Kindle Tablet thoughts and wondering what it means for Kindle 4

Amongst all the rumors and controlled leaks about the Kindle Tablet the one thing that has begun to gnaw at me is the lack of news or rumors about the Kindle 4.

Quite a few Kindle owners have mentioned their concern over whether Amazon will stop focusing on the Kindle as eReader and start focusing on either Kindle Tablet as Tablet or Kindle Tablet as Reading Tablet.

It’s a very valid concern and this post is just some thoughts about what direction Amazon might take.

Reasons why the Kindle should be safe

There are some very good reasons why the Kindle should be safe (reasons why a Kindle 4 should be out either by November 2011 or, in the worst case, by February 2012) -

  1. The Kindle is undoubtedly a success. B&N’s Nook is a billion dollar business now (just check their last two earnings reports) so it’d be safe to assume Kindle is a $2 billion or more business for Amazon.
  2. The Kindle protects the huge revenue stream Amazon gets from physical books. As people transition from physical books to ebooks they transition from being 25% Amazon.com to 75% Kindle. There is no way that Amazon would risk a revenue stream that has played such a huge part in its success.
  3. The Kindle gets people to Amazon.com. Kindle eBooks are in many ways a loss leader that get people to Amazon.com where they buy 42″ LCDs and watches and other big-ticket items.
  4. Books hold great nostalgia for the company. Imagine a world where people think of Apple when they think books – Amazon would be loath to let that happen. The Kindle is safe because Amazon is probably emotionally attached to being the destination for books.
  5. Kindle is the best device for reading books largely due to eInk and LCD based devices can’t really compete - unless you are LCD compatible or wedded to the Church of Free or the Church of Special Aesthetic Sensibilities. Which means that a company that wants to be the #1 source for books and booklovers needs to have a device built on eInk. Basically, Amazon will have to always have a reading device built on eInk and that makes Kindle pretty safe.
  6. It’s unlikely Amazon would be naive enough to end a product line that is a HUGE hit. If you’ve managed to sell 4 to 8 million devices in a year it makes little sense to stop investing in the device.
  7. Qualcomm has a company interested enough in its Mirasol eInk/ePaper displays for Qualcomm to invest $2 billion into an eInk/ePaper screen manufacturing plant. Whether that’s Amazon or a rival it will force Amazon to use color eInk in a future Kindle (whether it’s Qualcomm or eInk Triton from PVI/eInk). Amazon will have to cover that angle of attack even if it plans to focus on Tablets. And the only way to defend is with an improved Kindle that has a color eInk screen.
  8. B&N and Sony are both improving their eInk Readers. That forces Amazon to play catch-up. If its competitors were letting it waltz away then Amazon could have ignored the Kindle and treat it as a cash cow. However, both B&N and Sony have released touch eInk eReaders and that forces Amazon to improve the Kindle.
  9. The Kindle is a mini Amazon Store in people’s hands. Amazon isn’t going to reveal the full extent of its plans until there are 20 to 30 million Kindles in people’s hands. Then the full power will become obvious.
  10. The Kindle is now very, very cheap. Once it hits $100 we can
  11. The Kindle is quickly reaching a price point where it has a shot at literally replacing paper.

The combination of -

  • The scope of the Kindle’s success.
  • The strategic importance of Books – both as a revenue stream and to get people to Amazon.com.
  • The nostalgia Amazon probably has for selling books and being the top online bookstore.
  • The imminent arrival of Qualcomm Mirasol color eInk.
  • The continuing improvement of Kindle Rivals.
  • The role of Kindles as mini Amazon Stores.
  • Kindle now hitting very tempting price points.
  • Kindle as a potential replacement for paper.

Leads to the Kindle being in a surprisingly strong position. It would be madness for Amazon to stop making eInk based Kindles that it can sell as $100 pathways to Amazon.com.

That brings us to a far more realistic threat to the Kindle – death by distraction.

Just how much focus will Amazon keep on the Kindle?

The real threat to the Kindle is not that Amazon abandons it – It’s that Amazon takes the continuing success of the Kindle for granted and starts focusing Lab 126 and the Kindle Team on the iPad/Nook Color-targeting Kindle Tablet.

Amazon has just one team that knows how to design and sell hardware – The combination of Lab 126 and the Kindle Team. While we (and Amazon) would like to believe that this team can magically grow and evolve and build Kindle Tablets while still focusing on Kindle 4 and Kindle 5 – that is going to be really, really difficult.

Let’s start by looking at why Amazon might prioritize a Kindle Tablet over the Kindle.

Kindle Tablet is strategically very important

With the Kindle Amazon has prepared itself for the shift from books to ebooks. That still leaves the shift from CDs and DVDs and boxed video games to music downloads and movie downloads and game downloads.

Amazon has no device for that shift. It could leverage iPad and iPhone – if it’s willing to pay Apple’s 30% tax. However, sooner or later Apple would kick it out and take over completely. Amazon has to take over the entire pipeline. It can’t be dependent on another company.

Amazon’s only options are to -

  1. Build its own device. Which is what the Kindle Tablet really is.
  2. Take over a competing Ecosystem. That’s what Amazon’s Android App Store is about (in addition to supporting the Kindle Tablet).

