SAN JOSE, Calif. – The Kindle Fire brings welcome competition to a tablet market dominated by Apple and a services market led by cellular carriers. It may also undermine opportunities for Taiwan's many system builders trying to stake out a position in the new mobile market.
The killer feature of the Kindle Fire is its $199 price. Amazon is stealing a page from cellular carriers, subsidizing the hardware costs in hopes of reaping a bonanza for its services businesses.
Amazon may be one of the few Web 2.0 companies that can pull off such a feat. It leads the online book business, has a recently enhanced movie and music business, a cloud services business that offers storage and computing and a fledgling app store.
To keep that services business—and associated ad revenues--within its own gates it apparently had to launch its own browser. Amazon Silk will add to the browser fragmentation already expanding with Apple's Safari, Firefox and Google Chrome. Thus Amazon is also challenging Microsoft's once dominant spot in browsers.
As for Apple, the competition is long overdue. Some market watchers claim the iPad is sweeping up as much as 80 percent of the tablet market.
For my money, the Samsung Galaxy Tab is the closest competitor. But Apple is using patent infringement suits around the world to keep it out of the market, and already succeeding in Germany.
Carriers could use some competition, too. The huge gap between bundled and unbundled smartphone prices is just obscene—especially when you factor in the frustration over getting shacked into pricey long term data plans.
I hope Barnes and Noble and Netflix jump on this bandwagon soon. But frankly the two will probably have to partner to offer the suite of services Amazon has today. I can't think of any other Web 2.0 companies with the kind of portfolio needed to create such an offering. Even Yahoo lacks vibrant e-book and app services.
Wintel will also hate this product. It breathes more life into the tablet phenomenon that looks to eat into its notebook franchise.
Taiwan is the only unfortunate casualty here, IMHO. Its OEMs have been working hard to figure out a way to create compelling tablets using Android and now Win8, but so far they have lacked the software sophistication and services to compete.
No doubt at least one of them is happy as the maker of the Kindle Fire. But when I was last in Taipei, the OEMs I talked to were shaking in their boots over the prospect of the narrow profit margins in a $200 Amazon tablet.
I suspect today every one of them is knocking on the doors of China's big Web 2.0 companies such as Baidu and Ten Cent.
One of the biggest challenges of the Kindle Fire is the relatively small size of its 7-inch screen. I tried both a 10-inch Galaxy Tab and a 7-inch RIM Playbook recently. Although the Playbook has more sophisticated software, the larger screen was always my preferred choice.
I suspect that long term tablets with larger display sizes will always be the most popular because they are the most fun. But for Amazon and other would-be Web 2.0 carrier types the bigger display will be harder to subsidize.
One other impediment for the Kindle Fire is at least the perception of its lack of openness. Users have had a taste of the open mobile Web and they won't want to go back to the walled gardens of any service provider. If the Fire doesn't let people readily use services such as iTunes, Google Apps, Barnes & Noble bookstore or NetFlix streaming, users may snuff it.
I am intrigued by the Whispernet Synch feature of the Kindle Fire which lets it remote its display to a TV. I suspect it is using something like Intel's Wi-Fi based display technology as the lowest cost way to make the link. Long term, 60 GHz will make the best connection, but it's far from the cheapest approach today.
There are many shoes yet to fall. The Kindle Fire does not go on sale until November 15. We won't know the details of what's inside the box for sure until almost Thanksgiving.
Until then the game is on to speculate exactly what's inside the Kindle Fire, who makes it and to what extent it will gain foothold in the emerging tablet market. One thing is clear, it has generated plenty of heat.
I'd love to hear what you think about the Kindle Fire. Sound off below.