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Amazon Kindle Tablet firing up Tablet growth numbers

Posted in Industry updates, Mobile Computing by Manas Ganguly on December 2, 2011

Nearly two years after Apple Inc. rolled out the iPad, a competitor has finally developed an alternative which looks like it might have enough of Apple’s secret sauce to succeed

Just two weeks after its introduction, Amazon’s Kindle Fire already is shaking up the market, with the device expected to surpass all other iPad rivals to take second place in the global media tablet business in the fourth quarter.Coming up from zero in the third quarter, Amazon will ship 3.9 million Kindle Fire tablets during the last three months of 2011, according to a preliminary projection from the IHS iSuppli Display Materials & Systems Service from information and analysis provider IHS (NYSE: IHS). This will give the company a 13.8 percent share of global media tablet shipments in the fourth quarter, exceeding the 4.8 percent held by No. 3 Samsung, and second only to Apple’s commanding 65.6 percent portion of the market, as presented in the table below.

The Kindle Fire’s rapid ascent will help fuel the expansion of the entire market, with the additional shipments contributing to a 7.7 percent increase in the IHS forecast of total media tablet shipments in 2011.

Amazon, with the Kindle Fire, has found the right combination of savvy pricing, astute marketing, accessible content and an appropriate business model, positioning the Kindle Fire to appeal to a brand-new set of media tablet buyers. Imagine a Walmart Hyperstore with individual 24*7 supply pipeline to the homes of each of its consumers. Amazon is dong just that with the Kindle in the Digital Space.

IHS now predicts global media tablet market shipments will amount to 64.7 million units in 2011, compared to the previous forecast issued in August of 60 million. The total shipment level represents 273 percent growth from 17.4 million units in 2010.The forecast for the following years also has been increased, with shipments expected to rise to 287.2 million in 2015, up from the previous forecast of 275.3 million. Sales of the Kindle Fire alone will account for much of the growth in sales. Dramatically reduced pricing in general in the non-Apple portion of the media tablet market also will play a role in expanding sales.

A departure from the earlier business and profit models

Most other Android tablet makers must earn a profit based on hardware sales alone. In contrast, Amazon plans to use the Kindle Fire to drive sales of physical goods that comprise the majority of the company’s business. As long as this strategy is successful, the company can afford to take a loss on the hardware—while its Android competitors cannot.

While Apple remains dominant in the media tablet market, speculation is rife that the company will respond to the Kindle Fire’s aggressive pricing with a lower-cost version of the iPad.

And Apple is expected to reply back…

A far more likely scenario is that Apple also may reduce the pricing on the iPad 2 when the company introduces the iPad 3. This will provide a value alternative for entry-level users in the same way that the company continued to offer the iPhone 3 when it rolled out the iPhone 4. This approach would allow Apple to maintain its target profit margins on both the iPad 3 and the iPad 2, while offering end-users an ever-expanding family of products.

All numbers are according to IHS iSuppli december 2011 estimates

Facebook’s smartphone Buffy isn’t a smart idea afterall

Posted in Mobile Devices and Company Updates, Social context, media and advertising by Manas Ganguly on November 30, 2011

Why Buffy could be a problem child for Facebook?

Buffy: Chances are that this name would remind you of the Vampire Slayer, as it did with me when I first heard of it. Wonder who Facebook had on its mind as the Vampire for its first ever smartphone called Buffy. Possibly it’s a combination of Google, Apple, Microsoft, Yahoo, Amazon and more. HTC will be producing the Buffy which will deeply integrate the social network into its platform. So then, after all these years of going round and round mobiles and smartphones as the delivery platform for their social services, Facebook finally is all in!

Slowly but surely all these big players are beginning to acquire, buy or subcontract all elements of the delivery value chain – and become the Walmarts of the digital world. Walmart puts all the shopping needs behind one door for the customer. Apple wants the customer to buy one iPhone and spend all his time in its virtual app world. Google’s the same way. To compete, Facebook needed a piece of hardware. Facebook has the liberty to choose between Android, Windows Phone or even create a new OS (WebOS anyone?). Facebook would obviously opt to heavily customize the Operating systems and store fronts and Android is a readily available choice to do that.

Globally, smartphones and tablets are converging at ecosystems as these become devices to primarily consume data from the eco-systems. Amazon’s success with the Amazon Kindle Fire Tablet is a shinning example and given the success of Amazon, Amazon is thinking of a move into smartphones. Given that Facebook has a been building an apps based ecosystem and is becoming the de-facto web standard OS, Facebook nursing intentions in the smartphones and tablets is a logical extension of their clout to the physical world of devices.

However, as Facebook pursues building a smartphone, it risks alienating far more important partners – a lesson they should have picked up from Microsoft’s Zune fiasco. Arguably, the Zune is one of the most expensive failures that Microsoft has ever had, all because it betrayed its partners and then under-resourced the effort.

