Kindle Fire takes a bite out of Apple

Amazon's new tablet could pose a serious challenge to the iPad. And that’s just the beginning, with other competitors waiting in the wings.

By The Fiscal Times Dec 7, 2011 3:23PM
by Suzanne McGee, The Fiscal Times

Reviewers like "Captain Gadget" of the Huffington Post have dubbed Amazon’s (AMZN) new Kindle Fire a "tablet for dummies" compared to Apple's (AAPL) iPad. After all, you get less battery life, less connectivity, no camera and a smaller screen and hard drive, to name but a few subtractions.

But at $199, it also costs $300 less than the cheapest Apple iPad. And there seem to be plenty of folks out there willing to make the tradeoff -- enough for Canaccord Genuity analyst Michael Walkley to scale back his estimated iPad sales in the current quarter to 13 million from 14 million.
 
Post continues below.
That's still in line with the expectations of other analysts, and means that Apple's iPad remains the market leader, well ahead of any challengers. Still, the Kindle Fire poses a serious long-term risk to Apple: Forrester Research calculates that as many as 5 million could be in the hands of new buyers by the end of January, three months after the product's launch. And there are plenty of additional competitors to the iPad waiting in the wings.
 
For some companies, dominating the tablet market is less important than its rapid expansion overall. Take Qualcomm (QCOM), which has developed a new technology for higher-quality color screen displays that also consume less power. (While a standard Kindle with e-Ink technology can go for weeks without needing to be recharged, a Kindle Fire, with its color screen, can run out of juice within a day.)
 
The mirasol displays aren't yet ready for mass production on a commercial scale. However, such innovations will convert more consumers to the idea of tablets, perhaps making even the extravagant growth in demand forecast by the likes of the Gartner Group (from about 70,000 this year to 294,093 by 2015) look like an underestimate.
 
Investors may want to take a look: Qualcomm already also offers solid growth and a reasonable valuation of about 22 times trailing 12-month earnings. Analysts are calling for its stock price to jump to $66.87 or so, with the highest price target on record being $75, both figures well above its current price of $54.46.

Back at Apple, any concerns about the Fire may be offset by booming iPhone sales. Canaccord Genuity's Walkley has boosted his sales forecast for this quarter to 30.5 million from a previous forecast of 29 million.

Related links:

The Apple economy: an insanely great year
Kindle Fire: hot evidence of Amazon’s ambitions
8 iconic Apple products

13Comments
Dec 7, 2011 5:29PM
avatar
Reviewers like "Captain Gadget" of the Huffington Post have dubbed Amazon’s (AMZN +1.73%) new Kindle Fire a "tablet for dummies"

Isn't the Iphone a dumbed down smart phone? Isn't the Ipad a dumbed down PC?

 

Dumbing down seems to be a winning strategy. So why hate on Amazon for playing Apple at its own game?

Dec 8, 2011 1:29PM
avatar
I don't understand guys like this "Captain Gadget" that think the rest of the world is as pretentious as they are.  I know full well that my Fire is not on par with the iPad, but for 200 bucks it does everything I need it to.  I can read on it, surf the web, check email, listen to music... all the things I ask of it work great. It doesn't take a genius to explain to you that it's not as advanced at the iPad, but maybe Captain Gadget doesn't understand math.  $500 > $200, and that's all that matters to most of us.

They way Apple has brainwashed an army of drones that swear allegiance to all things Apple and to hate all things that are not is in a word, troubling.

Dec 8, 2011 1:21PM
avatar
I bought a Kindle Fire the day it was released.  This is an entertainment machine, not a portable computer.  It does everything I need from reading books, checking email, listening to music, or watching a movie.  I saved some money and did not have to drink the Apple Kool Aid.
Dec 8, 2011 7:29AM
avatar
I think finally a company has found the right way to compete with the iPad. Make a device with a good eco system of content and beat Apple big time on price. That's the Kindle Fire. Amazon certainly has the content available and I do not think anyone thinks the Fire is a iPad. It is good enough these days considering the price. The other issue with other Tablet's that have tried to compete is price. They all offered good features and a comparable product to the iPad. But the price was the same or higher.
Dec 8, 2011 11:19AM
avatar
About time someone comes along and offers a great product costing a lot less than Apple products.  Apple products are just way too expensive and the fact that they look "pretty" does not convince me to buy their overpriced and overrated products.  I will never purchase anything Apple, ever, in this economy.
Dec 8, 2011 10:45AM
avatar

The issue with Apple is not only that they made inovative products and had a cult following as the reasons for their core success.

