Apple & Amazon: Let’s Talk & Burn

Mac OS KenSeems all it takes to get the tech world fired up is Apple announcing that they’re going to announce something iPhone-ish, and Amazon announcing that they’re in the tablet game. Seems Mac OS Ken’s Ken Ray is fired up about all of it, too.

Let’s Talk
How convinced was I that invitations to Apple’s iPhone event would go out a day later than they actually did? So convinced that I’m not 100-percent certain that they have gone out. Oh sure, it’s being reported byAllThingsD,The Loop, andThe Unofficial Apple Weblog… What does that prove? They might just be trying to fool ME.

We all know they’re out to get me.

You can run your stories inAppleInsider andCNET and theNew York Times. You can show me the art of icons and the tagline “Let’s talk iPhone.” You can hold up all of these things up as proof, and what do they prove?

It’s like all of that evolution talk and climate change crap, and Trident being safe because because four out of five dentists recommend it for their patients who chew gum. Did it ever occur to you that that fifth dentist may know something?

Did invitations actually go out this week? Or is that just what they want you to think?

It’s hard to imagine they did go out. I didn’t… get…


So yeah, invitations went out summoning the few, the few… the people important enough to be invited… Sure, I could be bitter but… that would get in the way of my being truly bitter.

Everyone is supposed to show up at Apple’s Cupertino campus on Tuesday, October 4 at 10AM pacific time.

Says so right on the invitation, “Let’s talk iPhone.”

My money’s on an actual AppleTV TV. Who’s with me Piper Jaffray analyst Gene Munster?

Wanna play “Decipher the Art?” The “Let’s talk iPhone” event invitation art has four iOS app icons: A calendar icon reading Tuesday 4, the clock icon set to 10AM, the maps icon with a pin in Apple’s Cupertino campus, and the phone icon with a badge with the number one in it.

One model of iPhone? Maybe… One more thing? Could be.

One week to pick the bones and suck the marrow.

With the invitations FINALLY sent… a day early… analysts are say-say-saying what they’re expecting to see-see-see.

AppleInsiderhas Piper Jaffray Analyst Gene Munster issuing a note to investors post invite, saying he doesn’t buy all of this entry-level iPhone hokum.

Quoting his note: “We expect Apple to continue with a lead device (iPhone 5) that carriers sell subsidized for $199/$299 along with a previous generation device (iPhone 4 or iPhone 4S) for $99.”

Um… okay.

Where Munster has his real fun is in playing Da Vinci Code with the invitation, though he’s skipping the art for the tagline,”Let’s talk iPhone.” This — thinks Mr. Munster — could hint at voice recognition features for iOS 5 about which many have speculated, and about which Apple has said next to nothing.

Quoting his note again: “In the past, Apple has used its invitation to include cryptic hints as to what it will announce. The phrase on this year’s invite, ‘Let’s talk iPhone,’ may be a simple play on words, but may also refer to new speech-based features for the iPhone.”

Whatever it’s called, whatever it includes, Munster expects particularly strong demand for the device from Verizon customers. The iPhone was already over six-months old when it landed on Big Red’s network, and while it has been the carrier’s single biggest seller, Munster figures a lot of the company’s customers have held off waiting for a truly new iPhone.

UBS analyst Maynard Um is throwing his predictions against the wall as well. MacNN has Mr. Maynard expecting enough changes or improvements to drive a decent number of upgrades. Quoting his note:

We believe a refreshed iPhone 5 will boast enough physical improvements to drive another strong adoption cycle … Although screen resolution should remain the same, we expect an improved front/back camera resolution, faster network technology, a faster A5 processor, improved graphics performance, and potentially thinner/lighter form factor.

So we know now when we’ll see the next iPhone, but when can consumers actually get their hands on it? Almost definitely by October 14th, if indications in one Boy Genius Report report are to be believed.

The site said it had received info from a trusted,I though unnamed, AT&T source that the Death Star was blocking all employee vacation requests for most of the first two weeks of October beginning on Monday, October 3rd and ending on Friday, October 14th.

What? No iPhone?
Really, seriously, not getting the next iPhone any time soon is fourth place carrier in the states, T-Mobile. It has — once again — fallen to Big Fuchsia’s Chief Marketing Officer Cole Brodman to explain away the pain.

In ablogpost on the company’s site, Brodman acknowledges the disappointment expressed by T-Mobile customers that there’s no iPhone for them.

“Please know that we think the iPhone is a great device and Apple knows that we’d like to add it to our line-up,” writes Brodman, adding, “Today, there are over a million T-Mobile customers using unlocked iPhones on our network. We are interested in offering all of our customers a no-compromise iPhone experience on our network.

“In the meantime,” continues the exec, “we continue to bring to market some of the most advanced, cutting-edge Android devices.”

He then goes on to extol the virtues of some of those devices, though I’ve gotta say if people are calling T-Mobile to tell them how bummed they are about the lack of iPhone, hearing about the Androids probably isn’t going to do it. I wasn’t going to quote any more of the letter here, but the end kind of demands it.

