Can Amazon Really Fight iPad Magic?
I have already snoozed my way through a couple of Android-based tablet demo units in recent months, so I admit that I greet this week's Forrester projection with some skepticism. The researchers got their expected headlines the other day in predicting Amazon's less-than-secret upcoming tablet could seriously dent the iPad juggernaut and sell 3 to 5 million units in the fourth quarter of the year. So striking and provocative did Forrester believe their prediction would be that they withheld the report for a week "out of respect for Steve Jobs," says analyst Sarah Rotman Epps. I am not sure what to make of that, except that perhaps Jobs' infamous reality distortion field has a larger reach than we imagined. Now we all become circumspect at suggesting even the mighty Apple lives in a world of common market forces and competition?
Forrester suggests that the arrival of an Amazon tablet at an aggressive price (under $300) will pose the first serious challenge to the iPad. Amazon has the willingness to sell hardware at a loss in order to make a profit off of the software. Amazon's built in constituency from the Kindle and its direct line to consumers will give it a scale that other contenders had to win in retail aisles. According to their theory, this is what will finally jumpstart Android tablet development as big media publishers rush in. Forrester also sees prospects for Amazon partnering with other hardware OEMs and create an Amazon tablet platform for others.
I continue to marvel at Amazon's ham-handed management of digital download sales. While the direct-to-Kindle channel for e-books is an unmitigated success, to be sure, the company's music and movie/TV distribution channels are tired and terrible. I say this as a proud Amazon Prime customer who has access to their instant viewing library across multiple platforms. I will be pleasantly surprised if Amazon really can build a platform experience that is half as absorbing as the iPads, or even rival the good Nook Color. My experience is that the company suffers the same malady as Google, in that they toss the same interface at everything. Managing Amazon videos on my PC screen or my TV via a set top box is pretty much the same as navigating their bookstore in a Web browser. I am still waiting for them to get beyond the desktop gestalt.
That Amazon could and likely should own the Android tablet market in a year's time, as Forrester contends, is a no-brainer. The bar isn't set too high there. But whether their entry signals a serious beginning of Android tablet app development is another story. After all, Android on smartphones has had appreciable scale for a while now, and the major media companies are still only starting to move their brands to the Marketplace. I continue to hear complaints about the much lower CPMs and ad interactivity on Android. The ways in which interfaces and overall user experiences might fragment as much on tablets as they have on smartphones in this OS is a daunting prospect. As much as I like Web browsing on tablets generally, the magic of the platform is coming from apps, their creative experiences and fluid dynamics. The app-driven tablet experience is a different economy than the e-book economy Amazon has been used to with the Kindle. Yes, selling books at $9.99 a pop with minimal overhead has been a winner for the e-reader. That is a different animal from freemium, 99-cent apps of all sorts, and whether that kind of shop pays for loss-leader hardware pricing is also another story. Even a sub-$300 Amazon Android tablet in the current ecosystem is just a nice little alternative Web browser unless the company comes out of the gate with a layer of compelling built-in apps and some genuine plan for cultivating developers.
In some sense the market already has a successful near-Android tablet in the revised Nook Color from Barnes & Noble, a much underappreciated player in all of this. Since its firmware update last spring the Nook Color really has emerged as a credible minimalist tablet for readers. According to reports, for instance, some magazine publishers actually are seeing considerably more sales of their digital editions on the Nook than they see on the iPad. Just look at the aggressive push Apple is making in the App Store for magazines now. They aren't striking pre-emptively at an unreleased Amazon tablet. They are responding to B&N's successful and superior merchandising of magazine brands in their online store and on the device itself. Both Apple and Amazon should be paying closer attention to a competitor in B&N that knows how to sell content, has a cheap and capable-enough device, and leverages its retail presence very effectively. Have you been in a B&N lately and run the Nook gauntlet at their front door?My best guess is that an Amazon Android tablet doesn't eat into iPad sales so much as it carves a parallel path among those mid-range shoppers who are not going to spring for the more expensive iPad anyway. I think in order for an Android tablet eco-system to evolve, it is going to take a longer time and require considerably more design sense and developer relationships than Amazon or Google has shown so far.