Could Amazon Be Android?s Best Hope?

  • Posted: 27 July 2011 06:36 PM

    Could Amazon Be Android?s Best Hope?

    If Amazon does, in fact, enter the tablet market with a low cost Android tablet this fall they might be able to change the playing field to a lower margin one where Apple would be less able to compete.

    Less able to compete or less willing to compete?

    And you make it sound like there are no trade-offs. Like the only difference between and Amazon tablet and an iPad will be price. That will not be the case.

    Every time Retrevo asks consumers what would get them to buy a tablet, low price comes out on top of the list.

    All I can say to this is “duh” and “so what?” Of COURSE consumers want a lower priced tablet. Consumer’s want a lower priced everything. But that’s not really the right question to be asking, is it?

    In the most recent study, almost half (48%) of respondents said that $300 was the price point that would get them to consider an Android tablet over an iPad.

    What you THINK that is telling you is the price when a non-Apple tablet would become viable. What that is really telling you is that consumers value the Apple iPad two-hundred dollars more than they value the competitions wares. Now THAT’s impressive. Just not in the way you thought.

    Apple has traditionally been able to command a price premium for quality devices but if someone like Amazon who thrives on low margins can move the playing field, Apple may find it harder to command high prices.

    Tell me how Amazon is going to do that. Are they going to pay less for the Android operating system? No. Are they going to get a better deal on components than Apple does? No. Are they better at assembling computer parts for less than Apple does? No. Are they going to create an ecosystem equivalent to Apple’s without cost? No.

    If Amazon is going to create a lower cost tablet then they are going to have to cut corners somewhere and, perhaps, most everywhere. And then we’re not comparing “Apples” to “Apples” are we? If Amazon puts out a $250 tablet that is worth $250, then it is no more of a threat to the iPad than the Kindle or the Nook currently is.

    Despite the fact that Apple makes a lot of money on companion products like apps, music, and software, Amazon may be in a better position to sacrifice a high profit margin on a tablet or ?razor? in return for revenue from ?razor blades? like books, music, videos and apps.

    This is the first thing this article has said that makes a lick of sense. Apple and Amazon have two fundamentally different business models. Apple gives away content in order to make its money from the sale of hardware. Amazon could cut their hardware sales to the bone and try to make it up for it from content sales.

    But here’s the fundamental flaw in that line of thought. Amazon can do all of that NOW without the hardship or risk entailed in promulgating yet another tablet. All Amazon needs to do is to make their Amazon store App friendly to Android products. There is simply no need to build a tablet. They can make more money by becoming the store to ALL Android tablets than by confining their sales only to tablets that they themselves make.

    Amazon’s Strong Brand Could Help Them Sell Tablets.

    Maybe. And maybe not. While Amazon has one of the strongest online brands in the world, they have zero presence in real world retail. A new tablet is something you’re going to want to see, touch and play with. I think Amazon’s online-only presences is more of a hinderance than a help.

    Could Amazon be Android?s knight in shining armor that could help Android create a stronger presence in the tablet market?

    Now we’re getting into a whole different ball of wax. Even if an Amazon tablet were successful, far from becoming Android’s “White Knight”, I think it might end up becoming Android’s worst “Knight”-mare. If Amazon forks Android; if Amazon takes control of Android App Sales; if Android becomes the de facto power behind the Android brand, where does that leave Google? And if Google decides to take it’s money and its software engineers and its “ball” of code and go home, where does that leave Android?

    When the study asked consumers which manufacturer they would most likely buy a tablet from, we were surprised to see a high percentage of potential tablet buyers putting Amazon (55%) at the top of their list.

    Yeah, I’d be surprised too since Amazon doesn’t manufacture squat. If Amazon is going to commission someone to build their table for them, who will do it and how good will it really be?

    Further, is there are real reason to have faith that Amazon knows how to put together a tablet? Did you see the Kindle before the iPad? Did you see the Kindle AFTER the iPad? Amazon has many fine qualities, but hardware design and implementation are not their strengths. If fact, based on the Kindle, hardware design and implementation have to go down as one of their weaknesses.

    Finally, as John Gruber points out, Retrevo itself does not have a sparkling track when it comes to making predictions regarding Tablets:

    Apple iPad Hoopla Fails to Convince Buyers - February 4, 2010

    A follow-up Retrevo Pulse study looking at consumer interest in buying the new Apple iPad indicates a failure to convince any new buyers to consider the iPad. Not only did Apple fail to convince new buyers, it may have lost many potential buyers who now say they don?t think they need an Apple tablet computer. [?]

    Whether this device becomes a big hit is anyone?s guess but based on this study it sure looks doubtful.