John Paczkowski

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Content and Paying Customers Could Make Amazon Tablet a Killer

May 17, 2011 at 10:50 am PT

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Amazon likely does have a tablet in the works and Apple better pay attention, because the retailer will likely bring it to market before the holidays. So says Wedge Partners analyst Brian Blair, who, without citing sources, says he expects Amazon to debut a 10-inch media-centric tablet built around Nvidia’s forthcoming Kal-El quad-core chipset and designed to leverage its not inconsiderable content offerings.

“Our expectation is for a Google Android-based tablet centered around offering access to Amazon.com’s media services and content including Amazon Video, Amazon Music and even Amazon games,” Blair says. “Additionally, we would expect the device to leverage Amazon’s recent Cloud Drive storage capability for browser-based streaming or through a Cloud Drive app.”

With the right specs, this could make for a compelling piece of hardware and, perhaps, a viable alternative to the iPad. As Blair notes, Amazon is really the only company with a storehouse of mobile content and a vast base of registered, credit-card-holding users similar to Apple’s.

“As with Apple’s iTunes, users could log into the Amazon tablet using their existing Amazon ID and instantly gain access to movies, TV shows, music, digital games, Android Apps, and more,” he explains. “Apple has frequently spoken of the power of the number of credit card users iTunes has; Amazon is the only other player in the industry to have something similar. Amazon also has consumer’s trust that has been built up over more than a decade of good service.”

Those are potentially tremendous advantages–ones that no other Android tablet maker has. And they could mean the difference between another also-ran tablet market contender and a true iPad rival.

Tagged with: Amazon, Amazon Music, Amazon Video, Android, Apple, Brian Blair, Cloud Drive, iPad, iTunes, Kindle, tablet

comments so far. Add yours.

  • Anonymous

     And pigs could fly.

  • http://www.digitalundivide.com donfelipe

    Amazon already has the Kindle and tablet experience. This new tablet could be the iPad killer. If I were Apple I would be worried. I do like the iPad and it is selling well on my website and visitors are registering for the free iPad 2s but I will happily promote Amazon’s new tablets.
     

  • http://twitter.com/juvus juvus

     lol. yes pig could fly if you give them wings. Amazon has been there before. When they started selling  books on the net everybody thought it was a dumb idea and ec-commerce would never take off and the site would die. When they stated selling e-book people laughed thinking no one would buy a gray screen when they had the Iphone. Of course Steve Jobs declared that no one reads anymore.  Well now the Kindle is thriving.  Jeff Bezos feeds on public doubt about his mad skills of parting people with their money.  Every time I see  a comment of someone saying that Amazon is never going to make it because Steve Jobs is God sent on earth, I can hear Jeff’s laugh in my head and him saying “I can’t wait to kick some more doubter’s butt.”

    Stay tuned, ya’ll!!

  • Anonymous

     If I were Apple, I’d be worried… that the presence of the Amazon tablet might reduce the wait list for the iPad from 5 days to 4 days, 23 hours and 55 minutes. 

    I’m stumped what it is about Apple that makes its detractors hallucinate like Harold and Kumar after dropping acid for weeks.

  • Anonymous

    Now, if we can just keep Larry Ellison from killing Android outright, things could turn out ok…

  • Anonymous

    Not Apple, though, are you? Apple aren’t you, though, are they?

  • Anonymous

    What?   No one much doubted Amazon, ever.   Look at their completely untenable P/E now!  However, the Kindle has been more or less decimated by iPad.   Bezos was basically forced to give them away at a loss.   And he still hasn’t admitted how few he is selling.   They are rarely seen, whereas the iPad is showing up all over the place and Apple is quite forthcoming with the sales figures.

  • demodave

    Maybe Amazon can offer a branded “content competitor”, but if they brand it as a competitor in a face-to-face fight, I think they would be cutting off their noses to spite their faces.

    If they can manufacture their tablets cheaply enough or subsidize them heavily enough to be virtually free, that would help

    I think, though, that Amazon would still be better off allowing iPads access to their treasure trove of content (for sale, of course).

  • http://twitter.com/juvus juvus

     Here is my question to the world. Why does everybody has to give their stuff away except Apple. No one complains about parting with 800 bucks for a 3g Ipad or 500 bucks for a lower model, but if a competitor comes out with a product that is over 100 dollars everybody start saying it’s too expensive.  

    If their tablets are is as good or better as Apple’s why should they give it away cheaply?  Is Apple the only company allowed to have a margin?

  • KenG

    I didn’t believe that Amazon would be foolish enough to sell an Amazon-branded Android tablet, but all the rumors say I’m wrong.  I still think it’s a giant mistake.

    I think it will be unrealistic for any tablet vendor besides Apple to get more than 10% of the market, and even that would be tough for Amazon.  At a cost of maybe $300-$400 each, carrying them in inventory will be a lot more expensive than all of the digital content they sell ($0.00), and even still a lot more than the Kindle.  The incremental revenue they receive from selling apps and content for the tablet just isn’t going to be that great relative to the price of the tablet, which they might have to sell at little margin to be priced attractive enough.  And if they subsidize the tablet, they will be providing a low cost platform for competing content, unlike the kindle, which only works with Amazon books.

