Moreover, Google (through Motorola) will soon make an as-good-or-better tablet at the same price point as the Fire. The Fire is a direct threat to Google's tablet ambitions, and Google has much more cash with which to subsidize tablets. In addition, Google has a monetization strategy (ads + content) which is better than Amazon's (content). Heck, even search ads alone is probably better than Amazon's content model. Amazon's ad. monetization is weak because they don't have a search engine nor a real locality ad. platform.
Amazon is in a much superior position than Google in this competition. They didn't gain significance because of better tablet product or ad monetization; they are significant because of all the credit card information in their database before they entered the digital content delivery business. The friction from buying content on Kindle Fire is minimal, which is a deterministic advantage Amazon and Apple have over every other digital content provider in the mobile device market.
Time will tell. I suspect that the digital media market is not large enough to provide meaningful subsidies at this stage, especially since a huge portion of tablet time is spent on the web and in email. When customers want to buy a movie, they'll probably use whatever ships on the device they have already purchased. The better device wins--people aren't going to choose a tablet based on customer service or even content selection; witness Amazon's
failure in the music market.
If this is true, than Google has the stronger position, as they can afford deeper subsidies on the device through advertising. I don't know what Google pays to be the default search engine on the Fire or the iPhone, but it is significant.
I think the Fire might have been more usable for people in general, that is easier for normal people to setup and start consuming Amazon content. I don't have a strong opinion on this though as I think all Android tablets I've seen are crap (does not include Nexus 7 which I have not seen yet).
Google's tablet business model is actually superior to
Amazon's. Google has better ad. monetization than Amazon, and just as good a theoretical monetization of digital media (movies, music, and books).
Amazon has sustainable advantages in a shitty business (retailing/warehousing/shipping physical goods) but when it comes to digital media, it's just bits, a commodity. It is much easier for Google to sell digital content than it is for Amazon to monetize web browsing and email, which is what most people do with tablets.
You say samsung lose margin to retailers. Well amazon lose margin to manufacturers the same way. Prices haven't been reasonable yet because Apple showed people will pay a hefty premium; android tablet makers neither wanted to shrink this pie nor to appear inferior ('cheap'). Amazon is selling the fire as an upsell on an ebook reader, so they can't afford this luxury; $200 is already expensive for what is primarily positioned as a book replacement device.
As for google, they have motorolla. And their 'content sales' is web use ( > advertising). But do they need a cheap tablet? No, Amazon is making it for them already, for a $10 loss.
I'm still not following the argument. Google producing tablets is a positive externality for Amazon. The Amazon app store, Amazon MP3 store, and Kindle app run great on any android tablet. The Amazon Fire was the catalyst of the sub $200 tablet revolution.
As far as subsidizing the tablet further, my guess is that Amazon Prime subscriptions will subsidize all Kindles. If you are a Prime member, you get to buy 1 Kindle a year at a subsidized price. Stats have shown Prime members to buy more things from Amazon.
Combined with the recent price war, perhaps Google is recognizing that Amazon is gettin' all up in their business with Kindle Fire - ie, the best selling Android tablet prior to the Nexus7.
Doesn't anyone else see how the Kindle Fire is very significant for Google, despite the fact that Google may see no revenue from this product?
Google now has a strong partner in its Android patent war, unless Amazon has paid license fees to the likes of Oracle, which would then undermine Google's position.
What's really funny is that he says Google is ruled by people who only care about product and that platform is suffering, whereas amazon is all services by edict. But the most successful Android tablet product out there is the amazon Kindle Fire. So Google didn't even beat amazon on product and even ended up having to copy it with the Nexus 7.
Yeah, I think the only reason that Amazon has sold any Kindle Fires since the Nexus 7 came out is due to how much they advertise it on their site and because most consumers are poorly informed. Google needs to do a much better job of advertising the Nexus line.
There is absolutely no justification for an informed customer to pick the Kindle Fire over the Nexus 7. The latter is cheaper, has a much better and more updated OS, a lot better app selection, and can still access all the content the Kindle Fire can, except Prime Videos (which can still be sideloaded using an APK from XDA-Devs, the site linked here).
And of course part of the reason is that many people are buying these tablets as gifts. You don't put as much thought into a gift as you would into a purchase for yourself. Not only because people are selfish, but also because during Christmastime you have to buy gifts for a lot of people, and you know yourself better than you know anyone else.
(2) Amazon's market is different. They aren't competing with other "Android vendors." Yes it essentially runs Android, and by some peoples' definition, it's a tablet, but in the end what the Fire really is is a well-integrated portal to Amazon services and products. Nobody else can really offer that to consumers. Plus, it's highly unlikely that other vendors can afford to sell their hardware for $200.
