How a Non-Tablet Changed the Tablet Market

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Amazon's Kindle Fire is so capable, so packed with features, and so cheap that no tablet but iPad can compete.

What does it say about the market for tablet computers that the best-selling tab running Android is not really a tablet.

It's an e-reader that was invented to help sell the public on e-books, whose components don't have to be manufactured, printed or mailed but retail for close to the same price, vastly increasing profits to booksellers like Kindle developer Amazon.

The leading Android tablet is actually Amazon's Kindle Fire -- an e-book reader built up into a general-purpose tablet that became the main competitor to Apple's dominant iPad immediately after the Kindle Fire was launched in November 2011.

Within three weeks after launch, the Fire had grabbed 14 percent of all tablet sales, compared to 57 percent for iPad, according to iSuppli Market Research.

By the end of February sales of Kindle Fire had grown to 54.4 percent of the Android market, up from 29 percent at the end of December, according to sales tracking analysts ComScore.

Kindle Fire's best feature is its ability as an e-book reader, according to reviewers. It is much more, however. For a list price of $199, customers get a seven-inch display, 8GB of RAM, free storage on Amazon's cloud, WiFi and USB connections, the ability to run any Android-compatible app or game and automagical connections to media (for which you can pay Amazon) including e-books, music, movies and anything else you can find on the Internet.

Fire's list price is $430 lower than the list price of the latest edition of the iPadand $249 less than Amazon's discount price for a new 10-inch Samsung Galaxy tablet and $50 less than the 7-inch Samsung Galaxy.

Price alone makes Kindle Fire a good competitor for the higher-cost Android tablets, but a rumored upgrade with a 10-inch display will improve its chances even more. Comscore estimates that 10-inch tablets sell 39 percent more than seven-inch tablets, regardless of manufacturer or other features included.

Amazon may also come out with a six-inch version to expand options for readers even further.

However, the Fire won't make much more progress against iPad, iSupply predicted. Of the 124 million tablets iSupply predicts will be shipped this year, 52 percent will be iPads.

The newest iPad's high-resolution display and momentum as market leader will keep the iPad at the top of the heap iSuppli predicts for 2012, while now-discounted iPad 2 models will compete directly with the lower-end, lower-cost Kindle Fire.

Best-Selling Tablet is Not a Tablet?

The oddest-seeming factor in the market-share battle is that tablets act as often as BYOD work devices as they do conveniences for home users – not a role most users or manufacturers expect an e-reader to fill. Barnes & Noble's Nook, in fact, does not even try to fill that niche. It remains a specialized reading machine, but still lists for $249.

Kindle Fire's price, easy access to a huge library of media, weight (14.6 ounces) and ultra-fast browser make it very attractive to tablet users, but function for function is more competitive with the Nook, according to analysts quoted in a September, 2011 Computerworld story.

Kindle's Silk browser can be installed on any Android machine, however; users can root Kindle Fire the way they can any other Android device, to add or get access to 5GB more storage space on the same machine, expand the list of file types it can handle, add far more useful apps than an e-reader supplies, and replace its utilitarian interface with something more attractive.

Plus, refurbs are now selling for less than $150.

That sounds an awful lot like a full-function tablet to me, except for the price, which makes Kindle Fire waaaay more attractive to anyone but a dedicated iOS user than any other tablet on the market, even though it was designed as an e-reader.

Why does the e-reader thing matter?

First, because people buy hardware to have access to one app or function, then take the other things it can do as an additional benefit.

Kindle Fire was designed small, for a market that demands electronics be cheap, light, easy to use and have ridiculously long battery life.

Building extra functions on top of a platform meeting those requirements gives you a high-performing tablet that can do more than just display e-books.

Downsizing a "real" computer to a tablet, or even building a giant smartphone both leave designers stretching their existing designs to meet the potential of a new size, or dumbing down all the specifications they consider standard.

That ends up delivering either a big phone with lousy battery life and iffy touchscreen control, or a dumbed-down PC that is more appropriate as a way to fill in for the PC when a user can't sit in front of a laptop, which is the way designers at PC companies appear to think of it.

Second, a machine designed for the computer-illiterate to operate without a manual is guaranteed to be more reliable and easier to lean than even a simplistic smartphone interface.

That combination – a surprisingly rich set of functions, a simple, fast interface and a price so low nothing else even competes with it – are what pushed Kindle to the top of the tablet market.

Its users still seem to see it as an e-reader with extra richness than as a tablet for general computing, however.

Kindle Fire Splits Tablet Market into Tabs and Almost-Tabs

Despite its success in the U.S., Kindle Fire hasn't taken off overseas. Part of the reason is price. Most of the reason is that, overseas, the Netflix, Hulu Plus, Amazon Prime and other streaming media services that make Kindle Fire a good media tablet even for non-e-book readers, aren't available.

Is that a problem?

Yes, if Amazon wants to take over the top tablet spot from Apple.

No, if you look at it from a customer's perspective.

Kindle Fire isn't competing for people who would otherwise buy an iPad. It's competing for people who want to read e-books, but don’t to waste time and money on a single-function device.

They're far happier to get something close to an iPad-quality machine for the cost of an e-reader; in making that choice, they expand and enrich the market for tablets – beyond the limited number who would pay $500 to $700 for something less capable than a laptop, while providing something very close in power to a laptop at the price of a decent Android phone.

The question isn't whether Kindle Fire will continue to lead the Android market.

The question is whether Nook will morph into a tablet that can compete with Fire, and whether Samsung, RIM, Lenovo, Acer and other tablet makers will take note of the Kindle Fire equation and try to offer their own iteration.

Given the historical inability of PC makers to squeeze premium features into smaller boxes at lower prices (doing it at the same or higher prices is a different market entirely), I doubt they'll be able to match the Fire any time soon.

Barnes & Noble could compete by beefing up the Nook. But it's already working at a deficit, trying to sell a less-capable machine in competition with a powerful one whose price is artificially low because the manufacturer subsidizes the cost in order to sell more books and other media.

In e-reader quality, accessibility and usability, Barnes & Noble might hope to compete with Amazon. It can't compete with Amazon's deep pockets and drive to make the Kindle Fire as inexpensive and easy to use as possible.

It also can't compete with Amazon's ability to sell a product that's neither fish nor fowl, while getting customers to appreciate a little something in between because it's better and cheaper than either a traditional e-reader or a full-scale tablet.

Unfortunately for makers of full-scale tablets, no one buys a tab for the power it packs.

With the exception of size, which Amazon will solve with a 10-inch version of Fire, the Kindle Fire compares favorably with almost all the features of the leading tablets.

It will continue to do so, I think, leading the non-iPad tablet market by underpricing everything else available, while not really competing with the iPad because it's not as powerful and (more importantly) isn't a Mac.

Odd as it seems, the market looks as if it will remain divided, for the near future, into three segments: basic e-readers, tablets with a range of features, specifications and prices, and iPads.

Nooks will continue to lead the first category.

Kindle Fire will lead the second. iPads, for the foreseeable future, will lead the third, probably until laptops evolve into tablet formats, or smartphones evolve into something that makes tablets unnecessary.

Predicting winners and results of competition in any tech category is a losing prospect. Even when you're right, development moves quickly enough that you can't stay right for very long.

In this case, though, until some major new change in the size, portability and cost of everything on the market except Kindle Fire, the only two questions prospective tablet users have to answer are:

• iPad or not-an-iPad

and

• Kindle Fire or something more expensive?

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