    They will have no hardware advantage over any other Android tablet mfr, for they will be using the same silicon, the same memory, the same displays (unless they use e-ink, which is more appropriate for e-readers than tablets).  Does anybody really believe they will be the only tablet vendor with a quad core?

    Then there’s the development expense, which would be considerable.  It would be a lot cheaper (and less corrosive to their relationships with their suppliers) if they paid all of the other tablet vendors to put their digital stores on every tablet, and it would give them wider expsoure than the (most likely) 5% of the market they might get.

    I’m not convinced that tablets will be a boon to app retailers who get 20-30% of the sales price; that market might only be in the single digit billions, with the resulting net profit to a company like Amazon in the tens of millions.  Hardly worth the investment a tablet will require.

    I just don’t see what value Amazon will bring to the tablet market for consumers, for if all they offer is access to their store, it can easily be added to other tablets, so unless they are willing to forego profit on the tablets, there will be no incentive for people to buy theirs instead of a Tab or a Xoom or an Ipad or any other device.

  • Anonymous

    Yes, Apple is the only company allowed to have a margin.

  • http://twitter.com/rcastano rcastano

      This may be a risk to Apple´s market share indeed.  But I think it is a greater risk for Google.  Let me explain.

    Google made Android open source and the strategy is simple.  Google gives away the software but Google apps and services are used. Applications like Mail, Maps, Google Search and Location Services are used extensively and it benefits Google in its core business which is selling ads.  This was Google´s strategy against Apple holding up the user´s information when Apple´s iPhone looked like it could become a monopoly.  Some think it is a good strategy and most consumers are very grateful for the free or almost free phones.  So they buy lots of them.

    Google gives Android away but keeps the manufacturers from using other apps and services by conditioning access to the Google app store by making them sign user agreements.  Most manufacturers will do as Google says just to be able to get their clients access to the app store because otherwise the phones would be useless.  Google has enforced this agreement by stopping shipments from big manufacturers like motorola and Samsung for changing the Location Services supplier.

    There are two problems with Amazon coming into the Android equation.  The first problem is Amazon does not have to sign user agreements because Amazon will have its very own App store.  The store could easily be bigger than Google´s and will even have exclusive applications.  This means Amazon may or may not sign an agreement with Google.  If Amazon does not sign the agreement, they are free to use other services like Bing or Skyhook and make some money in the process.  This would be a big problem for Google.  They would not like paying millions for engineers developing the software and lawyers defending the platform if one of the important brands is not signing agreements.

    The second problem with Amazon getting into the game is that other manufacturers will also have access the the Amazon App store and that gives them the same freedom that Amazon will have.  Even if Amazon signs the Google user agreement, other manufacturers may not.  Their clients will always be able to use the Amazon app store.  

    This could be a big problem for Google.  If the manufacturers stop signing agreements, Android further developments could stop being Open Source and the platform could be in trouble.

  • http://mindtherant.blogspot.com/ MindTheRant

    I notice no one has mentioned the Nook Color, which to my mind has been a greater motivator for Jeff Bezos to enter the Android tablet market than Apple’s iPad.

    I suppose no one’s heard of the Nook Color or its $249 price tag.  It’s an android device, too.

    The maker, Barnes & Noble, recently rolled out an app store for the Nook Color and just announced they’d achieved 1 million downloads in a week.

    Sure, 1 million downloads is chump change if you’re the iTunes store.  Undoubtedly the commenters here were unaware of this news or, if they were, dismissed it.

    So far it’s clear that the iPad’s high-profile competitors are too expensive and offer no clear advantage.  The Nook Color may not be nearly as powerful as the iPad, but hey, it’s *half* the price.

    As far as making money on these devices, let’s not forget that for the first 3 years Amazon was selling the Kindle it was pricing ebooks for it at $9.99 — less than the wholesale price it was paying for the content. Amazon has a history of losing money on pricing to gain market share and, to date, it doesn’t seem to have done them much harm.

    Then, too, Amazon’s bread and butter, like Barnes & Noble’s these days, is ebooks — and ebooks are in their infancy.  The Kindle and the original Nook are the Model Ts of ereaders; moreover, Apple has yet to show much interest in selling ebooks to its iPad buyers.

    So the opportunity here to use Android as a low-cost/no-cost OS and tap into the competitive market of 3rd party component manufacturers to build something that *approaches* the iPad but costs at least $100 less — and gives customers access to the next generation of ebooks plus the other downloadable media Amazon already makes available on its site … well, it doesn’t take a tech guru (and I’m not one) to see the possibilities.

    B&N has grabbed a consensus 25% share of the ebook market in just under 2 years, when everyone had already decided Amazon had the market sewn up.  It doesn’t seem outlandish to imagine that Amazon feels the same way about the iPad market everything thinks Apple owns.