Android has evolved quickly from geek to chic. In many ways, Android is rivaling and even outpacing the iPhone, including consumer adoption, market share and capabilities like support for faster 4G networks. Moreover, Android offers consumers the freedom of choice. You can choose from a variety of colors, screen sizes, slide-out keyboards, price points and customization options, as well as enjoy the numerous benefits of open source innovation, cloud services and amazing apps.

This is why, for now, our focus continues to be giving customers the best that Android has to offer, coupled with 4G speeds that let you browse the Web faster than on average home Internet.

Really? Because at the beginning of the letter you mentioned that you’d like to add the iPhone to your line-up, a fact of which Apple is aware, indicating that Apple won’t let you. Seems like maybe that’s why, for now, your focus continues to be giving customers the Android pitch.

But maybe I missed something.

Fire Up the Kindle
A second destroyer of worlds has hit the tablet space. Bloomberg was first with details of Amazon’s entry into the tablet arena, and its seems significant on a number of levels.

Start with the price: $199 for the Kindle Fire, or $300 less than the least expensive iPad. Of course, it’s also smaller. Amazon’s starting the Fire line with a seven-inch tablet, though there’s talk that a ten-inch model may be coming relatively soon. More on that in a bit.

Bloomberg says Amazon CEO Jeff Bezos “is betting he can harness Amazon’s dominance in e-commerce to pose a real challenge to Apple’s iPad,” though a number of analysts and industry watchers say he looking to pick off lower hanging fruit.

It is an Android tablet and it seems built — almost exclusively — for media consumption. In fact, that may be the real play here. Bloomberg has Wedge Partners analyst Brian Blair saying that sales of Kindle eBooks, movies and music may make up for the narrow profit margins Amazon is seeing on the low-cost hardware, though those content sales may actually be making up for a shortfall.

A piece from Fortune has Piper Jaffray analyst Gene Munster guessing that at 199-bucks a pop, Amazon is actually taking a $50 bath on each Fire sold.

It does have enough content to make that play, though, with Wedge’s Blair saying, “Amazon is really the only other guy, the only other potential tablet player, that has a similar offering to what Apple has. If you look across their product offerings, they have content that none of the other tablet makers currently have because they have content on the media side.”

To start that ball rolling, the Fire also comes with Amazon Prime, the company’s $79-a-year service that includes free two-day shipping for orders from Amazon, and its streaming video service. And there’s that content thing again.

The Fire will have access to 18 million movies, TV shows, songs, magazines, and books, along with the Amazon Appstore, Amazon’s Silk Web browser, free cloud storage for all Amazon content,a color touchscreen, and a dual-core processor.

So there’s what it has compared to the iPad. As to what it’s missing, that’s a relatively sizable list. No camera — not even a crappy one — no microphone, which leaves modern-day messaging clients and VoIP right out, and no built-in 3G connectivity. Plus it’s got that smaller screen, which may be a big deal to some, though not others.

It’s a big deal to Wedge’s Blair, who says, “I don’t actually believe seven-inch is going to be a viable tablet for anybody … It’s a ‘tweener. A real tablet offering has got to be a 10-inch screen.”

Colin Sebastian, an analyst at Robert W. Baird & Co. says “The Amazon tablet is not necessarily a direct competitor to the iPad,” and that “the price point is the headline rather than the functionality.”

True, though with the boogeyman taking up nearly permanent residence in the economy, it’s a pretty big headline. All caps, top half of the page kind of headline as the holidays approach.

Speaking of which, the Kindle Fire should be out in plenty of time for the holidays. Orders are being taken now at with devices set to ship on November 15th.

AppleInsider has analyst Ming-Chi Kuo saying that the seven-inch tablet is just a jumping off point, and that both a 10.1-inch device and an 8.9-inch model should be along sometime in 2012.

Did Amazon say anything about that on Wednesday? Right… like Amazon was gonna say here’s this now, but you might wanna hold off because bigger and better is coming.

Engadget says what they said instead was “stay tuned.”

Such a 20th century comment. “Keep hitting refresh” might make more sense in this day and age.

Quoting Engadget: “We just asked Amazon Kindle vice president (and thinking man) Russ Grandinetti when we might expect a larger successor. With a smile, Russ said ‘Stay tuned,’ and left it at that.”

Firing Line
So, who really felt the hurt of Amazon’s announcements?

First under the bus was Barnes & Noble. The book, eBook, and Nook seller pulled a neat little trick earlier this year when it pushed a software update to its Nook color which — surprise, surprise — turned the dedicated eReader into an Android-based tablet. For $250. That wasn’t a bad deal until Amazon announced the $199 Fire.

Ticker symbol BKS took a small — in dollars, though big in percentage — hit dropping $0.91. Doesn’t sound like a lot, but that actually represents a 6.9-percent drop.

So, yeah… Barnes and Noble was hit both first and worst.

