All those experts who said the new Amazon Kindle Fire wouldn't really compete with Apple's tablet-leading iPad may have been wrong.
Since launching in 2010, Apple's iPad has been the global leader in tablets. But since Amazon's first table, the all-new low-priced Kindle Fire came out in November Apple's dominance may be sagging. In a new analyst note, Shaw Wu of the brokerage firm Stern Agee sees iPad sales as a little light in the current quarter.
Wu assigns the blame for light iPad sales to stiff competition, namely from Amazon's Kindle Fire, priced at $199 while the starting price for the Apple iPad is $499. He also notes that some Apple customers are buying the MacBook Air instead of an iPad, but in lowering his estimate for iPad sales in the quarter from 13.5 million units from 15 million units, it's clear the Kindle Fire is the leading culprit.
IHS iSuppli estimates Amazon will sell nearly four million Kindle Fire tablets by the end of the year -- not bad for a product that didn't ship until mid-November. Reviewers note that the Kindle Fire isn't the Apple iPad -- it is short on apps and isn't known for content creation abilities. Yet it seems to serve at a low price what most tablet buyers want -- a handy device good for watching videos and Web browsing and content reading on the go.
It's not like Apple's iPad dominance is going away, either. If the company sells 13.5 million tablets in the quarter as Wu estimates, the Cupertino, Ca.-based company still has a global leader on its hands. But the Kindle Fire has shown out of the gate that a device can ably compete with the iPad after others like the HP TouchPad and the BlackBerry PlayBook failed.
Wu isn't the only analyst who thinks the Amazon Kindle Fire is dipping into Apple iPad dominance, either. Another new report from Michael Walkley of Canaccord Genuity sees the same trend.
With our expectations for a new iPad launch during the March quarter leading to potentially lower inventory levels combined with increased competition from the $200 Kindle Fire, Walkley said in a note, we have slightly lowered our December quarter iPad estimates from 14M to 13M units.
But it's interesting to note that some analysts don't think Apple is overly concerned with the low-priced Kindle.
If anything, we believe that Apple is not too concerned about the low-priced entrants, wrote Mark Moskowitz, an analyst with J.P. Morgan, in a Dec. 2 research note. Recall, it has been our view that low-priced, reduced feature-set entrants, such as the Kindle Fire, are soap box derby devices stuck between a tablet and an e-reader.