inexpensive Kindle Fire tablets, which feature OMAP applications
processors, are increasingly seen as a pesky low price competitor to
Apple Inc.'s iPad. But it would come as a surprise to many if Amazon
took a page from Apple's book and moved toward vertical integration,
including designing its own chips.
Carolina Milanesi, an analyst
for consumer technologies at Gartner Inc., said she was skeptical of
the report. Amazon's strategy is to make money on services, not
hardware, she said. "As far as an integrated offering goes I think there
are higher priorities when it vines to acquisition than not owning the
silicon," Milanesi said.
Amazon's Kindle Fire and Kindle Fire HD
tablets use OMAP applications processors. Amazon sells its tablets
basically at cost in an effort to get more people buying content from
Amazon. According to UBM TechInsights, the Amazon Kindle Fire, which
retails for $159, carries a bill of materials of $148. Adding in costs
for marketing and R&D, the firm roughly breaks even on each device
sold, according to UBM TechInsights.
Strauss said a move by
Amazon to acquire OMAP seems like a stretch. But he said Amazon is
interested in expanding the Kindle product line and could also be
contemplating developing its own branded smartphone.
and others believe that TI's decision to stop focusing OMAP on the
smartphone and tablet markets stems from a trend toward integration of
the applications processor and the cellular baseband. TI began gradually
pulling out of the baseband IC business a few years ago and lacks the
capability to pair OMAP with an advanced baseband.
if TI did sell OMAP, it would likely be at a discounted rate. While
product lines like OMAP might typically be sold for three to five times their annual revenues, TI in this case might have to settle for something lower, he said.
Roger Kay, a technology market analyst Endpoint Technologies Associates, said, assuming the report is true, Amazon must decide if whatever the purchase price for OMAP might be would be worth the added degree of control the company would get from owning its own chip designs and optimizing them for its products.
"Given that Apple is very nearly the benchmark for an integrated ecosystem, Amazon isn't that far behind in acquiring the pieces that you have to have to make a complete stack," Kay said.