If Amazon wants to preserve its huge revenue channels of music CD sales and movie DVD sales and video game sales – then the Kindle Tablet is the savior. Perhaps the only one.

That instantly makes it very important. More important than the Kindle because Music+Movies+Games is worth more than books. More important than the Kindle because a Tablet is better suited for shopping. More important than the Kindle because the Kindle has already carved out the top spot in its market and keeping that spot should, in theory, require far less effort than fighting the iPad monster.

Can Amazon be as effective focusing on two areas?

It’s debatable. My gut instinct says that an increased focus on the Kindle Tablet (due to its greater strategic importance) will eventually have a negative effect on the evolution and quality of the Kindle. You could even argue that we are beginning to see signs of this.

Kindle is already a step behind other eReaders technologically due to its lack of touch. It has a better store and a much better infrastructure – However, the device is over a year old and needs a refresh. Would that be the case if Amazon weren’t focusing so hard on the Kindle Tablet? Probably not.

Even if Amazon were/is capable of balancing the needs of the Kindle and the Kindle Tablet there is another factor that almost guarantees the Kindle will suffer from a little neglect.

The Kindle Tablet battle is a far tougher one (in addition to being more important)

Both iPad and Nook Color are very strong competitors. Far stronger than Nook 2 or Sony’s T1 Terminator eReader.

Nook Color is scary because of its great screen, low price ($249), and relatively rapid update path (it’s added features at a very healthy clip). iPad is scary for all the reasons the Press spends all its time salivating over. Far worse, both have an early mover advantage – iPad is the first Tablet and Nook Color is the first reading tablet.

Not only will Amazon be tempted to prioritize the Kindle Tablet (due to its greater importance), it will be forced to throw a lot more resources at the Kindle Tablet due to the quality of the competition and their early lead.

Kindle Tablet will probably see an incredible amount of resources devoted to it over the next 3 to 5 years. Amazon doesn’t have a choice – Jeff Bezos is unlikely to want to bow before Apple’s CEO’s whims and fancies.

Are all resources devoted to Kindle Tablet resources not needed by the Kindle?

Obviously not. There’s no rational way to argue that the Kindle, after establishing an entire new market and selling 10 million+ units, doesn’t need all the resources it can get. Amazon should be doubling down and expanding the category as much as possible. It can’t – Because those resources are tied up in making the Kindle Tablet.

The Prize of Winning the Tablet Wars is the Nail in the Coffin of Kindle getting a Fair Amount of Attention

Amazon almost has the eReader war won. The prize is rich but it doesn’t compare to the prize of the Tablet Wars.

There are a few things to consider here -

  1. The Tablet Wars are still in their infancy. And by ‘Tablet’ we mean the personal consumption device that users will use to buy digital goods (and eventually all sorts of goods).
  2. The low-priced Tablet market is there for the taking.
  3. Without Steve Jobs Apple is a shadow of its former self when it comes to envisioning the future and leading customers to it. iPad might keep growing but the next big step in the evolution of the Tablet/Personal-Consumption-Device Space is unlikely to come from Apple.
  4. Amazon’s ambition is immense. It’s not going to be satisfied to control ebooks while Apple controls everything else and Valve controls game downloads. It sees that big gaping hole waiting to be filled by a non-iPad Tablet.
  5.  While winning the Tablet Wars is critical for Amazon to preserve music and movie and game revenue streams, it leads to far bigger prizes.

There’s just no way that Amazon can ignore the scope of the opportunity.

It’s not only a huge threat to Amazon’s existing revenue streams it’s also the possibility that Amazon absolutely fortifies its position as the Omnipresent Store of the Future.

Tablets just make for much better Personal Shopping Devices than eReaders. Not to mention that only people who actually read will buy eReaders.

Unless Kindle Tablet is a failure the Kindle is going to be massively deprioritized

If Kindle Tablet comes out, sells 5 million units at $249 each, and takes up a big part of the Tablet Market – then its going to become Amazon’s main focus. The #1, #2, and #3 priority. There’s just so much at stake.

Then Kindle gets deprioritized and a small skeleton team keeps doing updates and making sure Kindle continues to narrowly edge the competition. There’s enough room for a little complacency.

Meanwhile the lion’s share of resources go to the Kindle Tablet as Amazon fights with Apple (and B&N and Samsung and Microsoft) to be the Tablet of the Future.

Basically, we are going to see one of two futures unfold -

  1. Kindle Tablet is a hit and Amazon tries to use a $200 or $250 Tablet to upend the iPad’s lead in Tablets.
  2. Kindle Tablet is a failure and Amazon tries to evolve Kindle into a color eInk device and attack Tablets on fronts such as battery life.

In either case the Kindle’s continued evolution as a reading device is under threat.

Kindle Tablet vs Nook Color 2 (comparison + predictions)

It seems that in addition to the Kindle vs Nook contest we will have a Kindle Tablet vs Nook Color 2 contest in 2011 Holiday Season.

At this point we only have nebulous details and it’s still fascinating to contrast what we know about each tablet and do a Kindle Tablet vs Nook Color 2 comparison.