And they knew it. Within hours of the Fire announcement, the company sent an email to customers offering $25 off the Nook Color along with free shipping, which is still $25 more than the Kindle Fire and where’s my Amazon Video?

What do we do when Apple and Amazon run ALL of the physical media stores out of business?

Booksellers, sellers of electronics… let’s get down to it. What effect will the Kindle Fire have on iPad sales?

Great question. Check back in a year.

Yet another piece fromForbessays the release of the Kindle Fire —as well as a couple of other low-cost, ad-supported Kindle eReaders — “is nothing short of an all out assault on Apple.”

Less expensive and lighter than the iPad, the piece says “the biggest threat to Apple … is the infrastructure that Amazon offers its customers. Few of Apple’s competitors already have a large online offering of music, streaming video, and eBooks. Amazon has that in spades, and a healthy e-Reader business.” “Score one Amazon,” wraps the piece, “Now the question becomes, what will Apple do?”

But then there’s this other piece that says the Fire is not an iPad killer; that it’s “poised to nibble at Apple’s market share. But this low-cost and under-powered tablet is more likely to suffocate its Android-based brethren than the iPad and actually should cement Apple’s dominance of the general-purpose tablet market.” That’s the opinion of this piece… oh. Alsofrom.

All things to everyone.

Strikes against the Fire versus iPad in thisForbes piece include the 33-percent smaller screen, the lack of cameras, the lack of 3G wireless, the lower memory, and two-finger multi-touch, which could limit its gaming capability.

The real victims of the Kindle Fire are likely to be other Android tablet makers, as well as Barnes & Noble, about whom we’ve already spoken.

Piper Jaffray analyst Gene Munster seems to agree with the second of thoseForbes pieces. This timeFortune has Mr. Munster saying the Fire is not a true competitor to the iPad, though he says “it is more competitive than (his firm had) anticipated.”

Quoting his note:

In our view, Apple has focused on a combination of superior hardware and software, leveraging supply-side economies of scale to offer a premium tablet for $499. Alternatively, Amazon appears to be focusing on a product with superior content delivery; the company is leveraging its wide range of content assets available for sale in conjunction with its Cloud Services product for world class, mobile, digital delivery.

Here, too, is where he says Amazon is probably losing 50-bucks for every Fire sold, and that Apple has its iPad supply chain cranked up to full, where Amazon may find it “difficult to produce more than a few million Kindle Fires for the holiday season.”

Over time, though, he thinks the Fire will be a serious shot in the arm for Android tablet share. According to Fortune, “Munster expects Apple’s share of the tablet market to fall from 90-percent today to 60-percent in 2012, and for the Android share to rise from less than 10-percent to about 30-percent.” The Kindle Fire, he says, is likely to be one of the first Android tablet to drive those share gains.

Siding with Munster on the potential of a bout between the iPad and the Fire, AppleInsider has Ticonderoga Securities analyst Brian White saying it’s like comparing… well… you know.

Quoting his note:

“While Amazon’s price point, installed base, digital content and cloud ecosystem will attract a certain consumer demographic to the Kindle Fire, there is still no real competitor to the iPad 2, in our view … essentially, we believe the Kindle Fire addresses a different market than the iPad 2, a tablet-light user on a tight budget that may not have yet purchased a tablet or already use a Kindle.”

Computerworld has a few other analysts saying there’s little danger in the Fire for iPad.

Gartner’s Carolina Milanesi says she thinks “it’s more disruptive of the Android tablet market because of its price point … Android competitors like Samsung will be impacted by the Fire’s price, much more so than something that has the Apple logo on it. So there’s no reason why Apple should worry today.”

“A seven-inch tablet is for content consumption,” says the analyst, “not for the kind of content creation that can be done on the iPad.”

Technology Business Research analyst Ezra Gottheil says Amazon’s selling for the cheap seats saying, “The under-$200 price point has been thriving, while the Android competitors who have priced their tablets at Apple’s range have not … What’s emerged is a two-level market.”

“Is there going to be overlap between the Fire and the iPad?” he continues. “Sure. I don’t have any doubt that [the Fire] will have success. But for the most part the market has already bifurcated. And Apple owns, and will continue to own, the higher end of the tablet market.”

All of that said, both Milanesi and Gottheil say Amazon will be the most serious threat Apple has faced tablets to date thanks to its content-selling capabilities.

All of this could be, though I got an email from longtime Mac OS Ken listener and Apple fan Blair. His take, “noting I pretty much just consume information on my iPad, I might consider when Amazon brings out their 10-inch pad looking at getting an Amazon tablet instead of an iPad. But iPad 2 is here to stay with me till at least 2013.”

So it’s not just what the tablets can do, but what people do with them.

I may be overstating this, but it seems to me that Wednesday’s announcements could be the second biggest in the young history of tablet computing, the introduction of the iPad being the first. Not because of any one thing Amazon introduced, but because for only the second time we seem to have a tablet headed to market that actually knows what it wants to be, and is priced to get there.

Can’t wait to spot one in the wild… then I’ll run calling wild… fire.

There could have been many more of those.