blackpad" in november.  but we'll see how that goes - i'm not sure how a (one can only imagine) business-focused tablet is going to sail too far.  and there's also verizon and motorola's upcoming tablet - the one i'm really excited about, that integrates fios tv into the tablet experience.

so let the war march on.  the end winner is just going to be the consumer, since increased competition is going to force manufacturers to make their products more desirable versus their competitors.  but until the major clash, apple's tablet throne is still intact.