Amazon Ignites Tablet War With Fire, Takes On Apple

Amazon.com Inc took the wraps off its long-awaited “Kindle Fire”, tacking on a mass market-friendly $199 price tag that poses a serious threat to the dominance of Apple Inc’s two-year-old iPad.
The eagerly anticipated gadget, while lacking many of the high-tech bells and whistles common on tablets from cameras to 3G wireless connection, may sound the death knell for a raft of devices based on Google Inc’s Android. The software powers tablets made by Samsung, Motorola, Asustek, HTC and LG Electronics.

Dotcom-entrepreneur and billionaire-CEO Jeff Bezos unveiled to a packed audience the gadget he hopes will wed Amazon’s books, movies, music and other content with cloud or Internet-based storage and Web browsing. “People have been waiting for a tablet for 200 bucks for a long time and this is the best one I’ve seen so far,” Tim Stevens, editor-in-chief of gadget review website Engadget, told Reuters.

The Kindle Fire tablet has a 7-inch screen, free data storage over the Internet and a new browser called Amazon Silk. Amazon expects shipments to start on Nov. 15. By pricing the Fire at less than half the iPad – yet stripping out costlier components and features – the Internet retailer hopes to get the device into millions of consumers’ hands, who in turn will buy Amazon content.

One key differentiator that might help the Fire stand out during the cut-throat holidays is Amazon’s “EC2” cloud computing service, which supports Internet browsing and helps speed loading of websites. That was not available on rival tablets, Stevens noted.

“Expect a blood bath as pricing will have to get extremely aggressive,” said Mark Gerber, an analyst at Detwiler Fenton & Co. He expects Amazon to sell at least 3 million Kindle Fires this holiday season, taking the No. 2 spot in the tablet market.

Colin Sebastian, an analyst at RW Baird, kept his Amazon tablet sales forecasts the same on concern about potential supply issues. He expects two million to three million units to be sold this year and four to six million next year. “While we think the Kindle Fire could easily be the most successful Android-based tablet to date, the Nov. 15 launch date, and the possibility of issues with ramping production – Apple encountered significant production issues with the iPad 2 – are the key reasons we are maintaining our current tablet estimates,” said Sebastian.

Breaking into a crowded tablet market will be difficult. Companies from Hewlett Packard Co, Motorola, Samsung and Research in Motion Ltd have launched tablets, but none has taken a big bite out of Apple’s lead. Apple dominates the North American tablet market, with 80 percent of the 7.5 million units shipped during the second quarter of 2011, according to Strategy Analytics.