Amazon Tablet Rumor Central

  • Posted: 26 August 2011 10:23 PM

    I have no doubt that an Amazon Tablet is coming, perhaps very soon. I thought we might gather all the rumors and discussion together in one thread for those who are interested in what Amazon’s tablet may be and what effect it may have upon Apple.

         
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    Posted: 26 August 2011 10:30 PM #1

    FalKirk - 27 August 2011 01:23 AM

    I have no doubt that an Amazon Tablet is coming, perhaps very soon. I thought we might gather all the rumors and discussion together in one thread for those who are interested in what Amazon’s tablet may be and what effect it may have upon Apple.

    I agree it is coming. I think it will be a portal to retail shopping and ebook consumption. Less focus on games, outside media, mapping, or non-retail web

    I think it will use android with a lovely proprietary overlay, use push to send day of sale specials. It will handle music, but not well.

    It will crush the Nook. Amazon will provide huge ebook discounts for use on the device, at least at first.

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  • Posted: 26 August 2011 11:24 PM #2

    Amazon’s Tablet to Be ‘Hundreds Less’ Than iPad

    PCWorld

    The fire sale of the HP TouchPad (and the resulting rush to snag the tablet) proved one thing: if it’s cheap enough, they will come.

    It proved no such thing. First, it was an immense bargain. Anytime you sell a $500 item for $100, it is going to fly off the shelves.

    Second, there was a genuine sense of urgency present. Any salesman knows that his worst enemy is “maybe later”. Retailers are always trying to introduce time urgency into their sales by having “limited time only” offers. These are usually shams and are ignored by savvy consumers. However, in this case, potential TouchPad buyers truly did have a sense of urgency. They knew that if they didn’t buy it now it would be gone forever.

    Third, just because you buy a sofa from a fire sale for $100 does not mean that you and every other potential buyer now thinks that sofas will cost $100 now and forever more. Consumers are apparently not as foolish as Bloggers. They know that a fire sale or a close out is a one time thing that has no long term effect on the prices of similar goods.

    According to unnamed sources speaking to the New York Post, the online retailer plans to sell its upcoming tablet for “hundreds less” than what the iPad costs, though no price has been specified. Understandably, it seems as though Amazon wants to get its hardware out there first, and makeup the difference in content sales later.

    I like this strategy…maybe.

    I think it would be foolish for Amazon to try to attack Apple head on with an Android device that mimicked Apple’s. Amazon needs to hit Apple where they’re weak and/or where they’re not. A clunky cheaper tablet that was much lower priced - perhaps even subsidized by Amazon’s store - might have a chance because it was aimed at a market segment that Apple is not catering to.

    Amazon hopes that consumers will spend more in its digital content stores as a result of getting the hardware itself cheaper. Now, whether that strategy will work in the tablet sector is up for debate, but it’s worked in the video game market for years.

    Here’s the problem with that strategy. Amazon’s store already has razor thin margins. They make it up in volume because they have an international online store with no costly physical store fronts and no costly taxes. Subsidizing the tablet in order pull in additional sales might be a dicey proposition at best. As many have noted, Apple does not really make much money from its iTunes and App Store. They are not loss leaders - they do make money - but they far from being profit centers for Apple.

    Based on reports, the Amazon tablet is expected to run Android 3.2 with a nine inch screen, slightly smaller than the iPad’s 10.1-inch screen but significantly bigger than the Tab’s 7-inch screen.

    Amazon may release two versions of its tablet: a dual-core processor model for the average consumer, and a more powerful quad-core device for the power user

    Regardless of the specs, as long as it’s comparable to the iPad, Amazon’s apparent decision on pricing will pay off.

    If Amazon tries to make a tablet that is comparable to the iPad, they will be crushed. They need to make a tablet that clearly differentiates itself from the iPad both in the tablet itself and in the business model employed to sell it.

    Look at the TouchPad: it was inferior to the iPad in power (and some may argue software), and still sold like gangbusters when the price was right.

    The author is a fool. No one but a moron would garner that lesson from the TouchPad fire sale. Almost anything that sells far beneath it’s value will sell well. But at what costt? HP lost $100,000,000 (one hundred million dollars) in a matter of days in order to “successfully” sell off their TouchPad inventory. That’s not a business model. That’s the epitome of a business failure.

