Amazon's Fire no iPad killer, experts say

'No reason for Apple to worry' about $199 tablet

The Kindle Fire tablet
The Kindle Fire tablet from Amazon.com.

Amazon's new Fire tablet may disrupt the Android market, but it's unlikely to have a significant impact on Apple's iPad business, analysts said today.

Earlier today, Amazon CEO Jeff Bezos introduced the Fire, a 7-in. backlit-color screen tablet priced at $199 that will start shipping in mid-November.

The Fire is powered by a customized version of Google's Android mobile operating system, has 8GB of storage -- half that of the lowest-priced iPad -- and weighs about 33% less than Apple's iPad 2. Amazon will sell only a Wi-Fi version of the tablet.

Experts saw it as a negligible threat to Apple's tablet, and cited a variety of reasons.

"Hardly an iPad killer," said Brian White of Ticonderoga Securities, in a note to clients today. "While Amazon's price point, installed base, digital content and cloud ecosystem will attract a certain consumer demographic to the Kindle Fire, there is still no real competitor to the iPad 2."

Others agreed.

"I think it's more disruptive of the Android tablet market because of its price point," said Carolina Milanesi, an analyst with Gartner. "Android competitors like Samsung will be impacted by the Fire's price, much more so than something that has the Apple logo on it. So there's no reason why Apple should worry today."

Milanesi sees the Fire as "all about consumption and buying behavior" because of who is selling it, its size and hardware specifications, and the tight integration with Amazon's online markets for apps, books, music and movies.

"A seven-inch tablet is for content consumption," she said, "not for the kind of content creation that can be done on the iPad."

She also noted that the Fire lacks some of the iPad's features, including a microphone and camera. "There are lots of things that are missing from the Fire," she said.

Not that that wasn't smart of Amazon, which is selling the Fire to push the products and services it sells.

"The point of the Fire is to sell more content, and keep customers within the Amazon ecosystem," she said, pointing out that there's no need for, say, a camera when Amazon can't parley that into a sale of some sort.

Ezra Gottheil, an analyst for Technology Business Research, also thought that the Fire won't pose an instant threat to the iPad. In fact, the Fire's price only reinforces the split nature of the tablet market.

"The under-$200 price point has been thriving, while the Android competitors who have priced their tablets at Apple's range have not," said Gottheil. "What's emerged is a two-level market."

Gottheil cited the success of Amazon's low-priced Kindle e-readers and the race to acquire an HP TouchPad when that company dumped them at fire sale prices last month.

"Is there going to be overlap between the Fire and the iPad? Sure," said Gottheil. "I don't have any doubt that [the Fire] will have success. But for the most part the market has already bifurcated. And Apple owns, and will continue to own, the higher end of the tablet market."

Some consumers will opt for the lower priced Fire. "There will be a little loss to Apple, but for the most part, consumers will ask themselves this question: 'Do I want a $200 tablet or a $500 tablet?'" said Gottheil.

And those who answer the latter will continue to head to Apple.

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