, , , , , ,

When Apple changed the market with the iPad, it was only a matter of time before competitors tried to match it. Amazon, a company known for its excellent adaptation, though not for its ability to lead the market with cutting-edge products, now has issued its response and perhaps the best challenge to the iPad yet, in the form of the Kindle Fire.

The Fire offers a 7-inch display, or half the size of the iPad, at half the price ($199). It uses the Android operating system, which enables users to access Amazon’s vast content library. The Kindle Fire does not offer an embedded camera or microphone, nor does it provide 3G cellular connections, so it only works on Wi-Fi. However, running on Amazon’s EC2 cloud computing engine, which represents Amazon’s version of the Android app store, the Fire gives users access to more than 10,000 games.

To date, 28.7 million iPads have been sold, and consumers are browsing the web more and more using such tablet devices. Online purchases on tablets has reached 20 percent of all mobile e-commerce sales. Furthermore, 40 percent of Amazon’s sales already are from books, music, and movies—that is, products that are perfectly matched to digital sales.

Thus the rationale behind the Kindle Fire was to provide what Amazon thinks are the best features, in a smaller device, that is adequate and can be sold for a non-premium price. Furthermore, though the iPad already has helped Apple gain more hold in the digital media space, through its Kindle app, Apple takes a 30 percent cut of all content sold in this channel. Amazon needed to build a tablet device so it could avoid paying to grant customers access to content that Amazon already owned.

The arrival of the Kindle Fire fits with the history of Amazon. It started as a giant online bookstore; it has adapted widely, quickly, and well to challenge electronics stores such as Best Buy, contribute to driving Borders bookstores out of business, and compete with discount department stores such as Walmart and Target. The Kindle Fire offers Amazon customers all the software they might need to access every product they could possibly want to buy.

Discussion Questions:

1. Would you buy a Kindle Fire? 

Brad Stone, “Amazon, The Company that Ate the World,” BusinessWeek, September 28, 2011.