    The question is, what price is Amazon willing to pay in order to sell a cheaper tablet? If the price they pay is minutely increasing it’s size and weight and reducing it’s specs while significantly reducing its price, then I think they have a chance.  But attempting to create a device that is equal or nearly equal to the iPad but with a significantly subsidized price may prove to be a very costly mistake.

    The coming price war on tablets will benefit everybody.

    This is nonsense. Do you want to see the negative effects of a price war? Look no further than the PC market. Who’s benefitting there? Not the manufacturer who is living on razor thin margins. Not the consumer who has little choice but to buy crappy merchandise. Value wars help the consumer far more than price wars ever will.

    I’m willing to bet that Apple will even join in and possibly bring the cost of the iPad down a bit, too.

    I’m willing to bet that they won’t.

    I think it’s a perfect time for an iPad price drop. Just in time for the holiday season. That could make things very interesting.

    If you are stupid enough to think for even one second that Apple is going to drop the holiday price of a best selling product that they can barely keep in stock, then you should get out of the business of writing about tech. You know nothing.

         
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    Posted: 26 August 2011 11:42 PM #3

    It’s a stupid article. Price drops imply competition and a race for market share. There is (will be) none at the iPad’s price points. the have as much market share as they, and only they, can service. Heck, they have more market share than they can service.

    You get what you pay for. recent touchpad buyers, with a taste of what a tablet device could be, wil buy iPads next.

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    Posted: 27 August 2011 12:14 AM #4

    FalKirk - 27 August 2011 02:24 AM

    Amazon’s Tablet to Be ‘Hundreds Less’ Than iPad

    PCWorld

    The fire sale of the HP TouchPad (and the resulting rush to snag the tablet) proved one thing: if it’s cheap enough, they will come.

    It proved no such thing. First, it was an immense bargain. Anytime you sell a $500 item for $100, it is going to fly off the shelves.

    Second, there was a genuine sense of urgency present. Any salesman knows that his worst enemy is “maybe later”. Retailers are always trying to introduce time urgency into their sales by having “limited time only” offers. These are usually shams and are ignored by savvy consumers. However, in this case, potential TouchPad buyers truly did have a sense of urgency. They knew that if they didn’t buy it now it would be gone forever.

    Third, just because you buy a sofa from a fire sale for $100 does not mean that you and every other potential buyer now thinks that sofas will cost $100 now and forever more. Consumers are apparently not as foolish as Bloggers. They know that a fire sale or a close out is a one time thing that has no long term effect on the prices of similar goods.

    According to unnamed sources speaking to the New York Post, the online retailer plans to sell its upcoming tablet for “hundreds less” than what the iPad costs, though no price has been specified. Understandably, it seems as though Amazon wants to get its hardware out there first, and makeup the difference in content sales later.

    I like this strategy…maybe.

    I think it would be foolish for Amazon to try to attack Apple head on with an Android device that mimicked Apple’s. Amazon needs to hit Apple where they’re weak and/or where they’re not. A clunky cheaper tablet that was much lower priced - perhaps even subsidized by Amazon’s store - might have a chance because it was aimed at a market segment that Apple is not catering to.

    Amazon hopes that consumers will spend more in its digital content stores as a result of getting the hardware itself cheaper. Now, whether that strategy will work in the tablet sector is up for debate, but it’s worked in the video game market for years.

    Here’s the problem with that strategy. Amazon’s store already has razor thin margins. They make it up in volume because they have an international online store with no costly physical store fronts and no costly taxes. Subsidizing the tablet in order pull in additional sales might be a dicey proposition at best. As many have noted, Apple does not really make much money from its iTunes and App Store. They are not loss leaders - they do make money - but they far from being profit centers for Apple.

    Based on reports, the Amazon tablet is expected to run Android 3.2 with a nine inch screen, slightly smaller than the iPad’s 10.1-inch screen but significantly bigger than the Tab’s 7-inch screen.

    Amazon may release two versions of its tablet: a dual-core processor model for the average consumer, and a more powerful quad-core device for the power user

    Regardless of the specs, as long as it’s comparable to the iPad, Amazon’s apparent decision on pricing will pay off.

