Jeff Gelles: Amazon's four new Kindle versions shaking up the tablet market

Jeff Bezos, founder of Amazon , introduces the Kindle Fire at a news conference in New York. The 7-inch tablet is due out in November.
Jeff Bezos, founder of Amazon , introduces the Kindle Fire at a news conference in New York. The 7-inch tablet is due out in November. (MARK LENNIHAN / Associated Press)
Posted: September 29, 2011

Call it the shot heard 'round the high-tech marketplace. In a single salvo Wednesday, Amazon and its founder, Jeff Bezos, fired directly on the last big bookstore chain standing, Barnes & Noble; hurled a shot across the bow of Apple and every other technology company; and even gave old-fashioned retailers new reasons to worry.

Amazon's ammunition is four new versions of its Kindle, a brand introduced just four years ago for an e-book reader that has already upended the world of book publishing. Just one of the new Kindles, a $79 "fits in your pocket" version of the basic e-reader, is available now, with rollouts of the others promised in November. They include the $199, 7-inch-screen Kindle Fire, Amazon's widely anticipated answer to Apple's iPad.

Together, the new Kindles carry the potential to reshape the market for "tablet computers" - a confusing place because it comprises products with very different prices, purposes, and pedigrees.

Defining the high end is the phenomenally successful 9.7-inch iPad, which sells for about $500 to $800 and wins praise - like most Apple products - for its smooth hardware and software integration. Since its April 2010 debut, the iPad is already closing in on 30 million in sales.

At the low end, the market includes the black-and-white, single-purpose Kindle and a handful of small tablets - including Barnes & Noble's Nook Color, a touch-screen e-reader introduced last year that also offers access to music, video, and other Internet content and apps.

Amazon's new product line stops short of including a direct competitor to the iPad, whose larger screen is especially well-suited to watching movies or video and reading newspapers or magazines. If Amazon is successful, count on it mounting a head-on challenge to iPad in 2012.

But even without a 10-inch, all-purpose tablet, Amazon has already rocked the market, say analysts such as Roger Entner of Recon Analytics.

"They have probably the best tablet strategy outside of Apple," Entner said. "They've come in at the right price point, and with very attractive hardware that is complemented by terrific software."

The Kindle Fire's price - 20 percent lower than predicted - drew much of Wednesday's attention.

Dominic Sunnebo, of Kantar Worldpanel, said that last Christmas, consumers were unable to find "a polished device from a well-known brand" for less than about $400. "If Amazon can pull this off, then we are likely to see Christmas wish lists rewritten overnight," he said.

Amazon also drew praise for its focus on ensuring that its hardware and software work together smoothly - a point of complaint with some tablets that rely on Google's open-source Android operating system.

"The integration is very tight," Entner said of the Fire, lauding such features as its ability to synchronize with an Internet-enabled TV. "You can start watching a movie on your tablet, and when you come home and turn on your TV, it starts where you stopped on your tablet. That's quite neat."

Key questions about Amazon's new products were unanswered Wednesday, including how much they rely on Android. Amazon stressed that the Fire would use a new "cloud-accelerated" Web browser, Amazon Silk.

"Put simply, Amazon's Kindle Fire may be based on Android, but it is not an 'Android tablet' in the way we normally think of the term," wrote J.R. Raphael, a Computerworld analyst. "If you're expecting the full-fledged tablet experience, you may be in for a disappointment."

Raphael said the Fire lacked some popular Android apps as well as access to the main Android Marketplace. Instead, apps must be bought through Amazon's own store.

Those aren't the only signs that Amazon is pursuing a variation on the classic "razors and blades" strategy, under which it can accept a smaller margin on its tablets in return for greater sales of books, movies, music, and the vast variety of stuff - everything from electronics to groceries - it sells through its online store.

Here's one more: Purchase an Amazon Fire, and you'll get a one-month subscription to Amazon Prime, a service that provides free two-day shipment for anything you order from the Amazon store.

Since it went online in 1995, Amazon has repeatedly disrupted markets that other companies dominated. It may have just done it again.


Contact columnist Jeff Gelles

at 215-854-2776 or jgelles@phillynews.com.

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