Amazon (NASDAQ:AMZN) bet big when it launched its Android based Kindle tablet range and seems to be winning. The company recently revamped its entire Kindle range and introduced a 8.9″ Kindle Fire HD tablet to re-position itself as a direct competitor to the market leader Apple‘s (NASDAQ:AAPL) iPad. With Kindle Fire HD scheduled to go on sale in late November, Apple launched its own offensive and introduced a 7.9″ inch tablet called Apple iPad mini. The new Apple launch though well received, fell short on consumer expectations and this will most likely result in a lot of people purchasing Amazon’s tablet instead. Amazon went on record claiming, “Wednesday was the $199 Kindle Fire HD’s biggest day of sales since launch and up 3x week over week” a day after the iPad mini was announced. 
Revamped Kindle Range Stands Up To iPad Mini
The 7″ tablet market heated up recently with Google (NASDAQ:GOOG) releasing its own Nexus 7 tablet and Apple launching iPad mini. Priced at $329, the Apple iPad mini could not deliver the expected death blow to the 7″ segment. Priced at a considerable markup to other devices in the segment and with similar or slightly better features, it fell short of customer expectations. We believe that Amazon’s blossoming content store, improved UI on the revamped Kindle range, good technical specifications and the ease of accessing its market place could see it attract substantial customers as the tablet market grows.
The overall tablet market grew 49.5% in the third quarter with Amazon commanding a 9% share in the 27.8 million tablets shipped worldwide.  Android based tablets gained considerably at the expense of Apple’s market-share. While, this could be a result of people awaiting a new iPad and iPad mini launch, the iPad mini falling short on consumer expectations could result it in being a long term trend.
Currently, the Kindle device range has limited geographical presence. With Amazon planning on rolling out Kindle Fire tablets globally it will soon have enough distribution to gain market share. Also, the company has been aggressively promoting the Kindle range on its home page to push the Kindle Fire HD. Going forward, we expect the company to continue to aggressively market its Kindle Fire HD relative to the iPad mini. However, it will not be easy for the company as it will face tough competition from Microsoft (NASDAQ:MSFT) Surface device range and other Windows 8 based tablets that Samsung and other device manufacturers are planning.
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We currently have a $218 estimate for Amazon which is 8% below the current market price.Notes:
- Amazon Says Kindle Withstood iPad Mini Assault, All Things D, October 2012 [↩]
- Android Tablets Gain Momentum in the Third Quarter, Expectations Remain High for the Holiday Quarter, IDC, November 2012 [↩]