Can the iPad 3 Kill the Kindle Fire?
The tussle between Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN) in the tablet market is heating up as the Kindle Fire is proving to be a significant threat to the iPad. In a recent market survey by ChangeWave Research, although Kindle Fire fell short of the iPad in terms of customer satisfaction, it scored higher than other non-iPad tablet players such as Research in Motion’s (NASDAQ:RIMM) PlayBook. [1] The survey pointed out that users rated the low price as the most attractive feature while buying the Kindle Fire. Amazon is selling this device for just $199, less than half of Apple’s entry-level price of $499 for the iPad 2.
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Amazon Could Make Up for Losses with Kindle Fire
One interesting finding from the ChangeWave survey is that nearly 29% of the Kindle Fire owners said that they will spend more money on Amazon’s platform over the next 90 days, compared with 19% of non-owners. This is good news for Amazon as the company’s sole purpose of selling the Kindle Fire at a loss is so that users will buy other products such as books, movies and popular television shows from Amazon’s platform, thereby compensating for the loss.
iPad 3 Launch Could Change This Equation Though
According to a recent report from DigiTimes, Amazon will cut Kindle Fire’s supplier orders by half to 3 million units in Q1 2012 as it expects slower post-holiday sales and the forthcoming launch of the iPad 3 to slow down Kindle Fire sales. [2]
We expect the iPad 3 will be a high performance iPad with some attractive features like voice recognition service Siri, presently an important feature on the iPhone 4S. The new iPad may also have a high resolution screen and a faster processor. According to some reports, the iPad 3 may be released as soon as March this year and may support 4G LTE networks even before it’s available on the iPhone (see The Next iPad Could Get 4G LTE Before the iPhone).
All these factors make the next iPad a potent weapon for Apple and can impact Kindle Fire sales, which is why Amazon might have decided to cut down the Kindle Fire orders for this quarter.
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Notes:- ChangeWave Survey Shows Momentum for Amazon Going Forward, February 2nd, 2012 [↩]
- ODM orders for Kindle Fire tablet PCs to drop to 3 million units in 1Q12, say source, DigiTimes, January 20th, 2012 [↩]