Has Amazon Finally Built an iPad Killer?

Discussion
Sep 26, 2013

Amazon.com first showed that it can use price to attract consumers to buy an e-reader, and then to buy a tablet device. Now, it is looking to demonstrate that it can sell tablets that are more technologically sophisticated, similar to what Apple has done with its iPad line.

This week, Amazon introduced its new Kindle Fire HDX tablets in two sizes, seven and 8.9 inches. Amazon’s "powerhouse tablets" come with a new graphics engine, twice the memory and triple the processing power of previous models. Amazon says its displays have the highest resolution of any on the market. Oh, and because it is Amazon, the two models sell for $229 and $379 respectively. (The Kindle Fire HD sells for $139.)

"The third-generation of Kindle tablets mark another meaningful step forward, and increasingly differentiate Kindle Fire from the increasingly crowded tablet market," Colin Sebastian, an analyst with Robert W Baird, told Reuters.

Amazon has also updated software including its e-mail, calendar and productivity apps. Also included is X-Ray for Music, and Second Screen, which turns the tablet into a TV remote. Further, Amazon Prime members can now watch Instant Videos offline as well as streaming them.

Mr. Sebastian told Reuters that Apple and Google continue to hold a significant advantage over Amazon when it comes to apps.

One potential game-changer for Amazon is Mayday, a new customer service feature that enables Fire HDX to have an Amazon expert appear to help them with their issues at the touch of a button.

According to a USA Today review, "Mayday is the kind of knock-your-socks off feature that is not only sure to get attention, but that will play into (Jeff) Bezos’ grand plan to cement Kindle’s place in an excruciatingly competitive tablet market."

What effect will Amazon’s new Kindle Fire HDX models have on the tablet market? What type of response do you expect from the other manufacturers and retailers in the tablet space?

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12 Comments on "Has Amazon Finally Built an iPad Killer?"

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Max Goldberg
BrainTrust

The new Amazon tablet will put price and feature pressure on other tablet manufacturers. It could dominate the lower-priced tablet market, while Apple dominates the high-end market. It will be interesting to see how Amazon scales Mayday as the new tablet’s sales rocket. Providing instant tech support could be the Achilles heal of this product.

Ian Percy
BrainTrust

Frankly, this whole tablet strategy is simply brilliant. And that starts with selling the Kindle virtually at cost. This of course is the old “free hamsters” marketing strategy. $120 later you finally have all the stuff the free hamster needs.

I want to buy a new Fire HDX just to use the Mayday feature. Actually it’s more than a feature, it’s a benefit. Amazon may well knock some tablet players out of the game and for sure will shake up all of them.

Ken Lonyai
BrainTrust

Amazon is incrementally and impressively growing its Kindle line and likely converting users, but there are distinct markets driven by each brand with little chance one will truly cannibalize another.

iPad is still the tablet to be seen with if you want to look cool. Surface is more of a family oriented budget device (lots of features for the buck), and Kindle is still largely for aggressive book readers and Amazon junkies. Android devices are generally for tech mavericks and developers.

Surely market share will always be in flux, but I don’t expect any major shifts unless someone starts bundling or giving away devices. And certainly, every new device is dissected by the competition and new features evaluated for knocking off.

BTW – I remember Bill Gates keynoting Internet World in New York in the latter ’90s showcasing the concept of a live assistant a touch away. Many have tried this but it hasn’t stuck. Amazon, if committed to Mayday, would be my bet for making live assistants a workable feature (onStar notwithstanding).

Todd Sherman
Guest
Todd Sherman
4 years 21 days ago

Beyond just the hardware – which is pretty impressive – Amazon has a great differentiated strategy that leverages other unique company assets such as Instant Video and X-ray. That brings significant value and will definitely get customers to take a serious look at Amazon’s offerings.

While I like Mayday – and think it will be very helpful – it’s an admission that the overall design itself of the apps/AOS/hardware isn’t currently at the level where users do not need technical support. Or it could be a brilliant marketing tool to overcome the discomfort potential Android users might feel. Or both.

Gene Detroyer
BrainTrust

We see this proliferation as being highly competitive, but as Ken notes, it is also highly segmented. Not all tablets are the same and not all users wish the same features. For me, full productivity is the key (Word, Excel, etc…in full utilization). Several people I work with quickly abandoned the original tablets they bought for those that gave them full productivity and essentially use them as a replacement for their computers. Others couldn’t care less about productivity and would not pay an extra penny for it.