Kindle Tablet vs Nook Color 2 – Price and Value for Money

B&N surprised everyone by releasing a really good Nook Color Reading Tablet for $249. We’re talking about a 7″ Tablet with an IPS screen with a density of 169 pixels per inch, 512 MB RAM, 8 GB memory, and a solid 800 Mhz processor.

It’s incredible value for money. Nook Color 2 is very likely to continue the trend. Expect a few improvements technically and a $249 price.

The rumors about the Kindle Tablet suggest that it will be $250 and will come with free Amazon Prime Membership. It’s quite likely that the free Prime membership will make the Kindle Tablet better value for money. Add on the fact that Amazon can sell Kindle Tablet owners lots of things (not just books) and we see why Amazon will have no problems beating Nook Color 2 in value for money.

Kindle Tablet gets the edge in value for money.

Please Note: Nearly all Kindle Tablet conjecture is based on this uncharacteristically good and balanced post at TechCrunch.

Kindle Tablet vs Nook Color 2 – First Generation vs Second Generation 

It’s worth noting that Nook Color 2 will have a year’s worth of experience and customer feedback. B&N has had a year to see how a Reading Tablet does, what customer pain points are, and how to deal with them.

Kindle Tablet is a first generation device. While Amazon can leverage the lessons it learnt from selling the Kindle, there is still a lot it hasn’t tried before.

B&N gets the clear edge here.

Predicted Sales for Kindle Tablet and Nook Color 2

An analyst has predicted Amazon might ship 5 to 10 million Kindle Tablets in 2011 Holiday Season. The 5 million figure would be wildly optimistic but is also quite possible.

Wildly optimistic because there might not be a Kindle Tablet market.

Quite possible because Amazon might eat up large portions of – The Nook Color Market, The Android Tablet Market, The iPad Market.

DigiTimes expects 2 to 3 million Nook Colors to be shipped in 2011.

My predictions:

  1. 4 to 7 million Kindle Tablets. Sold out 3 weeks before Christmas.
  2. 3 million Nook Color 2s. Sold out by mid-November 2011.

Both companies are underestimating the demand for a cheap, high quality tablet. B&N’s main problem will be creating awareness for the Nook Color 2 and it will be helped greatly by all the ‘Kindle Tablet is a Nook Color Killer’ articles.

Amazon will win and B&N will be very happy (and it might end up with more total Nook Colors than there are Kindle Tablets).

Which Reading Tablet will be better for reading?

This is a very tough question.

Firstly, Nook Color is a very impressive reading device. The pros – great size, readable screen, readable at night, focus on reading, color, touchscreen, powerful processor. The cons – weight is a bit of a pain, no eInk so not as easy on the eyes, bright sunlight kills reading like it would a vampire, battery life is nothing like eReaders.

Overall, the pros outweigh the cons and Nook Color is an effective Reading Tablet.

The big concern with Kindle Tablet is that Amazon sells movies and music and TV shows and will probably make a device optimized for consuming those as well as books.

B&N has the edge unless Amazon ends up releasing a pure Reading Tablet.

Please Note: If you fall into the 10% of the population that are not distracted ever from what you intended to do, then this point doesn’t apply to you.

Nook Color App Store vs Kindle Tablet App Store

Nook Color has a fledgling app store with 550 or so Apps. There are some big ones like Angry Birds and Ms. PacMan but it’s still a small and growing store.

Amazon’s Android App Store has tens of thousands of Apps and lots of big names and a ‘Free App of the Day’ feature guaranteed to get you more zero-price sales than you would think possible.

Amazon has a very clear edge here. B&N has 3 months to beef up its store but is unlikely to ever catch up in terms of numbers.

The Lack of Openness and Care Bear Worthiness of Both Devices

Unlike companies that are OPEN and GOOD and steal your information while you’re not looking, B&N and Amazon are EVIL and make you pay for stuff before getting it. Part of this means that they take Android (an OS meant to be pure and unsullied by anything other than advertising and data collection) and dirty it with their custom OS layers and the concept of paying for apps and content.

For Nook Color 2 it’s easy to root and run Android and get everything for free.

For Kindle Tablet it’ll be close to impossible.

B&N gets the edge here as hackers and people who were Born to Demand Free will embrace its hackable qualities.

User Interface and Screen and Touch

Coupling these together because they go well together.

Nook Color 2 has a surprisingly well done user interface. The screen is splendid. Touch has some problems (touch at the edge isn’t great and sometimes touch and typing aren’t smooth).

Amazon is making its own entire user interface over Android (a good decision considering how unappealing Android can be visually). It promises to be sharp and snappy and very Kindly in its colors and feel.

This is an unknown until the two devices are out. It’s Amazon’s experience with user interfaces on the web competing with B&N’s already good interface and its year of Tablet experience.

Specifications – Which Reading Tablet will be more loaded?

B&N did a stunning job with Nook Color. There really are no words to do justice to a Reading Tablet for $250 that includes as many goodies as the Nook Color has.

Amazon may or may not match that spec-sheet with the Amazon Kindle Tablet. If it doesn’t – it’ll be rather unfortunate. If it does - movies and games will be really impressive on the Kindle Tablet.

B&N holds the edge here unless Amazon shows it can match the Nook Color’s impressive specs.

