Apple’s iPad currently stands undefeated in the tablet market with HP giving up its TouchPad, Samsung’s Galaxy Tab 10.1 stuck in a patent issue, Motorola Xoom and RIM Playbook crawling to catch up. Can the e-commerce giant Amazon pose a threat to iPad by launching its own tablet for a lower price?
If the Amazon tablet is priced at $300 at the time of its launch and the company has enough supply to keep up the orders, Amazon could sell 3-5 million tablets in Q4 alone, Forrester analyst Sarah Rotman Epps wrote in her blog. Apple sold 3.3 million iPads in the first three months of the launch.
“Amazon’s willingness to sell hardware at a loss combined with the strength of its brand, content, cloud infrastructure, and commerce assets makes it the only credible iPad competitor in the market,” writes Rotman Epps.
As Amazon’s revenue doesn't depend much on hardware, selling the devices at a loss can help the company strengthen its customer base. Comparing Apple and Amazon on the same strategy, Rotman Epps says: “Apple sells software and services, but the lion’s share of Apple’s revenue still comes from hardware, which makes it vulnerable to a company, such as Amazon, that isn’t seeking profit from hardware sales. Amazon and Apple’s relationship, already fraught with Apple’s policy changes on content sales, will become even more strained.”
Amazon hopes that with the devices being cheaper, consumers will spend more for its digital content.
HP TouchPad, which had to go through a tough time since its launch, was finally sold out in several stores after a huge cut in its prices.
This clearly suggests that if Amazon prices its tablets at a lower price, its strategy of selling the devices at loss will pay off, given that the specs are comparable to iPad.
Amazon tablet is expected to run on Android 3.2, with a 9-inch screen, slightly smaller than the iPad’s 10.1-inch screen.
Though Only nine percent of consumers considering buying a tablet actively prefer an Android tablet—compared with 16 percent who prefer iOS and 46 percent who prefer Windows,” according to analysts. However, Amazon can provide its software and services to slates from Samsung, Motorola, Asus, Acer, Toshiba and others.
In a year from now, we could see a range of ‘Amazon tablets’ made by different hardware manufacturers, Rotman Epps wrote.