There seems to be a good chance that the Kindle Fire will be an effective, low end, competitor for the iPad as a platform for digital magazines. How effective do we think it will be?
We might start by looking at some numbers. The problem is that while Apple gives us precise totals for iPad device sales, on a quarter by quarter basis. Amazon has historically given very little information about Kindle sales, either about the device or about the sales value of content. Nobody outside Amazon knows whether the eInk Kindle has sold 8, 10, 12 million or even 25 million units. The original Kindle has given Amazon a big audience for ebooks, but its not much good for magazines. But the Kindle Fire is a very different beast and its ability to handle colour, web pages, apps and graphics suggests that it can become a serious candidate as a digital magazine platform. We start with the proposition that Amazon is now selling the Kindle Fire, that none had been sold as of 14 November 2011, and several million will be sold in the last quarter of 2011. Mark Mahaney, an analyst at Citigroup, guesses that Amazon may sell 12 million Kindle Fire’s next year.
How about Apple? We know from Apple’s quarterly statements that 41 million iPads had been sold by the end of September, 2011. Those sales took place in the first 17 months after the launch. An astonishingly fast take-up for a brand new consumer product at $500+. Asymco guesses that Apple may sell 17 million iPads in this quarter, and 87 million next year. That would mean that Apple has 140 million iPads in the market, against a conjectured 15 million for Kindle Fire. If Apple introduces an iPad 3 with retina screens, and pushes a low-end iPad into the $250 it will put pressure on Kindle and could hit much higher volumes on the low end.
If all goes well with Amazon’s Kindle Fire, it will become the first serious low-end competitor to the iPad. But we still take the view that the competition will be asymmetric. Apple’s high end will not be threatened, and Amazon will focus much more on selling books, music, film, TV and magazines than it will on delivering a new communication platform
Apple also has the advantage that there is a much deeper and pervasive iOS eco-system deployed over devices which offer additional functions and form factors (phone, diary-assistant, navigation device, music system, maybe soon TV). Asymco estimates that there may be 220-280 million iOS devices sold next year. Even if we count the eInk Kindles as part of an Amazon eco-system, that would only take us to 40/50 million devices at the end of 2012. Apple would be nearing 500 million, iOS is far ahead as a platform. Amazon is only just getting going with its App store. Amazon’s eco-system straddles two very disparate operating systems and user experiences. The Amazon eco-system is strong on its common e-commerce platform, on its dominance in the ebooks space, and in its cloud services. But on all other fronts it is well behind Apple.
There is still no news on when the Kindle Fire will be available ex-North America. Why would Amazon be slow to launch the Kindle Fire outside of the US market? Is it that they do not yet have in place the legal framework which would allow them to deliver the full range of music and film in European and Asian markets? Is it that they are simply cautious and will only release the Kindle Fire in international markets when they are sure that they have got it right?
We will soon be getting one to find out more about the potential of this first ‘promising seeming’ Android tablet. The Kindle Fire may not be as good as the iPad for magazines, but it looks like a potential option for customers who do not want to buy an iPad but who do want to own a tablet computer. If Amazon retains its considerable lead in selling ebooks (from the whispers that I hear Apple’s ebook sales are not even 10% of Amazon’s), it is quite likely that some high-end consumers will be buying both devices. I look forward to seeing the first customer support query that asks us how a subscriber can read on her Kindle Fire the subscription that he bought through iTunes for her iPad.