Which Reading Tablet will be more Fun?

Tough question.

Don’t really have an answer. After seeing both, and playing with both, will add an update.

Which Reading Tablet will be better for Kids and Families with Kids?

B&N has put HUGE emphasis on making things good for Kids. Perhaps its retail experience has taught it that kids determine book sales quite often. Perhaps everyone at B&N has kids and wants a device they can use. Whatever the reason, B&N’s Nook Color is very good for kids.

This is also reflected in things like NOOKKids (a software app for kids) and via a focus on books and apps for kids (for the Nook Color).

Amazon hasn’t really shown any desire to focus on kids. It might or it might not focus on kids with the Amazon Kindle Tablet. Prime and Sharing will be good for families but don’t think there will be much of an emphasis on kids.

B&N will probably have the edge.

Kindle Tablet vs Nook Color 2 – Customer Support

Amazon is pretty darn good at customer support.

B&N’s big selling point will be in-store help and the ability to actually play with a device in store before buying it.

However, overall, Amazon’s ruthless focus on customer service will probably win out.

Thoughts

It’s very strange that Amazon would target Nook Color 2 instead of targeting iPad 2. It’s smart because it’s obviously a more reasonable target. However, it’s unlike Amazon to go for a smaller target.

Kindle Tablet vs Nook Color 2 is definitely going to change things. It’s going to make Reading Tablets a bigger force. It’s going to put downward pressure on Tablet prices. It’s going to accelerate the rise of ebooks. It might just sell 8 million non-iPad Tablets in 2011 and show there’s a HUGE market for Tablets of all sorts – especially reasonably priced ones. Kindle Tablet vs Nook Color 2 is going to give rise to two winners and might just cement Kindle Tablet and Nook Color 2 as the 2nd and 3rd most popular Tablets (a scenario that absolutely no one would have dreamt of a few years ago).

7″ Kindle Tablet, 6″ Sony Reader, Kindle Tablet Thoughts

DigiTimes speculates that Amazon’s 7″ Kindle Tablet will start shipping in October 2011. It also suggests that the 10″ Kindle Tablet will arrive in early 2012. The latter seems very likely since we can depend on Amazon to miss the opportunity to make the most of this Holiday Season – choosing instead to launch around the same time as the iPad 3.

What better way to make things tough for yourself than launch your 1st generation 10″ Kindle Tablet around the same time as the third generation iPad 3?

DigiTimes seems pretty confident that the 7″ Kindle Tablet will be shipping in October -

Amazon’s 7-inch tablet PC, which is supplied by Quanta Computer, is expected to start shipping in October, the sources added.

It also throws in some rather impressive-sounding Kindle sales estimates -

In addition to the tablet PC, Amazon also outsources its Kindle e-book reader to Foxconn with an estimated volume of 15-18 million units, accounting for 60-70% of global e-book reader shipments of 25-30 million units in 2011.

15 to 18 million units in 2011 for just the Kindle alone? That’s a lot of people wondering why there are Ads in their screensavers.

What do we know about the Kindle Tablet so far?

It’s a confusing and completely undependable list of oddities -

  1. There are actually two Kindle Tablets – a 7″ and a 10″.
  2. The Tablets might be called Hollywood or Scribe.
  3. The 7″ might be targeted at the Nook Color.
  4. The 10″ is probably targeted at the Android Tablet space. Some people think it’s targeted at the iPad.
  5. Kindle Tablet might see 5 million or so units sold in 2011. This is probably an analyst compensating for missing on Kindle sales projections.
  6. The 7″ Tablet has a dual core processor while the 10″ tablet has a quad-core processor. Which matches perfectly the number of people interested in how many cores the processor of their Tablet has – somewhere between 2 and 4.
  7. There is strong speculation that Amazon will price its Tablets much cheaper than the iPad. ‘Journalists’ claim it will be ‘hundreds of dollars’ lower.
  8. There is weak speculation that the 7″ Tablet will come in at $249 and will challenge the Nook Color.
  9. One group claims the Kindle Tablet is aimed at video and TV show viewing. Another group claims that the Kindle Tablet will actually be a reading tablet. Given that Amazon has to take on both the 7″ Nook Color and the 10″ iPad it’s quite possible that both groups of people are correct and Amazon has one arrow earmarked for each of its rivals.

It’s all very confusing. The Kindle Tablet is all things to all people. Of course, it’s going to come out and leave some people very disappointed by its inability to butter your toast on the right side.

Sony releases a new eReader

Yes, Sony is still releasing eReaders. Yes, ‘journalists’ are again anointing a Sony eReader as the new ‘Kindle Killer’.

Let’s think about this again – Sony got whipped by Amazon, then by B&N, and then by Kobo. Yet, its latest eReader is suddenly a ‘Kindle Killer’ because … It has wireless library book downloads.

Didn’t see that coming.

4 years after Amazon released the Kindle with wireless book downloads via 3G we have Sony offering wireless library book downloads via WiFi. The Convenience. The Promptness of the Response. How could any company possibly compete with Sony when within the ludicrously short time-span of 4 years Sony has sort of responded to free 3G book downloads?