Joan Treistman
BrainTrust

I think there are at least two kinds of tablet shoppers…those who have particular tech needs (maybe for business operations) and those that simply enjoy tablet activities (perhaps for leisure).

I have no doubt that Amazon can provide needs for the latter, beyond the expectations of any purchasers. Those who use a tablet to supplement business needs may not recognize or accept as a reality that capability with the Kindle Fire HDX. They may feel that the Kindle brand is counter intuitive to what will satisfy them. It’s a nuanced emotion, but relevant not only to Kindle but other tablet manufacturers and retailers. Monitoring tablet transactions won’t be enough for the competitive brands. To truly understand their opportunities they will have to examine the underlying emotions that impact Kindle’s strengths and weaknesses.

James Tenser
BrainTrust

The new Kindle Fire offerings reveal a classic “sell-razors-at-cost-earn-profit-on-the-blades” strategy. Bezos has said as much in his endless string of media appearances over the past 48 hours.

“We don’t make any money on the devices,” he says. But Kindles provide a minimal-friction channel for the sale of Amazon content – ebooks, games, video, and subscription content like the Washington Post. Did he mention they are also handy for buying physical products?

iPad loyalists can still choose to pay more for marginally sleeker hardware and the vaunted “ecosystem.” I perceive the differential is narrowing, while choices proliferate. Google, Microsoft, Samsung are also competing furiously, keeping prices in bounds while feature sets leap ahead.

The tablet sector has now fully made the transition from early adopters to the mainstream shopper. There is an embarrassment of choices and a relatively long time horizon. Why? Because tablets will prove useful not only as consumption devices, but also as controllers for our connected lives and the internet of things.

gordon arnold
Guest

Amazon is not holding back on their desire to capture market share for the tablet market. Sacrificing profit and offering unlimited one-touch, instant help for a world economy device might just be the mistake Amazon’s competition is hoping for. These new offers will show a slam dunk success for the holiday season for sure. But in the months that follow and the cost of support passes the revenue being brought in to provide for that benefit, we will see how good at juggling their finances execs really are. Watch for a drastic revamp of free to not so free shipping coming soon into F/Y 2014, maybe because of this low margin product.

Herb Sorensen
BrainTrust
Going back to first principles here, I have long pointed out that RETAILING is at the cutting edge of social evolution, always has been and always will be. Furthermore, the mental process of taking a customer from and idea to YES – closing the sale – is what SELLING is all about, and the vast world of self-service retail doesn’t know enough about selling to fill a thimble – and there would still be room for a lady’s little finger in there. Jeff Bezos is effectively the world’s premier SALESMAN. Sorry if you don’t get it. Stick with the masses of your dim colleagues, as Amazon eats everyone else’s lunches, a bite here, a bite there, as it damn well pleases them! This swelling Kindle phenomena means that Bezos, with his INTIMATE relation with shoppers, will NOT rely on everyone else’s devices to OPTIMIZE his selling PROCESS. He has the advantage that his proprietary market is large enough, that he can build and optimize a device that works there, sells content and all other merchandize, and can do it in any bricks stores as well. Those proprietary walls around bricks stores WILL become totally transparent, and like any good warehouse,… Read more »
Bill Hanifin
BrainTrust

The combination of device with applications and services will make a difference for Amazon’s Kindle Fire HDX. Amazon is the leading retailer in the US and Amazon Prime members are highly valuable to the company. By using the new tablet device as a platform for delivering exclusive services to members, Amazon could shift purchase preference for tablets away from the iPad.

Shilpa Rao
BrainTrust

The tablet market is flooded, and there are tablets in global markets at almost all price points. As mentioned in the article, apps play a significant role in what platform you choose, and Amazon is not that great an option for that. As many mentioned in their posts, it would find its segments. But I do not think it will be an industry game changer.

Dan Frechtling
BrainTrust

Bezos doctrine: “Amazon makes money when people USE, not BUY, our devices.”

It doesn’t matter what Mayday costs as a percent of the bill-of-materials. Instead, it matters is what Mayday costs as a percent of lifetime revenue.

Users get answers in 15 seconds, 24/7/365. A live video feed appears with the representative in front of a studio backdrop. All answers are fair game – whether for urgent needs or “cup of sugar” requests such as app suggestions. Inside the reality distortion field this logic holds. Outside the field, Amazon PAYS more money when people use its devices.

In retrospect, it will seem completely logical when Amazon degrades Mayday to touch type chat and announces their next stop is smartphones, where providers make even more money when people use devices.

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