    If Amazon tries to make a tablet that is comparable to the iPad, they will be crushed. They need to make a tablet that clearly differentiates itself from the iPad both in the tablet itself and in the business model employed to sell it.

    Look at the TouchPad: it was inferior to the iPad in power (and some may argue software), and still sold like gangbusters when the price was right.

    The author is a fool. No one but a moron would garner that lesson from the TouchPad fire sale. Almost anything that sells far beneath it’s value will sell well. But at what costt? HP lost $100,000,000 (one hundred million dollars) in a matter of days in order to “successfully” sell off their TouchPad inventory. That’s not a business model. That’s the epitome of a business failure.

    The question is, what price is Amazon willing to pay in order to sell a cheaper tablet? If the price they pay is minutely increasing it’s size and weight and reducing it’s specs while significantly reducing its price, then I think they have a chance.  But attempting to create a device that is equal or nearly equal to the iPad but with a significantly subsidized price may prove to be a very costly mistake.

    The coming price war on tablets will benefit everybody.

    This is nonsense. Do you want to see the negative effects of a price war? Look no further than the PC market. Who’s benefitting there? Not the manufacturer who is living on razor thin margins. Not the consumer who has little choice but to buy crappy merchandise. Value wars help the consumer far more than price wars ever will.

    I’m willing to bet that Apple will even join in and possibly bring the cost of the iPad down a bit, too.

    I’m willing to bet that they won’t.

    I think it’s a perfect time for an iPad price drop. Just in time for the holiday season. That could make things very interesting.

    If you are stupid enough to think for even one second that Apple is going to drop the holiday price of a best selling product that they can barely keep in stock, then you should get out of the business of writing about tech. You know nothing.

    Great knife work, Falkirk. Remind me never to make you my enemy.

         
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    Posted: 27 August 2011 01:34 AM #5

    I wonder whether the Motorola buy will influence Amazon. With Android becoming more proprietary, will Amazon be willing to bet their future on that horse? Then again, Bezos is a smart guy. I don’t know if he’d be willing to be vulnerable at all to another company for a flagship product.

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    Posted: 27 August 2011 01:43 AM #6

    +2, FalKirk!  Nice post!

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  • Posted: 27 August 2011 02:30 AM #7

    calebcar - 27 August 2011 04:34 AM

    I wonder whether the Motorola buy will influence Amazon. With Android becoming more proprietary, will Amazon be willing to bet their future on that horse? Then again, Bezos is a smart guy. I don’t know if he’d be willing to be vulnerable at all to another company for a flagship product.

    There’s been some suggestion that Android should look into buying webOS and going out on their own. It this were a year ago, I might think that was a viable option. Create a tablet all your own and -again - don’t compete directly with Apple but go for sort of a super Kindle or a Nook killer. Keep the price low and slowly, over time, increase your offerings.

    But I think that ship has long ago sailed. Whatever Amazon is planning, everything is set in motion and about to hit the market.

    As for Amazon using Android, I’ve always wondered about the wisdom of that approach. Clearly they are going to want to introduce their own store and that’s not going to sit well with Google. And forking the software? That’ just plain crazy. You think Amazon wants to take on maintaining and improving the forked Android software in addition to running their store and making the hardware?  That a massive, massive effort with little reward assured for Amazon.

    On the whole, I just don’t understand the proposed Amazon tablet. Others see only opportunities, I see only pitfalls. I suppose that it will all make sense when it’s finally announced. But then again, I expected to be able to say the same about the PlayBook and the TouchPad too.

         
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    Posted: 27 August 2011 03:17 AM #8

    Will a Amazon tablet fill a void or strive for the low end along with a fair amount of content. Remember its not about hardware specifically, its about content, right?
    And furthermore,  tablets for specialized jobs do not need all the bells and whistles that are incorporated in a iPad nor does it need a lot of content, just a app or two. Example? a tablet for use in a restaurant or for sales presentations. Will there be a realization that there is a market for tablets aimed toward just this segment,  specialized uses at a more fair price point.

