) unveiled four new Kindle Fire tablet computers this Thursday,
including ones with larger color screens, in addition to new
e-readers as it steps up competition with Apple (
) ahead of the key holiday shopping season. The new Fires will run
a modified version ofGoogle's (
) Android O.S. The company also introduced several new features
with the devices which will help differentiate it from several
existing tablets in the market. With speculation that Apple will
introduce a smalleriPad sometime this month, the company has taken
the fight to the former with a larger Kindle Fire that has screen
size of 8.9 inches compared to the 9.7 inches for iPad.
See our complete analysis for Amazon
Better features at lower prices
The company also refreshed its line of e-readers. Called
Paperwhite, the new model has a black and white screen and comes
with a light source which enables reading in a dark environment.
It'll compete directly with Barnes and Noble's Nook device. With
eight weeks of battery life, even with the light on, Paperwhite
will cost $119. There's also a model with 3G cellular
connections for $179. The low-end Kindle Touch has been retained
and will now cost $69 instead $79. The drop in prices of the Kindle
range is in-line with our expectations. We expect the prices to
further drop top $113 by the end of our forecast period.
The device has a considerable price advantage over the iPad
range and coupled with several new features, it is much better
placed to compete with it. We expect it to challenge Samsung
) in the coming months for the second position in the tablet
market. The profit margins on the devices seem to be razor
thin, if any. The company expects the devices to bring in profits
from the increased sales of digital content through its online
store. This is in contrast to Apple's strategy of making a healthy
profit on every device sold. We expect the new Kindle to continue
bringing in revenues for the company, like it has in the past.
Key Risk: Small Size of App Market and a smaller
The primary risk to popularity of the new Kindle Fire devices
will be the limited selection of apps available when compared to
Apple's iPad. Besides, if the speculation of a new smaller iPad
prove true, the company will face additional competition from the
market leader. It already competes with Google's Nexus and Samsung
Galaxy range of devices which have devices with similar sizes.
Additionally, the HD models lacks a rear-facing camera which can be
used for shooting photos or videos, a common feature in tablets.
Combined with the brand loyalty that Apple products enjoy, these
factors may limit the proliferation of the new devices.
We currently have a
estimate for Amazon
which is 11% below the current market price.
a Post at Trefis Powered by Data and Interactive Charts
Drives a Stock at Trefis