Gizmodo can’t decide whether to make fun of it or to consider it a threat to the Kindle. Here is some of what it writes -

The PRS-T1, though, could be Sony’s comeback kid.

The six-inch E-ink ebook reader is the world’s lightest at that size, and its touchscreen display means …

Does Sony really expect to compete by promoting the PRS-T1 as ‘the lightest eReader in the world’ and does it really think ‘wireless library downloads’ are a meaningful feature?

Sometimes it’s the Difficult Features that make the Difference

Amazon’s 3G based book downloads feature is a big competitive advantage. Not just because it offers incredible convenience but also because very few companies are willing to go through the level of pain that dealing with wireless providers entails.

Can you imagine working with a beast like AT&T and negotiating all sorts of torturous agreements just so that users can get books wirelessly? All that pain just to save users the effort of finding a PC or a digital kiosk – that’s madness.

eReader makers not named Amazon either won’t go to the trouble (Sony) or found it too painful (B&N). Which leaves Amazon with a pretty big competitive advantage.

The Kindle says – If you can get a cellphone signal then you can get your book in 60 seconds.

Sony says – Customers aren’t really asking for 3G downloads.

That is the real reason Sony doesn’t have much of a chance – It just isn’t willing to do the really tough stuff. It hasn’t been willing to do the really tough stuff since November 2007 and that’s why it’s gone from being the first entrant in the market to a #3 or #4 player.

The Delay in the launch of the Kindle Tablet is Lowering its Probability of Success

Things are set up beautifully right now – Nook Color is selling well, the HP TouchPad at $100 took off so fast that HP is thinking about un-killing the TouchPad, companies like Asus are selling half a million Tablets a month (supposedly).

Couple that with the iPad 3 (with its Retina Display and Quadruple Face Time) being delayed to 2012.

Right now is the perfect time for Amazon to launch. Both Tablets (if there really are two Tablets).

What in the world is Amazon waiting for? For B&N to release the Nook Color 2 and take away all the attention? For the iPad 3 to launch so that Amazon can blame it if things don’t take off? For another company to steal the perfect opportunity? Some sort of fear that it might turn into a hardware manufacturer?

It’s incredibly strange that Amazon is unable to ship a Kindle Tablet when B&N was able to ship a really good reading tablet nearly a year ago.

If Amazon does ship a very solid, very reasonably priced Kindle Tablet in October it will have a huge hit on its hands. The demand is there. If it waits until early 2012 to ship one or both of its Kindle Tablets then it will miss out on the Holiday Season and also gift Apple most of the people who would have bought a 10″ Kindle Tablet this year. Holiday Season 2011 is it for Amazon’s Tablet hopes – If it doesn’t ship this year, it’s going to be in very big trouble (and not even Mirasol supermagicalfaeriedust screens with generous helpings of PrimeRib will be able to save it).

What price vs demand lessons can Kindle Tablet learn?

The madness around the $99 and $149 TouchPad sale suggests that there might be a HUGE market for low-priced, high quality Tablets from an established brand. A Market that before yesterday night only B&N’s Nook Color was tapping into, and that too partially.

First, the criteria, so we can rule out TabletX from Unknown Manufacturer Y with Zero Quality Control -

  1. Quality – A $100 Tablet is useless if it doesn’t meet some basic quality bar.
  2. A Trustable Brand – HP is supposedly offering to make up the $300 price different to early adopters. That’s the sort of thing people don’t ever expect from an unknown brand. HP, B&N, Amazon – these brands have some amount of trust and carry a guarantee of sorts.
  3. Value for Money - A $99 TouchPad is very attractive because it can be used as an eReader and for surfing the web and for watching movies. At $500 there wasn’t enough value for money – at $100 it is incredible value for money. The response to the Touchpad sale suggests that what most Android Tablet makers are doing wrong is going for the $500 price point and trying to beat iPad on features or technology. It’s price that’s the real opportunity.

At the moment there are only two Tablets that beat iPad on value for money – TouchPad and Nook Color. It’s not a coincidence that TouchPad has sparked off a storm of sales and that B&N is probably the highest selling Tablet (Asus’ Transformer Tablet is also supposed to be doing well).

Amazon and B&N get the opportunity to observe this mad rush and rethink their pricing for their soon-to-be-released Tablets.

There is a Tablet Market – Just not a $500 Tablet Market

The consensus amongst the devotees of Apple is – There is no Tablet Market. There is an iPad Market.

That’s nonsense. Android is already making inroads and the TouchStorm has shown that people will buy Tablets if they are priced right.

B&N claimed last Holiday season to be selling 700,000 Nook Colors a month. That’s a very healthy number. It (in combination with the TouchStorm) suggests that other Tablets (which are selling half a million Tablets a quarter) got their pricing totally wrong.

There are a few big differences between Apple’s iPad and any other Tablet – the better quality (let’s assume its markedly better), the coolness factor, the status signalling ability, being first to market, the app store, usability, aesthetics, the Apple brand.

A Tablet priced at the same price can’t compete. For one, it can never become a status indicator. No other Tablet says ‘disposable income’ like the iPad. For another, it can’t build up the type of trust Apple has in general. We are talking about people who owned iPods and iPhones coming over to buy Tablets. Very few companies have that locked-in user base whose identity has a special cave carved out for Apple.

