Amazon’s Fire Tablets Are Yet Another Building Block Towards ‘Owning’ the Home

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The New York Times about Amazon’s tablets:

Now, five years after unveiling that first tablet, Amazon is coming out with a new model of the device that takes the company’s single-minded obsession with offering the lowest practical price to new extremes.

It is doing so at a time when the overall tablet market is no longer the growth juggernaut it once was, with weak sales from the likes of Apple and Samsung. One notable exception to the downward trend is Amazon, which is seeing sales rise because its devices are so inexpensive.

“They’re obviously doing something right because they continue to grow in a market that is overall declining,” said Jitesh Ubrani, an analyst at IDC, the technology research company.

​One has to know one thing about the tablet market: There is not one tablet market. There is a market for iPads, the only, for lack of a better word, Post-PC computers out there. And there is the Android tablet market. Which is mainly a market for portable TV screens. This is not to say Amazon is not accomplishing something here. But this is the market context for tablets.

It is more to say that there is tremendous opportunity for Amazon in Android-ish tablets. More so than there is or was for Android-ish smartphones. (Far more.)

There are relatively few tablet-optimized Android apps available. Amazon is not competing against a dominant Google Play Store here.

Hence the aggressive pricing.

The most remarkable thing about the device is the price, which, at $89.99, represents a 40 percent drop from the previous 8-inch Fire’s price of $149.99. More striking is the contrast to Apple’s 8-inch iPads, which start at $399 for the latest generation and $269 for an earlier model. (…)

If Amazon’s approach to tablet pricing sounds unprofitable, that is because it is, at least directly. The company views them as a way to entice people to become more enthusiastic Amazon customers by, for example, encouraging the purchase of $99-a-year Prime memberships, which include a Netflix-like video service, music and other forms of entertainment that can be consumed on the devices.

“We aim to break even on our hardware and make money when customers use our devices, not when we sell devices,” said [Kevin Keith, general manager of Amazon’s Fire tablet business]. “We feel like that’s a great model for our business.”

It is all in there. The Prime /video flywheel, the subsidized hardware. Amazon still needs a stronger app ecosystem to be truly successful here (and create an app-fueled moat itself). But that the company does know and they are working on it.

If they succeed tablets will be another entry point for Amazon into the home. Right after the Dash buttons, Echo/Alexa and Fire TV.

My -most likely unsurprising- thesis right now is, that Amazon, having lost the smartphone wars, is working hard to ‘own’ the home. (Though tablets usually get the ‘mobile’ label attached, they are used mainly at home.)

A year ago, Amazon was the third biggest tablet vendor in Q4 2015 according to IDC.

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