Kindle Fire Heats Up Tablet Market

By Adam Sewall on Nov 15 2011 at 8:00 AM

Amazon has Apple all fired up.

The e-retailer's Kindle Fire, which began shipping Monday, is bringing some heat to the tablet world—and may become the first serious competitor to the iPad. As we all know, Apple has dominated tablet sales: it commands a 67 percent share of the market. But there are early signs that this hold may already be slipping.

When the Fire was available for pre-order, for instance, 2,000 tablets were purchased every hour, beating the pre-sale pace of the iPad and iPad 2. Sales have been so strong Amazon increased manufacturing orders to 5 million from 4 million, which was upped from the original 3.5 million. Meanwhile, iPad sales have slowed.

Enthusiasm for the Fire is a strong sign the tablet market is here to stay. Overall tablet shipments in Q2 rose almost 90 percent from the quarter before and 300 percent from the year-earlier period. In April 2011, Gartner projected there will be 294 million tablets worldwide by 2015—a forecast made so long ago (in the fast-paced world of tech) that Amazon isn’t even listed in the projections.

Tablets have become a big player in online video, with viewers spending about 30 percent more time watching than on desktops, according to Ooyala’s recently released VideoMind Video Index report. It’s clear that Android has thus far been the closest thing to resemble a competitor to the iPad. But even then, the iPad has been dominant in total audience size, accounting for 97 percent of all tablet video plays, according to the VideoMind Video Index. Could enthusiasm for the Fire change all that?

Electronics shopping guide Retrevo.com polled 1,000 consumers. Forty-four percent said they would consider purchasing Amazon's 7-inch tablet at $199 over Apple's 9.7-inch iPad 2, which begins at $499. “Operating System confusion and lack of ‘tablet’ apps on the Android side may have helped keep Android tablets at bay however, the iPad 2 is starting to show its age and the new Kindle Fire is about to make the scene with a very attractive $199 price point,” Andrew Eisner, director of community and content, wrote on Retrevo's company blog.

Pete Cashmore, Founder and CEO of Mashable, echoed Eisner's sentiment. The Fire has access to millions of books, TV shows and movie titles thanks to Amazon's position as a major distributor of media. This, Cashmore reasoned, means Amazon can take a hit selling the device and recoup the loss by selling content. Like Apple, Amazon has been able to control "all the pieces of the puzzle," from building its own faster browser, integrating its own app store and running a modified version of the Android operating system.

"Mark my words: The Amazon Kindle Fire will be the most successful tablet device since the iPad," Cashmore said. "Five hundred dollars is a steep price to pay for many tablet-craving consumers, but paying $200 for a similar device is comparatively painless."

Initial reviews of the Fire have been mixed, focusing on what consumers already know: The Fire lacks the best specs, but it does come at a pretty attractive price point. Only time will tell whether the iPad gets burned or the Fire fizzles out.

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