It’s pointless to attack iPad without taking advantage of the biggest opportunity i.e. the range of prices from $99 to $299.

A Tablet that competes on Value for Money has a very good chance – The mad rush to buy TouchPads shows this, as does the success of the Nook Color.

Should Amazon go with a $500 Kindle Tablet or a $200 one?

A $500 Kindle Tablet with lots of great features would hit the brick wall of ‘Not being as good as Apple’s iPad 2′ which could be translated in so many different ways and means so many different things to so many different people.

It’s just not a fight Amazon should get into. It’s not a rational thing – it’s emotion driven and signal indicator driven. However, people understand value, they understand low prices, and they understand trust. Those are emotional triggers too – for every person who wants to show off his wealth there’s another who wants to get value for money.

A $150 Kindle Tablet would see the sort of frenzy we are seeing for the TouchPad. It would also cut into iPad sales massively. Why? Because people will only pay a certain premium for the ability to signal status.

A $200 to $250 Kindle Tablet would also do very well. It would impact iPad to an extent.

Anything higher and Amazon is pushing its luck.

This brings us to another reason why a low price is important – The first being that the low price negates iPad’s actual advantages (signalling status included).

Not many people have a use for a Tablet.

Which means that if they know they have to pay less they love the option. The whole Tablet market is irrational – no one even knows what Tablets are good for. They just know they want to buy one. So a $200 purchase that satisfies the hunger is more appealing than a $500 purchase.

Now, let’s look at B&N and the Nook Color because it is already showing that there is life beyond the iPad.

Should B&N go even lower in price with Nook Color 2?

Yes, it should.

At $250 Nook Color sold very well. At $200 a Nook Color 2 would become the best-selling non-Apple Tablet. Unless Amazon releases the Kindle Tablet at $200. A $200 Nook Color 2 would also increase the separation between itself and iPad 2 and make it easy for users who don’t care much about signalling status to buy the Nook Color 2.

Contrast the difference between a $200 Nook Color 2 and a $300 Nook Color 2 -

  1. $300 Nook Color 2 with faster processor and X technical improvement.
  2. $200 Nook Color 2 that’s much cheaper than other Tablets.

In the former case users are told about benefits they don’t even understand. In the latter case users can see the $50 drop and the $300 price difference from the iPad.

A Tablet purchase for most people is an experiment. They don’t have a particular task or function for which they need a Tablet - they just have a burning desire to possess a Tablet because everyone says that’s the thing to do. Kids were crazy about Pleo and Furby in past holiday seasons and grown-ups will be crazy about Tablets and eReaders this holiday season.

At $200 you make it easy for users to pick your Tablet. At some level they know that there’s no Tablet use they can think of which their existing devices won’t fulfill (it’s so amazing to sit on the couch and watch a movie on my iPad - my HDTV is 5 feet away but its screen is too big and beautiful). At the same time, they want a Tablet and they must feed the Cool New Device Ownership Hunger. So – make it easy for them. Give them a Tablet they don’t have to think twice about.

That brings us to our final point i.e. Amazon almost certainly already knows all this.

Kindle with Special Offers might just be a testbed for Kindle Tablet with Special Offers

Amazon knows better than almost any other company the difference lower prices make. We are talking about a company that went from a $400 Kindle 1 to a $139 Kindle WiFi. No ‘extra memory for $100′ and no ‘signal how much disposable income you have’ – It just kept cutting the price. You can’t even show off your literary pretensions any more – even people who don’t read own a Kindle, these days.

So, naturally, Amazon wonders about how to get the Kindle Tablet to a price point where buying one becomes a no-brainer. A Tablet for the Rest of Us.

It thinks about offers and deals and advertisements because it’s such an obvious direction to go in. What else could Amazon think about – apart from selling people who own the Kindle Tablet other things from Amazon.

And – wonder of wonders – that’s exactly how it can cut prices. Factor in the future income it will generate by selling people lots of other things like physical Blu-ray discs and digital movie downloads and books and music and kitchen sinks and purple iguanas.

If B&N can release Nook Color for $249, then Amazon can definitely release a pretty good 10″ Kindle Tablet for $350. Then it uses ‘special offers’ (aka future income from an Amazon.com tributary) to cut off another $100. Pure Magic. We have a $250 Tablet that’s comparable with iPad 2 in value for money and perhaps even beats it. And it’s half the price which means a lot more people can buy it. For people addicted to apps there’s even an Amazon Android App Store with 1 free app every single day.

Amazon has been painfully slow to get its Tablet to market but it’s very likely that it won’t make a half-hearted attempt. In some ways, its very future is at stake (it doesn’t want people to switch from Amazon books and CDs and DVDs to iTunes digital everything).

My prediction – $250 Kindle Tablet and $250 or $200 Nook Color 2. And both will sell a ton and by March 2012 Android Tablets will have 45% of the Tablet Market. Apple can keep hammering on Retina Display and RealEmotion Emotional Connection to YourDevice and TrueStatus status signalling $198 Add-on Sticker - The big chink in its armor is that it needs to make huge profits from device sales and there are always companies stupid/forward-focused enough to blow up profits.