Also, a lot of people seem to be assuming that Amazon is looking to upgrade the underlying version of Android. I think they are forgetting a key part here; Amazon is running a fork, and I think it's pretty likely that the only compatibility they care about is with Android Apps (and Bezos has said they will work hard to keep the Kindle Apps compatible with other Android platforms). The OS version doesn't matter at all, as long as the device is fast and pleasant to use, which by all accounts, it is here. There's really no reason they couldn't just keep working on their port indefinitely with no regard to what Google is doing with future iterations of Android. And if a new feature pops up that they like, nothing would stop them from cherry-picking it and putting it in to their fork.
Yes - Amazon has done well in tablet space but that isn't because of Android.
Most of the things that sell Amazon Fire are its really cheap price (it is probably a loss leader), seamless Amazon's Kindle and Content integrations (such as Prime as well as FreeTime). However, there are no Google Apps on it - no maps, no gmail, no Youtube etc. It is a really hamstrung experience if you have used their product.
Android is much much bigger than Amazon tablet and to say Amazon is eating away at Android is a disingenuous statement.
As a kindle fire owner I think Amazon could be beaten in the tablet market quite easily. It's a mediocre device though I don't think Amazon cares that much as it's clearly just designed to consume Amazon sold content.
Given that existing Android tablets from OEMs are not selling greatly, if this tablet is a success will it not be to the detriment of these OEMs already taking a hit on Android? So basically Samsung etc. are now competing with Google in the Android tablet space :-(
My personal feeling is that it was released in reaction to the Amazon Fire, which Google must be pretty pissed-off about given that it has sold well and is firmly on it's own Android branch, further deepening fragmentation. It's no coincidence that they are both 7" tablets for $200.
Agreed, ad. replacement may be derivative-work liability for Amazon; I don't think the case-law is clear.
But they don't have to directly replace ads. in order to monetize ads well. Because they have all of a user's browsing history with Silk, they can target ads. as well, or possibly better than, Google. Perhaps they show ads. at the bottom of the screen, or in the screen saver, or while web-pages are loading, or with location-based pop ups for coupons for a store just down the street, whatever.
In this respect the Fire is a direct attack on Google, and Amazon probably has to take this step in order to be able to subsidize this tablet as much as Google will be able subsidize their tablets. For this reason I wouldn't be surprised if Google soon cuts Amazon off from Android by making more of the OS closed source, and breaking app. compatiblity. If this occurs, expect Amazon to make a bid for Palm.
I cringed a bit when the article mentioned that physical goods built the business case for Amazon selling the Fire at cost. I find it very difficult to believe that Amazon was banking on Fire customers purchasing significantly more physical goods; by that same logic, Amazon should get into the laptop business - do you see that happening?
More realistically, Amazon quickly realized that the tablet is largely a consumption device for high margin content. The lack of a keyboard and touch, along with other design differences, makes the tablet relevant for consumption. Also, Amazon wouldn't have built a closed app and content store system if they thought that physical goods would be the bulk of the business case.
The Fire is part of Amazon's push to ensure that as virtual content sales explode, they get the bulk of the pie.
This is exactly why Google has built the Nexus 7 - to get on the bandwagon for virtual content. If they sell a lot of Nexus 7s - they will definitely be upping their content portfolio on Play.
I agree. I feel that the Kindle Fire is Amazon's physical manifestation of it's online services. Whereas Google provides Android as a foundation for other hardware manufacturers to use this is a distinct offering from any other tablet in the market. You have Amazon building a targeted consumption device for apps, games, books, and video.
This is indeed a compelling offering. It's a one-stop shop. Rather than content providers fighting with Apple. Amazon as the content provider is not doing that and making it easier for Average Joe's like me to consume content. Much like Apple did with music and iTunes years ago.
Amazon is doing a very good job of enticing people to buy the Kindle Fire. I opted to get a Kindle Touch instead of the Fire or an iPad. What's interesting is that I don't even think about getting an iPad.
I would have gotten one had Apple upgraded the camera for the iPad. But then the announcement for the Fire and Kindle Touch came out. All other tablet makers have been trying to compete with Apple by copying Apple. Amazon has created compelling reasons to consider it's devices and I think the strategy will be a great success. They aren't copying Apple.
What's shocking is how much Google has dropped the ball. They have Youtube and Google books and could have created compelling reasons to buy Android devices. I don't think about Youtube when I want to rent a movie I can't get on Netflix. It's clear that pretty soon I'll ditch Netflix and just go with Amazon Prime. This is even more likely given that books will be part of Amazon Prime.
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