 

They also had limited to no competition as they released and made these products.  As other companies start actually competting with Apple in their bread and butter markets with their 'inferior' but cheaper products, Apple market share is going to take a huge hit. 

 

And everyone knows it.

 

The competition doesn't have to 'beat' Apple's products.  They just have to be 'good enough' and reliable along with a whole lot cheaper.

 

Dec 8, 2011 10:58AM
avatar
amazon is about to start beating apple at its own game. not inventing a product but making it better.  not only selling digital media but selling alllll consumer products. they are working on a smartphone as well. once that comes out the loop will be completed and voila, amazon just played apple at their own game. not inventing a new product but making it better and simpler.  without steve jobs the future of apple will not be the same no matter what anyone says. but for now yes,  apple has the better offerings but their number is up.
Dec 8, 2011 10:22AM
avatar
The thing with the Kindle fire I think, and as mentioned in the clip is the market space, which they also did with the original Kindle. The other factors here are the up and down valuations.

 When Amazon sells a Kindle Fire unit they loose a few of dollars (I think it was or is right around $3.00) yes, however when the individual gets the unit physically what will they do with it? Well they will probably turn it on, think it is cool, and then go to Amazon as I imagine it will automatically do upon boot and connection recognition right. Then they will most likely buy something or transfer there existing Amazon media etc.  

 So Amazon looses three dollars the gains five just to make it simple do the equation in 100's so amazon looses the initial 3/5 and gains 5/5 on the first purchase or media transfer leaving a positive 2/20/200 percent. 
 
 I also know by having a smart phone that with a device like this and the ease of media access that the buyer will probably get several suggestions of apps, books, media, movies etc to buy from there friends and family or that they will find themselves or most likely all of the above. 

 I see no negative in the short term for Amazon really in a deal such as this. If you look at it from another side it is even more positive. Why would you buy a media device and buy no media then the first thing that pops up when enabled is the largest singular online retailers website which you just purchased the device from and you therefore at the least minimally already have a trust relation with, even if that is only a minor trusting relationship right!
Dec 8, 2011 3:43PM
avatar
Apple, Apple, Apple!! That's all I ever hear. Yeah their products are cool but are way over priced. The company makes HUGE profits on all their products. The thing that irks me about Apple is not the product or even the inflated prices they ask for them. Its the tools that buy and use the products. A combination of and in no particular order of pretentious self absorbed brainwashed smelly blanket wearing chai drinking patchouli wearin imbeciles who think Apples all that. I cannot wait to see Apple fall on its face, as is inevitable now that Jobs is gone. The company was almost run into the ground before he came back to save it from the board members that were more interested in profits then making cool new products. I see it now, profits are goin to be the order of the day in the board room while the products grow stale as the competition continues to take hugh bites outta Apples ****.
Dec 8, 2011 4:55PM
avatar

People are not spending more with cash.  They are still using credit.  There is no way with unemployment at the rate it is people have that much money unless yes we're talking about the ones who have the money.  He's stating 74% are going to pay off their Christmas debt right after the holidays. No just the people who have money are buying gifts.  Their are millions who have no money.  Saying that people are not paying their mortgage and using that money to buy things.. How stupid can you be!!  The sources that they are discussing is rediculous!  Also what state is adding 140,000 jobs per month!!!!   Credit card Percentage rates are not lower"  Depends on what CC you have and how long you  have had the card?   I don't know where this guy is getting his information.  Such ****.  Work at the mall for nothing,  7 dollars an hour.  just part-time.  Try feeding a family on that salary.  Retail isn't easy.  These people know nothing about working in this type of industry.  It's all about how much the retail industry can make each Christmas. After the holiday season is over the people who were hired will loose their jobs.  What are you going to say about that????????  

Dec 8, 2011 11:23AM
avatar
I picked up the new Barnes & Noble Tablet, much better product than the Kindle Fire.
Dec 8, 2011 10:14AM
avatar
Aw quit your whining. You know that the iPad has got the Fire beat hands down. Shoot, if you're gonna use something  thats that short on features, they still sell pencils and notebooks at Walmart. Get the iPad, you won't be sorry.
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

129
129 rated 1
281
281 rated 2
444
444 rated 3
732
732 rated 4
629
629 rated 5
623
623 rated 6
610
610 rated 7
440
440 rated 8
303
303 rated 9
126
126 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
BBBYBED BATH & BEYOND INC10
TWXTIME WARNER Inc10
COPCONOCOPHILLIPS9
HDHOME DEPOT Inc9
VZVERIZON COMMUNICATIONS9
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.