Kindle Tablet

Wanted to write a Kindle Tablet post that covers all the possibilities, and also makes some Kindle Tablet predictions. Well, this is it.

Kindle Tablet – What screen will the Kindle Tablet use?

There are three possibilities -

  1. The practical choice – IPS LCD. It’s what iPad and Nook Color use. It’s battle-tested and reasonably cheap. 
  2. The dream screen – Qualcomm Mirasol. This would blow away every other Tablet when it comes to battery life and ‘new technology appeal’.
  3. The multiple-mode choice – Pixel Qi. The ability to switch between color LCD and transflective LCD is very attractive. However, it just isn’t as sexy (or battery friendly) as Qualcomm Mirasol.

My gut feeling says Qualcomm Mirasol. For one, which one would you rather bet on – a start-up like Pixel Qi or an established giant like Qualcomm. For another, if you want to create a few solid competitive advantages, Qualcomm’s color eInk screen promises to do that exceedingly well.

If it were my call, it’d be IPS LCD as it’s the safe choice – but here’s to hoping we see Amazon take a chance on Qualcomm Mirasol.

Kindle Tablet – What will the Kindle Tablet Release Date be?

This is probably the least thought out section.

  • If using IPS LCD – Summer 2011. Probably July 11th, 2011.
  • If using Qualcomm Mirasol – Winter, 2011. Probably November 17th, 2011.
  • If using Pixel Qi – Very early. Perhaps as early as mid June.

Please do keep in mind that what B&N announces on May 24th might change the ‘announcement date’ and perhaps even the actual ‘Kindle Tablet release date’. If Kindle Tablet uses Qualcomm Mirasol, it’s unlikely to arrive in June or July 2011 – not matter what B&N announces.

How many models of the Kindle Tablet will there be?

Here are the 4 ones that seem most likely -

  1. 5.8″ or 7″ Kindle Tablet with WiFi and Special Offers for $200 to $249.
  2. 5.8″ or 7″ Kindle Tablet with 3G and WiFi and Special offers for $299 to $349.
  3. 10″ Kindle Tablet with WiFi and Special offers for $399 to $499.
  4. 10″ Kindle Tablet with 3G and WiFi and Special offers for $499 to $549. 

The main switches will be – 3G and WiFi vs only WiFi, No Special Offers vs Special Offers, 5.8″/7″ versus 10″. An additional switch is probably IPS LCD vs Qualcomm Mirasol.

That could mean as many as 6 to 10 models. However, for simplicity, Amazon will probably go with 3 or 4 models.

Not adding anything here about different memory sizes because Amazon is unlikely to prevent users from adding extra memory.

Kindle Tablet Price Predictions

Elaborating a bit more on the previous list.

The lowest price Kindle Tablet WiFi model will almost certainly be in the $200 to $250 price range and come with ‘special offers’. Amazon will probably subsidize it heavily as the Special Offers can encompass every single category of goods sold at Amazon. This will literally be the ‘Amazon.com in your hand’ Kindle Tablet.

This model will aim to take over the niche Nook Color is thriving in.

The two highest price Kindle Tablet models will probably be a 10″ Kindle Tablet with 3G and WiFi and Mirasol Qualcomm and a 10″ Kindle Tablet with IPS LCD and 3G and WiFi. These will probably be $550 and $450.

These Kindle Tablet models will aim to take over the entire market of ‘people looking for a quality Tablet who aren’t wedded to Apple’. Note that there is no Android Tablet that has been a huge success in this market and that iPad is very much an option - so Amazon will prioritize quality and new features (like Qualcomm Mirasol) over price.

The Kindle Tablet models in between these two extremes are not very interesting. They will probably serve as contrasting options/choices that make the $200 Kindle Tablet WiFi and the high-end Kindle Tablets more attractive. Amazon might also copy a page out of Apple’s marketing black book and introduce an over-priced top-line Kindle Tablet model at $800 or so – this would provide much lower value for money and would highlight the excellent value for money the lower priced Kindle Tablet models provide.

Kindle Tablet – What App Store will the Kindle Tablet have?

This is only worth discussing because there’s a small possibility Amazon surprises us here.

The consensus opinion is that Amazon is building the Amazon Android App Store as an App Store for its own future Tablets and Phones. However, how many actual apps for tablets does it have?

Amazon might use the existing Amazon Android App Store for Kindle Phone – But would it really use it for Kindle Tablets?

There is a small chance it creates a completely different App Store for Kindle Tablet. Just as Apple has the iPhone App Store and the iPad App Store, we might see a completely separate Tablet App Store for the Kindle Tablet.

How will Kindle Tablet complement Kindles?

Amazon wants to remove its dependency on iPad and Android Tablets for casual readers who want to read on a Tablet device. It sees its customers reading on Kindles at home and in sunlight and on Kindle Tablets at night and when out and about.

Kindle Tablets will take over the role that iPads and rooted Nook Colors are currently playing in the Kindle ecosystem.

Amazon will probably also introduce bundles – $50 off or $100 off if you buy a Kindle Tablet and a Kindle together. Perhaps even a free Kindle with Special Offers if you buy the 10″ Kindle Mirasol Tablet.

