Photo: Steve Kovach, Business Insider
Apple is a formidable player in the tablet market with almost 30 million iPads sold to-date. Similar tablets from Samsung, RIM, HP and others have struggled to make any dent in the iPad market. And now comes Amazon’s Fire. Will it succeed? I think so. Here are my 10 reasons why Amazon has a very good chance to take a big bite out of Apple’s iPad business:1. Jeff Bezos, Amazon’s CEO considers Fire as a service rather than a device. For Amazon, the device is the razor that allows it to sell more blades – ebooks and other products. In contrast, iPad is the main source of profit for Apple – it barely breaks even on iTunes. Clones of Apple such as Samsung, HP had a strategy similar to Apple and could not produce a tablet with enough differentiation. In contrast, Amazon can afford to sell Fire at $199 versus iPad’s $499 since it does not need to make money on the device itself.
2. Amazon has formidable friends in Google and Adobe, among others, who have a strong interest in making Fire succeed.
3. Publishers and other content providers are also keen to see Amazon succeed in order to balance Apple’s negotiating power. There are already indications that some publishers are making deals with Amazon who, unlike Apple, is reportedly willing to share subscribers’ information with the publishers.
4. Kindle was already popular with customers in spite of huge success of iPad. This is a strong signal that a large segment of the population finds Amazon’s devices attractive.
5. In a recent online survey of its 12,000 readers, the Wall Street Journal found that almost 64% were willing to buy the new Fire. The latest numbers show that Fire sold 95,000 units on its first day of release, almost one-third of original iPad sales and significantly greater than Samsung or HP tablets.
6. Apple has earned a reputation for great customer experience, and Amazon is no less an icon of excellent customer service. Jeff Bezos is a constant evangelist for customers.
7. With his recently announced retirement Steve Jobs is finishing his work with Apple and iPad, while Bezos is just starting with new energy on devices. While Tim Cook, the new CEO of Apple is a smart and competent person, it remains to be seen if he has the salesmanship and charisma of Steve Jobs that has been a big part of Apple’s magic.
8. Bezos can easily link its Amazon Prime service to Fire that can further boost this profitable part of the business.
9. Fire will help Amazon leverage its new and growing video streaming business. Given the recent stumble of Netflix, this may be another area of strong growth for Amazon.
10. Apple has a distinct lead and advantage in the number of apps in its arsenal. However, with the rapid growth of Android and the retailing muscle of Amazon, developers can hardly ignore Amazon Fire, making Apple’s lead in apps less compelling a reason for consumers to buy iPad.
Apple remains an innovative and magical company and no one should underestimate it. However, Amazon has been nimble and creative as well and I am convinced that the new Amazon device has a very good chance of catching Fire.