The expected Amazon tablet could easily sell 3 million to 5 million units in the final quarter of 2011, outselling all competitors to the popular Apple iPad, Forrester Research said.
The iPad has about 80% of the tablet market, according to Forrester, with 28.7 million iPads sold worldwide through August.
Forrester analyst Sarah Epps wrote in a report released Monday that Amazon may be able to launch a 9-in. LCD touchscreen tablet, at a loss initially, for $299, nearly half the price of many tablets. The 9.7-inch iPad 2 comes in three models, starting at $499 for a 16GB version and topping out at $699 for a 64GB model.
A $299 price tag would be closer to what most consumers want to pay for a tablet, based on a Forrester survey. That figure would also be close to the $249 pricetag that Barnes & Noble charges for its 7-in. Nook Color e-reader, which has some features of a tablet with email and Web browsing functions.
Like the Nook Color, the expected Amazon tablet would also run on the Android operating system. Reports have suggested the Amazon device would have the latest Android version, called Honeycomb, at launch. Taiwan-based Digitimes in July said Amazon would ship 1.2 million tablet computers by the end of September. With one month left in the quarter, Amazon hasn't even confirmed the device or a shipping date.
Various Web sites have suggested the Amazon tablet will come in two versions, code-named Coyote and Hollywood. The Coyote would run a dual-core Tegra 2 chip, while the more-powerful Hollywood would sport a quad-core T30 Kal-El processor that offers 500% better performance than the Tegra 2.
Forrester's sales estimate of 3 million to 5 million Amazon tablets is for the fourth quarter alone. Epps predicted that a year from now, Amazon will become synonymous with Android on tablets by providing the "missing pieces of the puzzle that Android is lacking: a competitive price point, a good experience for app shopping, a wide selection of content and convenient eCommerce."
Epps noted that Samsung announced it had shipped 2 million Android-based Galaxy Tabs to retailers in January, following the product's launch in September 2010, but questioned how many of those have been sold to customers. Motorola said it shipped 690,000 Android-based Xoom tablets since the February launch, while Research in Motion said it shipped 500,000 PlayBooks (running the QNX OS) between the April launch and the end of May.
"Priced right, an Amazon tablet will sell millions more than Samsung, Motorola and all other tablet competitors put together," Epps said.
Barnes & Noble said it has sold "millions" of Nook Color e-readers since its launch in November 2010, but Epps said Barnes & Noble must find ways to exploit its bricks-and-mortar retail advantage over Amazon to remain competitive with the upcoming Amazon tablet.
Amazon poses a threat to Apple, Epps noted, calling Amazon a "nasty competitor," partly because Amazon would be willing to sell hardware at a loss as it has done with the Kindle e-reader. "Apple sells software and services, but the lion's share of Apple's revenue still comes from hardware, which makes it vulnerable to a company such as Amazon that isn't seeking profit from hardware sales," Epps wrote.
Instead of relying on hardware profits, Amazon is likely to sell multimedia content via its tablet and to launch the Amazon tablet as a means to establish Amazon as an e-commerce platform for other manufacturers to adopt on their own tablets.
Epps conceded that Amazon's taking on Apple in the tablet space is "a bit like David taking Goliath." Amazon's net income in the quarter that ended June 30 was $191 million, compared to Apple's net income of $7.3 billion. For the same period, Amazon had $2 billion in cash, compared with Apple's $12 billion, she noted.
Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen or subscribe to Matt's RSS feed. His e-mail address is email@example.com.