         
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    Posted: 27 August 2011 04:07 AM #9

    I can say with a pretty high degree of confidence that if Amazon _does_ launch a tablet, it is almost destined to be a mistake and marketplace failure.

    Price it at iPad levels?  Not gonna work.  And people are already expecting some “subsidy” built-in due to actual Amazon integration.  This is where the PCWorld article gets even more wrong IMHO. 

    Like FalKirk said, there’s NO REAL MONEY in content sales.  Even as Apple gains a giant iOS customer base and ever more downloads from the App Store, reported revs from “sales from the iTunes Store, App Store, and iBookstore in addition to sales of iPod services and Apple-branded and third-party iPod accessories” were just $1.57B for this quarter, and up “only” 29% YOY.  Apple isn’t out to lose money on its own digital content stores, but it’s hardly wildly profitable. 

    It doesn’t look like the digital content revenue stream ccan support a cheap tablet.  So if Amazon has any hope of “making it up in volume” as they say, it would have to make Amazon itself the main attraction.  The numbers don’t lie - the only logical thing to do is position the Amazon Tablet to encourage more regular ‘ol shopping at Amazon.  That’s where most of Amazon’s $10B or so in quarterly revs comes from, after all.

    But that’s one heck of a vicious cycle.  Why make a “loss leader” or low-margin tablet to get more people to shop at Amazon when…uh…so many do, and it’s so easy to do on so many platforms?  So then you incentivize with “push coupons” and exclusive offers and discounts (becoming a sort of Groupon of tablets)?  And by making an Amazon tablet with a presumably upgraded Kindle app/interface, what does that do to your Kindle sales?  Of course, this totally ignores the potential problem of more Android fragmentation and necessarily going up against Googorola.

    I can’t see a compelling business case for a cheap Amazon tablet, or a more premium tablet that dares go toe-to-toe and price-to-price with iPad.  You’d almost be better off getting HTC or some other smartphone manufacturer to put an “Amazon” button on their phone.

    [ Edited: 27 August 2011 04:41 AM by Mav ]

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    Posted: 27 August 2011 04:34 AM #10

    calebcar - 27 August 2011 04:34 AM

    I wonder whether the Motorola buy will influence Amazon. With Android becoming more proprietary, will Amazon be willing to bet their future on that horse? Then again, Bezos is a smart guy. I don’t know if he’d be willing to be vulnerable at all to another company for a flagship product.

    FWIW: I think as much as possible whatever UI is on the device will be not obviously Android and in the future could be ported to another system (if its in Amazon’s interest).

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  • Posted: 27 August 2011 12:02 PM #11

    Mav - 27 August 2011 07:07 AM

    I can say with a pretty high degree of confidence that if Amazon _does_ launch a tablet, it is almost destined to be a mistake and marketplace failure.

    Price it at iPad levels?  Not gonna work.  And people are already expecting some “subsidy” built-in due to actual Amazon integration.  This is where the PCWorld article gets even more wrong IMHO. 

    Like FalKirk said, there’s NO REAL MONEY in content sales.  Even as Apple gains a giant iOS customer base and ever more downloads from the App Store, reported revs from “sales from the iTunes Store, App Store, and iBookstore in addition to sales of iPod services and Apple-branded and third-party iPod accessories” were just $1.57B for this quarter, and up “only” 29% YOY.  Apple isn’t out to lose money on its own digital content stores, but it’s hardly wildly profitable. 

    It doesn’t look like the digital content revenue stream ccan support a cheap tablet.  So if Amazon has any hope of “making it up in volume” as they say, it would have to make Amazon itself the main attraction.  The numbers don’t lie - the only logical thing to do is position the Amazon Tablet to encourage more regular ‘ol shopping at Amazon.  That’s where most of Amazon’s $10B or so in quarterly revs comes from, after all.

    But that’s one heck of a vicious cycle.  Why make a “loss leader” or low-margin tablet to get more people to shop at Amazon when…uh…so many do, and it’s so easy to do on so many platforms?  So then you incentivize with “push coupons” and exclusive offers and discounts (becoming a sort of Groupon of tablets)?  And by making an Amazon tablet with a presumably upgraded Kindle app/interface, what does that do to your Kindle sales?  Of course, this totally ignores the potential problem of more Android fragmentation and necessarily going up against Googorola.

