Is Kindle Fire a Game Changer? An iPad Killer? A Netflix Buster?
Today Amazon announced the Kindle Fire priced at $199, or about $300 less than the lowest cost iPad. It’s Wi-Fi only. It only has a 7” color screen. It has a slightly inferior processor but includes Amazon’s new Silk browser that caches and compresses data that lives on both the tablet on Amazon servers, consuming less bandwidth.
It’s made by Quanta who also made RIM’s Playbook. Hmm, guess what it looks like? It runs on Android but Amazon is going a great job (kudos) of masking that in the marketing.
It’s a passive media consumption device. It’s not a vibrant application platform like iPad. It has access to the Kindle catalog of 950,000 ebooks, 800,000 of which are $9.99 or less. It has access to Amazon MP3 with over 17 million tracks, many at 69 cents. It has access to Amazon Instant Video and Amazon App Store for Android – but again you have to really hunt for the Android references.
Amazon Prime customers pay $79 a year for the service and will get free access to 11,000 streaming movies and TV shows via Fire. Netflix has 20,000 titles. Non Prime subscribers get Prime free for a month with the purchase of a Fire. But Amazon has been giving a month of Prime for free to new subscribers anyways. If you buy a Fire (it ships November 15th but Amazon is taking orders) Amazon will give you free shipping on 2 day service on other purchases. Apple isn’t and Netflix can’t offer that.
There are no pay TV relationships with Fire. No Comcast, No Direct TV or Dish, no AT&T or Cablevision. All those brands have iOS apps to stream content on iPads and also use them as big remote controls. Will the pay TV brands play with Fire? Will they allow Amazon into their realm so as a Comcast or U-verse subscriber I can watch my DVR content on Fire, or live HBO?
So is the Kindle Fire a game changer? An iPad killer? A Netflix buster?
Kindle Fire competes with the iPad as far as accessible movie and TV titles but it’s a different twist on the tablet, which is exactly what the market needs. Differentiation not sameness. It is a stripped down offering. No camera, Bluetooth, 3G or 4G, video chat, and it has the 7” display that Steve Jobs laughed at. But for many consumers who afford an iPad, it puts a tablet in their hands, especially if they lost out on the great HP TouchPad fire sale.
The iPad is an application-focused platform that does entertainment content really well. The Kindle Fire is an entertainment consumption-focused platform that doesn’t do apps very well, but has email.
It’s not about the hardware, it’s about the content, and it’s about the price. We really saw that it was about the price with TouchPad. As far as content is concerned, Apple is rolling out its massive server farm in North Carolina. Google has the biggest cloud. Amazon has massive amounts of content on its servers. It’s a cloud war!
Ipsos Vantis has tested many tablets in its Vantis Files service and many tablet concepts for clients as well. What’s innovative here? It’s the positioning, it’s the bundling, it’s the libraries, and it’s not the tablet!
Amazon is putting the heat on both Apple and Netflix. On Apple because it’s the tablet for the rest of the America that can’t shell out $500 plus for an iPad and all the accessories and apps that come along the way. On Netflix because it undercuts its streaming service by $17 a year and customers are kicking Netflix while they are down anyways.
But Amazon’s offering is not perfect. Prime needs a ton of work when it comes to content search and discovery. Many of its movies are rental only. Prime and Fire are not available outside the US, while iPad and Netflix are. You can find Amazon’s MP3 and movie and TV content outside of Prime on lots of platforms like iPad, but I doubt you’ll be able to run Hulu Plus on Fire, or iTunes or Netflix for that matter. Prime won’t stream to iOS devices. Yes, Fire is another walled garden, and an Android one at that, which makes it interesting.
We think that the Kindle Fire will help grow the tablet market, where the rest of the Android supporters have been unable to. The industry analyst firms will argue about how to classify it — is it an eReader or a tablet? It doesn’t matter, it’s always been about the content, not about the device. In fact, it’s all about the titles- the exact titles!
Amazon is in the spotlight because of pricing. But it is clear that Hollywood is calling the shots. The movie and TV studios license their content at different prices to the streaming and consumption platforms — Netflix, Apple, Hulu Plus, and Amazon. They want competition. Netflix got too big too fast with streaming and subscribers (bigger than Comcast!) and its license fees got raised, which led to the price increase and the decoupling of the rental business. Yeah, unfortunatley Netflix didn’t do a great job at PR on the price increases. But Amazon still has to build up its streaming library, and there is the search and sicovery issue mentioned earlier.
When Amazon gets dominant will they get Netflixed by the studios? Until then, there is more choice in America.
Now Mr. Bezos, fire up the rest of the world!
- Randy Giusto
SVP, Innovation Research and Industry Analyst