Is it really going to be able to promote a piece of hardware? Does it really want to go to war with Apple and every other device manufacturer? Right now Apple, Microsoft and others spend lots of time on Facebook, but they aren’t likely to continue if they view Facebook as a potential competitor. Facebook should be focused on building the best Facebook app for every major platform. Going into competition with these platforms and phone providers could alone turn them into the next Microsoft Zune or Kin. This may partially explain why Microsoft is thinking of building its own social network all of a sudden.

Facebook may be dreaming of the upside of being the next Apple, without considering the collateral damage and opportunity cost that is more likely to make them the next Zune/Kin. However, its equations with major platform operators is destined to sour with the hardware approach no matter how much parity Facebook provides to the deal.

Amazon Kindle “fires” up the tablet market!

Posted in Mobile Devices and Company Updates, Value added services and applications by Manas Ganguly on September 29, 2011

Amazon Kindle Fire: Playing to a niche, it re-draws rules in the Tablet segment

The $199 pricing from Amazon, is one of the best examples of penetrative pricing- where by Amazon can make more money later by selling books, movies, music, apps through its app store. The reason Amazon can do it is because it has an offering very similar to Apple where it’s controlling the device, platform (it has a modified version of Android) and app store. Hence, it’s looking at a long term revenue by following a penetration pricing strategy. In doing so, it’s also utilizing its existing capacity of billions of gigabytes of cloud storage combined with Amazon Silk interface for faster loading of webpages to provide a better user experience.The reason other tablet players in the market such as Samsung, HTC, Motorola among others can’t follow this strategy, with the exception of apple, is because they only control the device part and have very little control over Android platform (controlled by Google) or app store (again influenced by Google).

On the flip side, Kindle Fire isn’t proper Android tablet. It is a forked version which means, whatever updates Google does will not make it to the Fire. It will Amazon’s prerogative to get the updates. Even the Android Market is out of bounds on the Kindle Fire. What really is unexplainable is the absence of HSPA capabilities on the tablet. Is it cost? For a mobile device which is heavily dependent on anytime available cloud service, not having a innate mobile connection capability is befuddling. And then there is the lack of Camera? Surely That wasn’t a huge investment that Amazon opted out of. It was hygiene.

Kindle Fire has shown us that a successful tablet launch isn’t all about the greatest hardware. It’s the apps and the ecosystem. Without which the brightest of the tablets are destined to fail. And don’t make the mistake of considering this a success for Android tablets. Because it is not. This is a tablet which only an Amazon could have pulled of. In fact Kindle Fire would be a nemesis of Android tablets. Now they have to compete with both iPad and Kindle Fire – one at the top end and one and the lower end of the spectrum.

Amazon has done a brilliant job of picking its niche and playing to its strength – content: gaming, video, music or eBooks and build an ecosystem around it and then start selling. That in essence is the purpose and motto of tablets- Tablet happens to be a conduit to digital consumption. And Amazon has seems to have hit the nail quite on its head.

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Amazon Kindle Fire: Now we have something beyond iPad in Tablets!

Posted in Mobile Devices and Company Updates, Value added services and applications by Manas Ganguly on September 28, 2011

…is there some way that we can bring all these things (Amazon web services, Prime, Kindle, Instant video, the MP3 store and the Amazon appstore for Android) together into a remarkable product offering that customers would love.The answer is yes. It’s called Kindle Fire.”
Amazon CEO Jeff Bezos

Did the penny drop or the cookie crumble on Wednesday, the 28th September 2011 in the new wonder segment of devices: Tablets? It was about time.. users were waiting for a credible challenge to Apple’s iPad in the tablet segment. And while the 7” Android Kindle Fire doesnot exactly go head to head with iPad2, it does set the tablet segment up nicely. That was something that Androids and Blackberrys in spite of a considerable smart-phone presence have not been able to establish in the last 2 years. For starters, Kindle Fire sells for $200 (as against $400-$500 tag for 7” tablets), but it’s the little details that count and for Amazon, it’s the fact that this is an end-to-end device that really makes it outstanding. Kindle Fire is about the content and the content defines the Fire.

For starters, Amazon forked out a huge amount of customization on Android somewhere between Froyo 2.2 and Gingerbread 2.3 to a point where the Android interface seems to look very different from what it really is. Heavy modifications and kitsch on the Android platform apart Amazon made sure the mash-up works and works well. Amazon the great integrator balanced the Android topwork along with seamless integration with Amazon services.

Kindle Fire comes with a 1 GHz dual core processor, 7-inch capacitive touch screen with IPS display and a resolution of 1024×600, free cloud storage, 8 GB internal memory, battery life for 8 hours reading or 7.5 hours of watching videos and WiFi- nothing ground breaking in terms of device…. Except for the service integration- The cloud service which Amazon offers is the brightest part of Kindle Fire. 10,000 movies and popular TV shows, 800,000 books which cost $9.99 or less and 2 million free books – that’s the US customers get access to when they buy Kindle Fire. Amazon has also introduced a Silk Browser which is purported to be a new way of doing things on a tablet.

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