    I can’t see a compelling business case for a cheap Amazon tablet, or a more premium tablet that dares go toe-to-toe and price-to-price with iPad.  You’d almost be better off getting HTC or some other smartphone manufacturer to put an “Amazon” button on their phone.

    When reading your very well thought out post, it occurred to me that if the Amazon tablet does fail, that the pundits will not look at themselves and wonder how they got it so wrong. Instead, they will once again attribute it to mystical properties that only Apple possesses. The reality distortion field, fanatical and mindless Apple fanboys, hypnotic will-sapping marketing, advertising etc. Sigh.

    The future is unknown, but some things are predictable. We don’t know the path that the Amazon tablet will take. But we do know some of the paths that are certain to lead to failure.

         
  • Posted: 27 August 2011 03:55 PM #12

    adamthompson3232 - 27 August 2011 03:55 PM
    Red Shirted Ensign - 27 August 2011 02:42 AM

    It’s a stupid article. Price drops imply competition and a race for market share. There is (will be) none at the iPad’s price points. the have as much market share as they, and only they, can service. Heck, they have more market share than they can service.

    You get what you pay for. recent touchpad buyers, with a taste of what a tablet device could be, wil buy iPads next.

    I gave my touch pad to my 10 year old cousin as a gift and all I got was a mean text in return telling me it wasn’t an iPad. Duh. Next time I’m gonna get him…oh wait, there’ll be no next time for me. But his dad’ll get him an iPad.

    I guess I just thOught he needed a doorstop. And touchpad is the finest $99 doorstop ever made.

    $99 for a door stop?  I think you overpaid.

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    Posted: 27 August 2011 05:47 PM #13

    $99 to never have to give a gift to someone ever again?  Priceless.

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  • Posted: 29 August 2011 06:47 PM #14

    If Amazon would like to attract more shoppers to it’s website and is willing to suffer a slight loss to do it than I have a recommendation.  Sell the iPad for $399.00.  They’ll be swamped!  :-D

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    Posted: 29 August 2011 09:11 PM #15

    adamthompson3232 - 29 August 2011 08:39 PM

    PED did a good job pointing out that the author has less than zero credibility based on past prediction accuracy.

    http://tech.fortune.cnn.com/2011/08/29/forrester-amazons-tablet-will-bury-the-ipad/?source=yahoo_quote

    I can’t believe someone would pay for this research.  It is pure speculation.  Can anyone tell me how many kindle’s Amazon sold so far in 2011?  Last official word from Amazon was millions so that leaves alot of guesswork to believe this tablet from Amazon will outsell the Kindle.  So what will this mythical tablet do that will convert millions.  Will it be a better e reader then the Kindle?  Not likely so why pay $250 for an e-reader.  What does it do that sells the device.  Assuming it is an android device and wants to compete with the iPad it will need more then the Amazon app catalog to interest users.  The music and books and movies on amazon are okay, but similarly priced to Apple’s offering so while Amazon may be happy with a lower GM, Apple pretty much sets the 70/30 cut to content providers which I estimate gives Apple about a 10-12% margin.  How will Amazon recapture the hardware subsidy they are purported to provide?  Now we get to the cost of doing business.  On the hardware BOM side we have the SOC 20$, The memory if you go multi-core you need to feed the pipeline Apple gets by with 512MB while most of the comparable Android devices use 1GB. the NAND will cost about 1.30 per GB so we have 30-40 in BOM with memory.  The WIFI chipset 9$. The touch panel and LCD depends on the screen size and resolution and last I looked the rumors are for multiple sizes, so each SKU will have a different BOM. A 10” touch panel and LCD is the most expensive part of the iPad so this is a place you could skimp to bring the BOM down but the experience will suffer and then the 5M unit number becomes a fire sale ala HP touch book.  These analyst are still under the illusion that Apple is not price competitive on iPad so anyone can walk in and undercut them on price, the reality is quite different, the customer has an expectation of performance established by the iPad and while Amazon may choose to use price as their primary differentiator, the touchpad proved that a $100 pricing advantage didn’t cut it, but if you provide a $500 device for $100 you can sell all you want on the way to bankruptcy.