Will Kindle Tablet have ‘Special Offers’? Will Kindle Tablet target Groupon and offer Living Social deals?

Yes, there will almost certainly be ‘Special Offer’ variants for a few of the Kindle Tablets. In fact, the lowest priced Kindle Tablet might be available only with ‘Special Offers’.

It’s also a safe guess that Living Social deals (Amazon owns a stake in Living Social) will form a large chunk of the ‘Special Offers’.

You could make a reasonably strong argument that Kindle Tablet’s possible utility as a defence against Groupon and other Daily Deal retailers is one of the top three aims Amazon has in mind for the Kindle Tablet. The first two probably being – direct channel to customers, defence against Apple’s closed ecosystem and Google’s pretend-open ecosystem.

Will Kindle Tablet attack iPad or Nook Color or Android Tablets?

Firstly, let’s leave the major part of the iPad user base out of the equation – the ones who already owned Apple products before they bought the iPad. Amazon is not going to target a customer base that has Apple engrained into its identity.

That leaves two major groups – those just looking for a good Tablet, those looking for a non-Apple Tablet.

These are the groups Amazon will target. Its main competitors will therefore be iPad, Android Tablets, and Nook Color (possibly even a Mirasol powered Nook Color announced on May 24th).

Amazon will have at least two Kindle Tablets – a 5.8″ or 7″ Kindle Tablet to take on Nook Color, and a 10″ Kindle Tablet to take on iPad and 10″ Android Tablets.

Amazon probably understands that it’s unlikely to catch up with Apple on quality and quantity of Tablet apps for a few years (if ever). So, it’s probably going to look for other ways to attract people looking for the best Tablet – quality of hardware, value for money, customer service, etc.

When it comes to people who want a non-iPad Tablet, things get a little murky – Nook Color is selling very well partly because it’s so easy to hack. Not sure whether Amazon will be OK with that. It probably cares a lot more about creating a secure channel to customers than attracting ‘Android is Open’ people.

Amazon will probably start by making something that suits its own existing customers and will then iterate to create models that attract more people – so neither an iPad killer, nor an Android Tablet killer.

How will Kindle Tablet do?

Very well.

It’s a strange prediction to make without knowing what the Kindle Tablet actually is. However, consider the context -

  1. Apple (with a little helping hand from the artificial and stupid restrictions put on netbooks) has created strong demand for tablets.
  2. There are lots of people who do not want the iPad or cannot afford it.
  3. There is no strong non-iPad Tablet except the Nook Color - except it’s actually a reading tablet and not a full Tablet.
  4. Amazon will compete very well on price.
  5. Amazon already has a reasonably good Android App Store – although with a limited number of tablet apps.
  6. Amazon has all the required elements in place – music downloads, movie downloads, cloud infrastructure, huge customer base, a solid brand, solid logistics.
  7. Amazon has the opportunity to study what Apple and B&N and other Tablet making companies did and improve on it.
  8. There is the possibility of introducing new technology – either of Qualcomm Mirasol or Pixel Qi would make the Kindle Tablet pretty impressive.
  9. Amazon has a lot of loyal customers who will take a chance on it. If a $399 Kindle with a first-generation eInk screen managed to sell enough to lead to the current eReader and eBook revolution, you have to imagine a decent Tablet offering would have a good shot at selling millions of units.

In fact, things are so well-aligned you almost worry Amazon will get complacent. You could argue it already has been complacent by letting Apple and B&N get so much of a head-start.

How will Apple and B&N and other Android Tablet makers respond?

Apple won’t do much. Customers will separate themselves into Apple and non-Apple camps and the Apple camp is very safe until Steve Jobs is around.

Apple’s 90%+ ownership of the Tablet space is bound to end. As long as it has 80% or 90% of the profits it couldn’t care less how many packs of diapers Amazon is selling via its Kindle Tablets.

Android Tablet makers (except B&N, discussed separately below) have little clue. They haven’t been able to make a worthwhile Tablet yet and it’s unlikely that in the next 6 to 12 months they will get their act together.

You have to keep in mind that lots of these companies are wedded to making laptops and desktops powered by Windows. You can’t unlearn your core competency. Apple was in a different situation – it had to do something to fight Microsoft. Finding a way to work around Microsoft’s dominance was always in Apple’s heart. None of the other Tablet makers have much incentive to destroy Microsoft’s dominance in desktop and laptop operating systems.

B&N is the dark horse. It’s supposedly selling 800,000 Nook Colors a month. It’s just opened an App Store for Nook Color and has 150 apps. It had a clear path to selling 10 million+ Nook Colors a year. A solid Kindle Tablet threatens that. The only recourse would be to release a much-improved Nook Color 2. Quite frankly, it’s going to be a fascinating contest – Nook Color vs Kindle Tablet from June to November, and then Nook Color 2 vs Kindle Tablet from November 2011 to June 2012.

2011 is going to be the year of Kindle vs Nook. The twist is that there are going to be two very different Kindle vs Nook battles – Kindle 3 vs Nook 2 in eReaders and Kindle Tablet vs Nook Color in Tablets. Who in early 2010 would’ve predicted that the most exciting Tablet War in 2011 would be Kindle vs Nook?

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