Perhaps the most interesting trend to note is that prices on slate tablets have not yet hit rock bottom. Amazon’s $50 (or $42 for bulk shoppers) tablet was the holiday season’s surprise hit, garnering the number 3 rank among the worldwide top 5. Rival vendors like Huawei and Lenovo also continued to focus on the low end while also expanding outside their home country China.
That is not surprising, given the prices. The tablet market is further differentiating. While tablets as a whole were down 21% in Q4, Amazon’s share grew:
Amazon’s latest Kindle iteration piqued everyone’s interest with its low price point, allowing Amazon’s annual growth to reach 175.7%, the highest amongst the top 5. Amazon’s success in the tablet market has thus far been purely based on price. While this bodes well during the holiday season, it’s unlikely the Kindle’s success will continue in the remainder of the year.
While Amazon was not in the top 5 for 2015 it managed to become the third biggest vendor only behind Apple and Samsung in the fourth quarter of 2015. IDC:
Amazon’s cheapest Fire tablets are little more than portable, connected screens. While more expensive tablets are at least technically capable of replacing laptops, cheaper tablets like those from Amazon are mostly used for watching video and little else.
That is not a big problem for Amazon: The company gets in most cases for the first time its own devices into the hands of people (who later may opt to buy a higher priced Amazon tablet or an Echo or an Fire TV etc.). Given that Amazon Prime Instant Video is a big driver of Prime subscriptions, having an inexpensive tablet available for video consumption doesn’t hurt. It hurts neither that these tablets are perfectly capable for browsing and online shopping. As a side effect Amazon gets an installed base of devices the company can advertise to developers of apps that can potentially run on those tablets.
The bigger the “Fire” ecosystem as a whole the better for Amazon. (The step from a Fire tablet app to a Fire TV app is a smaller one than from an Android tablet app to Fire TV for example; and we’re not even speaking of iPad apps.)