Amazon’s Kindle Fire is Cheap But No iPad Killer

September 29th, 2011 · by Trefis Team
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Amazon (NASDAQ:AMZN) unveiled the 7-inch Kindle Fire tablet on Wednesday for a $199 price tag, less than half of the lowest version of iPad version that comes for $499. [1] Some may believe that Kindle Fire’s attractive price point could potentially hurt Apple (NASDAQ:AAPL), but we do not think so. In another note we discuss that Amazon could actually be a threat to non-iPad players like Research in Motion’s (NASDAQ:RIMM), Motorola Mobility (NYSE:MMI) and other tablets based on Google (NASDAQ:GOOG) Android operating system.

The iPad accounts for around 12% of our $510 price estimate for Apple stock, which is about 25% above market price.

See our complete analysis for Apple stock here

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Amazon does not directly compete with Apple

Kindle Fire is a 7-inch tablet, and we believe it poses design difficulties and is not as useful as a 10 inch tablet such as iPad. In our earlier note titled Do 7-Inch Tablets Stand a Chance?, we discussed in detail why Steve Jobs called the 7 inch tablet “Dead on Arrival”.

Part of this stemmed from the fact that the 7-incher is a tweener — too big to be a smartphone and too small to be an effective tablet. We agree with this view and believe that 7-inch tablets will find it difficult to make meaningful inroads vs. iPads.

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Kindle Fire lacks certain features

Although Amazon can match Apple in terms of access to media content, Kindle Fire lacks certain features present in iPad such as forward- and rear-facing high-resolution cameras, microphone and a connection to a 3G wireless network. 3G tablets have started to become more popular. AT&T (NYSE:T) found that most customers that purchased 3G tablets also activated data plans, an item we discussed in iPad Average Price Could Increase as Telcos Sell More 3G Tablets). [2]

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Notes:
  1. Amazon Unveils $199 Kindle Fire Tablet, Bloomberg, September 29th, 2011 [↩]
  2. AT&T’s Lurie: Majority of Tablet Customers Activate 3G Connectivity, FierceWireless, September 13, 2011 [↩]
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