

The case against the Kindle as a low end tablet disruption - tylerrooney
http://www.asymco.com/2011/09/30/the-case-against-the-kindle-as-a-low-end-tablet-disruption

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brudgers
> _"Disruption requires asymmetry but it also requires the ability to go up a
> trajectory of improvement along the basis of performance that a majority of
> users demand"_

The premise upon which this depends requires construing the Fire as Amazon's
ground zero entry into the segment and dogmatic acceptance of the standard
narrative in which the market segment for tablets or slates did not exist
prior to the introduction of touchscreen devices in the form of Apple's iPad.

But neither is the case, just as smartphones were available for years before
the introduction of the iPhone, likewise, the Fire is an extension of Amazon's
well established product line - an extension which given the naming convention
Amazon has employed (Kindle -> Fire), one may reasonably suspect has been on
the drawing board for quite some time.

Another way to look at the potential for disruption which the Fire may hold is
to consider it as an extension of the disruption Android caused in the
smartphone market; i.e. making touchscreen smartphones ubiquitous commodity
devices. Indeed, Amazon's agenda with the Fire (and Kindle) is more analogous
to Google's with Android than to Apple's for the iPad.

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anactofgod
> "The iPhone is also a subsidized product and it seems very successful. How
> come it won? The answer is in details."

One of the other relevant details is that any subsidies that are provided are
done so by the wireless carriers, not Apple. Apple gets paid in full for each
iOS device sold, either by the carrier (iPhones), or by the customer direct
(the other iOS devices). By being immediately profitable on each iOS device,
Apple has no "subsidy variables" to factor into its profitability -v- product
lifecycle calculations.

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cowkingdeluxe
Most articles I've read on this subject state that the new tablet will be sold
at cost - a few dollars, not cost - $50. Which of these estimates is most
likely correct?

~~~
chomkian
Estimate says Amazon will be making a $50 profit:
[http://www.eetimes.com/electronics-news/4228505/Kindle-
Fire-...](http://www.eetimes.com/electronics-news/4228505/Kindle-Fire-
profitable-at-estimated--150-BoM)

Estimate from iSuppli (yes, the infamous iSuppli) claiming loss:
[http://www.isuppli.com/Teardowns/News/Pages/Amazon-Sells-
Kin...](http://www.isuppli.com/Teardowns/News/Pages/Amazon-Sells-Kindle-Fire-
at-Low-Profit-Margin-to-Promote-Online-Merchandize-Sales.aspx)

Make of that what you will.

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atirip
Let's see how long that price is sustainable. There's no point to buy Kindle
and not to buy any books, so subsidied Kindle will earn money to Amazon. But
not so with Fire, you can (and there will literaly be millions and millions of
cheapskates who will do exactly that) buy it and not buy anything from Amazaon
after that. So I predict that Fire will be Amazons Bing.

~~~
codex
Moreover, Google (through Motorola) will soon make an as-good-or-better tablet
at the same price point as the Fire. The Fire is a direct threat to Google's
tablet ambitions, and Google has much more cash with which to subsidize
tablets. In addition, Google has a monetization strategy (ads + content) which
is better than Amazon's (content). Heck, even search ads alone is probably
better than Amazon's content model. Amazon's ad. monetization is weak because
they don't have a search engine nor a real locality ad. platform.

~~~
codex
However, one way in which Amazon can make a ton of money on the Kindle Fire is
to use their Silk browser _to replace ads in search results and web pages_ on
Fire devices. They can do this because Silk is effectively a rewriting proxy.
Customers may stick with Silk anyway because the pages will load more quickly.
There will be backlash, but Amazon may decide to do this anyway. Obviously,
they would only replace a small percentage of the ads so as not to be cut off.
Alternatively, they can use Silk data to better target Fire ads. to users
outside of the browser, or with interstitials.

~~~
bad_user

         They can do this because Silk is effectively a 
         rewriting proxy.
    

Technically they can, but it is probably illegal. And Google may not come
after individuals that are using ad-blockers, or after shitty motels that are
doing this, but you can bet your ass they'll sue Amazon and probably win too.

And it isn't only Google that Amazon should worry about in such a case -- if
I'm a webmaster and the ads for which I'm getting paid for are going to get
replaced by Amazon, I would be pretty pissed and I would probably block all
Silk-related requests.

    
    
         Customers may stick with Silk anyway because 
         the pages will load more quickly
    

I somehow really doubt that Silk will translate in a faster user experience.
Of course, marketing does wonders.

~~~
codex
Agreed, ad. replacement may be derivative-work liability for Amazon; I don't
think the case-law is clear.

But they don't have to directly replace ads. in order to monetize ads well.
Because they have all of a user's browsing history with Silk, they can target
ads. as well, or possibly better than, Google. Perhaps they show ads. at the
bottom of the screen, or in the screen saver, or while web-pages are loading,
or with location-based pop ups for coupons for a store just down the street,
whatever.

In this respect the Fire is a direct attack on Google, and Amazon probably
_has_ to take this step in order to be able to subsidize this tablet as much
as Google will be able subsidize their tablets. For this reason I wouldn't be
surprised if Google soon cuts Amazon off from Android by making more of the OS
closed source, and breaking app. compatiblity. If this occurs, expect Amazon
to make a bid for Palm.

------
chugger
I'd choose an iPod Touch or an iPad 1 over a Kindle Fire any day.

~~~
chugger
The Kindle Fire really has nothing going for it except for the large screen
and the price.

~~~
jgroome
I'd say it certainly appeals to people who can see the advantages of a small
tablet computer but don't want to put down $600 on an iPad 2.

~~~
chugger
You can get a new/refurbished iPad 1 starting from $200

