The Wall Street Journal
by JOHN LETZING
Sept 28, 2011
Amazon.com Inc. is expected to unveil Wednesday the latest—and possibly biggest—challenger to Apple Inc.'s dominant iPad tablet.
Few specifics are known about the tablet, and Amazon hasn't publicly acknowledged its existence, even in the invitation for an event to be held Wednesday. However, a tablet from the Seattle-based company is seen posing a threat to the iPad's dominance due to Amazon's strong media offerings, history of aggressive pricing and its ability to market the device on its popular website.
Among the features expected: touch-screen technology; a customized version of Google Inc.'s Android operating system; and access to Amazon's app store, streaming movies and TV shows. Some observers have speculated that the device could be priced below $300—a new iPad is $499 —and could include Amazon Prime, the company's $79-per-year shipping and media service.
An Amazon spokeswoman didn't respond to a request for comment.
In a page lifted from Apple's playbook, Amazon distributed cryptic invitations—containing nothing more than the company's name, an address, a date and time—to a media event in New York. The Wall Street Journal reported in July that Amazon was working on tablet that would run on Google's Android platform, according to people familiar with the device. Unlike the iPad, it won't have a camera, one of those people said.
Amazon already has established it can successfully market a piece of hardware. As Apple's iPad sets the bar for tablets, Amazon's Kindle is the de facto standard for dedicated e-readers. Citigroup has estimated the Kindle will contribute about 10% of Amazon's total revenue by next year, or more than $6 billion, even as the company lowers prices on the machine.
As for whether a new tablet could eat into Kindle sales, Amazon Chief Executive Jeff Bezos has touted the compatibility of the Kindle and fuller-featured tablet devices in the past, saying many shoppers buy both. Amazon will also likely benefit from the millions of people who visit its website, which could serve as built-in promotion. "Amazon has an advantage that other tablet manufacturers don't in that millions of people already visit its site on a regular basis," said Ken Sena, an analyst who covers Amazon for Evercore Partners. He added that those consumers will be regularly exposed to advertisements for the device.
"It certainly creates a competitor to the iPad," Mr. Sena said.
The iPad, credited with kicking off the consumer tablet-computer market, has won plaudits for its ease of use, elegant design and selection of over 90,000 apps that transform it into everything from a video player to a DJ turntable.
The iPad already has left several high-tech bodies in its wake. Research In Motion Ltd.'s PlayBook, Hewlett-Packard Co.'s TouchPad, Samsung Electronics Co. Ltd.'s Galaxy Tab and Motorola Mobility Holdings Inc.'s Xoom have all failed to attract mass audiences. Last month, just weeks after the tablet device had first gone on sale, H-P wound down its TouchPad project. Samsung, meanwhile, faces lawsuits around the world from Apple, which claims the Korean electronics giant copied the iPad's look and feel.
Apple has sold about 29 million iPads since the product went on sale early last year and had 68.3% of the tablet market in the second quarter, according to data tracker IDC.
Apple declined to comment for this story. The Cupertino, Calif.-based consumer-electronics giant has scheduled its own media event for next Tuesday, at which it is expected to unveil the latest version of the iPhone.
Amazon's new tablet will also have to compete with Barnes & Noble Inc.'s Nook, a low-cost e-reader that offers a color screen and Web surfing.
Still, Amazon appears intent on replicating Apple's most appealing qualities. On Monday, the company augmented its media offerings by striking a partnership with News Corp.'s Fox unit that places the network's shows, such as "24," on the Prime streaming service.
The All Things D website, a sister publication to The Wall Street Journal, has reported that Amazon also has media partnerships to support the tablet with publishers Hearst Corp. and Condé Nast.
News Corp. owns All Things D as well as the Journal.
Amazon's longstanding relationships with consumers also means it has reams of sensitive information, including email addresses and credit-card data. That could make it easy for Amazon to market additional products for its tablet, as well as charge for them. "They have an awful lot of consumer credit cards already on file," says Michael Gartenberg, an analyst at research firm Gartner Inc. "I don't think we've seen anyone quite in this position to present a different alternative."
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