Amazon Kindle Fire: Tablet Product Strategy Done Right

Today Amazon revealed its new Kindle lineup, including a touchscreen E Ink eReader and Amazon’s first color touchscreen tablet, the Kindle Fire. I can’t say I’m surprised. The day the iPad launched, my colleague James McQuivey wrote that Amazon should “go head to head with Apple on a media tablet.” In March of this year, I wrote that “iPad 2 won’t have much competition in 2011, unless it’s from Amazon,” and more recently I published a report outlining the competitive advantages and disadvantages Amazon’s product strategists will face if they launch a tablet.

Looking back at that report, here’s what we got right:

  • Amazon is competing on price, content, and commerce. The Kindle Fire, a 7-inch Wi-Fi only device, will retail for $199—less than half the price of the iPad, less than the 7-inch Barnes & Noble Nook Color, BlackBerry Playbook, and HTC Flyer. As I predicted, Amazon is indeed drawing on all its content and commerce assets including video, music, games, as well as magazines, apps, and services—the Kindle Fire comes with a 30-day free subscription to Amazon Prime, and a pre-installed Amazon shopping app. It also features a spiffy custom-built browser, called Amazon Silk, which interfaces with EC2, Amazon’s cloud server, to optimize performance. (Meaning: it’s really fast.)
  • Amazon is overcoming challenges to supply, channel, and partnerships. Amazon appears to be overcoming nearly all the weaknesses I foresaw in its product strategy: 1) Supply—Kindle VP Dave Limp says they’re making “millions,” which is good, because that’s how many we expect them to sell. 2) Channel— will be selling the Kindle Fire at its retail partners (Best Buy, Radio Shack) in addition to Amazon.com, which gets more than 80 million unique visitors per month in the US alone. 3) Partnerships—In our most recent report we wrote that Amazon would need to overcome the challenges of co-branding with Google/Android—and they have, by not including any Google or Android branding whatsoever on the device. We think this is a good move if the goal is mass-market adoption.
  • Amazon still lacks a convincing global strategy compared with Apple. At launch, the Kindle Fire will only be available in the US. The iPad is available in 64 countries, and we estimate that 50% of iPad sales in 2011 are outside the US.

And here’s what we missed:

  • We didn’t know for sure what the size and price would be—turns out it’s small (7 inches) and cheap ($199). In the report we surmised that Amazon could launch a 10-inch tablet for $299, and maybe they will, but not today.
  • We didn’t explicitly say that one of the iPad’s great strengths compared with an Amazon tablet is the iPad’s ability to do double-duty as a work and leisure device. The Kindle Fire is solidly a content consumption device, good for media, plus email and Web. It has some productivity apps like QuickOffice, but we won’t see companies like GE and Mercedes Benz deploy the Kindle Fire for their enterprises the way they have with the iPad.

Overall, after seeing the device, our call and recommendations are the same. Amazon will sell millions of tablets, and the rapidfire adoption of the Kindle Fire will give app developers a reason—finally—to develop Android tablet apps. Apple’s place as market leader is secure, but Amazon will be a strong number two, and we expect no other serious tablet competitors until Windows 8 tablets launch.

Update: To be clear, after today's announcement we are going with the low end (3M) of our previous estimate of 3-5 million units sold this holiday season, because Amazon isn't shipping the Kindle Fire until November 15, fairly late in the holiday season.

Comments

simple math: a 7-in tablet

simple math: a 7-in tablet has only 49% screen area of a 10-in iPad. this Amazn will NOT be a good media consumption device. do you really want toprefer to watch videos and movies on such a tiny screen? What this device is the New Sears Catalogue in the mobile internet age. it's good to use it for buying coffee grinders and iPads.

Priced right, wrong name

Agreed, with the influx of tablets trying to steal the iPad's market share, I think Amazon is a truly formidable candidate. Forrester did a wonderful job of predicting the rise of a tablet primed for mass consumption.

I'd like to bring up one more note worth mentioning, you mention, Sarah, that Forrester missed the mark on correctly predicting size and pricing of the Amazon tablet, not such a big deal when it comes down to utility, but since we're talking about tablet strategy, why no mention of the giant misstep Amazon made in naming their tablet 'Fire'? It does little to inspire purchase or help differentiate from every other tablet/e-reader on the market. Washington Post writer Melissa Bell sums it up best: "it makes my mind skip straight into the heart of the Amazon rainforest, where fires are the preferred method of clearing the land for agriculture".

Oh well, guess Amazon can't get everything right, but I am excited to see where this one goes. Great post.

Fire

I think you are wrong and so is Melissa Bell about the name, amusing though her comment may be; Truth is Kindling helps light the flame of learning and fire makes sense to me. Bruce Springsteen was on fire and you wouldn't want to put him out would you ?

Kindle Fire

Yes you got a lot right on your forecasts. I think the key point you make is that The Kindle Fire is solidly a content consumption device, good for media, plus email and Web, whereas the iPad also does professional work. I also think the launch of the kindle Touch at the same time with a new lower price tag annd as a device even easieer to use than the Kindle 2 and with some nice added features gives them a great broad reach, particulalrly to those who trust Amazon and but a great deal through them. Both devices have to be winners.

Marketing is free

Amazon Kindle Fire

Marketing is free. This is like a gun (selling at loss). Latter on they will earn from services (selling books).

Enterprise solutions may prefer 10" (like Cius), but at lower prices...

i think kindle fire not have

i think kindle fire not have enough power to compete with ipad. maybe, it can compete in USA, but outside there, i doubt it. best mass gainer

Have you seen the ReaderDock

Have you seen the ReaderDock FireStation? It's a recharging dock with built-in speakers designed specifically for Kindle Fire. http://www.ReaderDock.com