Red-Hot Kindle Fire Blazes its Way to Second Place in Media Tablet Market
Just two weeks after its introduction, Amazon's Kindle Fire already is shaking up the market, with the device expected to surpass all other iPad rivals to take second place in the global media tablet business in the fourth quarter.
Context & Ripple Effects
iSuppli's call caps a fall of steadily building evidence: leaked October sales numbers suggested the Fire was outselling expectations before it even shipped, and order backlogs kept climbing through early October. By late November, ChangeWave had already flagged it as the first non-iPad tablet to generate meaningful buyer demand, even though 65% of prospective tablet buyers still wanted an iPad versus 22% for the Fire.
The significance is what 'second place' means structurally: every other Android tablet maker — Samsung, Motorola, RIM — has been selling against the iPad for over a year and none has cracked double-digit share. Amazon did it in two weeks, at $199, by treating the device as a storefront for its media and Appstore rather than a standalone computer.
First-order effects
- Amazon enters Q4 as the clear number-two in global media tablets behind Apple, with iSuppli tracking roughly 3-4 million units shipped and syndicated reporting pointing to 5 million by 2012.
- Every rival that positioned itself as 'the iPad alternative' — Samsung's Galaxy line, Motorola's Xoom, RIM's PlayBook — is demoted to also-ran status in the same quarter it happens.
Second-order effects
- Amazon's Appstore, confirmed as the primary app channel on the Fire, becomes a large parallel Android distribution point overnight, weakening Google's control over which apps Android tablet users see.
- The $199 price resets buyer expectations for non-iPad tablets, forcing competitors to either match a price their component costs cannot support or concede the volume tier to Amazon.
Third-order effects
- If the pattern holds, the tablet market bifurcates into Apple's high-margin premium tier and an Amazon-style commerce-subsidized tier where hardware is sold near cost and profit lives in content and services — a model no traditional PC-maker playbook addresses.
- Rumored supply-chain reporting of an 8.9-inch Fire followup suggests Amazon intends to press the advantage up-market, turning a single loss-leader device into a full tablet lineup.
The trend: The tablet market is splitting into an Apple premium tier and a content-subsidized commodity tier led by Amazon, with app-distribution leverage shifting toward whoever owns the storefront rather than the OS.