Amazon Kindle Fire set to compete with low-cost tablets in India

Competing with the scores of tablets being unveiled almost on a weekly basis in the market, – famous for its Kindle e-reader, has now launched the Kindle Fire tablet.

The Amazon product is set to pose strong competition in the tablet market. At the lowest price of $199, Amazon’s Kindle Fire tablet competes with the likes of Apple’s cheapest iPad at $499, Cisco’s Cius enterprise tablet at $750, HP’s TouchPad at $400, Samsung Galaxy tab at $469 and BlackBerry Playbook at $499. Though it lacks compelling features like camera and advanced voice-calling capabilities, the tablet scores on the popular 7-inch market size.

Amazon is going head to head with Apple and the iPad with a consumer-centric media consumption device. Amazon is hoping to attract consumers with a device that has direct access to its huge content library of books, music, films and TV shows. The pricing is critical to gain traction in the tablet market where the iPad has effectively become the defacto standard,” said Adam Leach, practice leader at Ovum.

Rival manufacturers failed to attract consumers as they have matched the iPad’s price point without matching its content offering, whereas the Kindle Fire has access to Amazon’s content store and is half the price of the cheapest iPad model. Amazon’s retail-based business model allows the company to subsidize the device on the premise that consumers will buy more from Amazon, be that physical goods or its digital content. This model is the direct inverse of Apple’s model; Amazon is selling a device in order to sell more content where as Apple sells content in order to sell more devices,” Leach added.   

The new tablet will help raise Amazon’s falling sales to 32 percent to reach approximately $64.6 billion in 2012. This can be compared with Apple, which shipped 9.25 million 9.7-inch iPads in the quarter ending June 25, and BlackBerry PlayBook shipments which are expected to reach 2.2 million by the year-end. HP which recently cut its TouchPad prices to $99, in a bid to raise sales, finally discontinued its TouchPads in August this year – a month after its debut.

According to Gartner, Android tablets are on pace to ship 11 million units in 2011, accounting for 17.3 percent of media tablet sales. This is up slightly from Android’s 2010 market share of 14.3 percent. Gartner’s forecast for the Android OS has been lowered by 28 percent from last quarter’s projection. The reduction would have been greater had it not been for the success of lower-end tablets in Asia, and the expectations around the launch of Amazon’s tablet.

So far, Android’s appeal in the tablet market has been constrained by high prices, weak user interface and limited tablet applications. However, Google will address the fragmentation of Android across smartphone and tablet form factors within the next Android release, known as ‘Ice Cream Sandwich,’ which we expect to see in the fourth quarter of 2011. Android can count on strong support from key OEMs, has a sizeable developer community, and its Smartphones application ecosystem is second only to Apple’s,” said Carolina Milanesi, research vice president at Gartner.

India’s tablet sales touched 1,58,000 units at the end of June 2011, with the 7-inch screen size and Android v 2.2 Froyo OS emerging as the most favoured platforms. With 27 models from 10 vendors now available in the Indian tablet market, customers are spoilt for choice. The split between 3G and WiFi models was in the proportion 70:30. Samsung used a tactical price drop to emerge the best selling Tablet brand in India during the three quarters ended June 2011.

RIM’s Playbook, Apple’s iPad2, Motorola’s Xoom and Samsung’s Galaxy Tab 7 are some of the notable MNC tablet brands available in the India market in the high end range. Tablet models in the India market in Q2 2011 ranged from Rs. 8,000 per unit going up to Rs. 47,000 per unit. Going forward, a majority of tablet models are set to launch in the volume segment at a price band between Rs 7,000 to Rs 15,000.

Moreover, content consumption will form the backbone of Tablet adoption in India. The consumption patterns span multiple formats: Entertainment (Music, Movies, Gaming, Cricket etc.), Video (calls, video sharing sites, Live TV), social networking and IM, web browsing and educational content (wikis, online digital libraries), ‘T-banking’, and productivity enhancement tools and corporate applications (e-mail, word processing, spreadsheets and others).

Though the launch date of the Amazon Kindle Fire tablet in India has not been announced yet, low cost tablets bundled with affordable data services on 3G and BWA networks can be expected to give a further boost to India tablet shipments in 2012 and beyond.

By Beryl M
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