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% 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 Kindle eBooks are in many ways a loss leader that get people to 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
  • 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

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.

Amazon Kindle Tablet – Kindle Tablet in November

There are now claims that people have played with the Amazon Kindle Tablet and that –

  1. It’s called ‘Amazon Kindle’. Which would be a very smart decision. Amazon wanted to go with 7″ Resplendent, Feels Fantastic Touch Screen with Magical  & Revolutionary Wireless and Something from Google that is Free as long as you sign away your Soul – unfortunately, that got rejected because Apple has the copyright on using Words that create Emotions to Market Devices.
  2. It has a 7″ color touchscreen.
  3. It will be priced at $250.
  4. It uses Android but has a custom version and has kept Google’s ‘let me carry your books for you, no strings attached’ hands off of it.
  5. Kindle Tablet is already in testing at Amazon and might be entering production soon.
  6. It’s slated for an end of November release.
  7. It’s aimed at Nook Color rather than at iPad.

MG Siegler, who has found some time to stop prostrating himself at the shrine of Apple, writes about the Amazon Kindle Tablet at TechCrunch –

How do I know all of this? Well, not only have I heard about the device, I’ve seen it and used it. And I’m happy to report that it’s going to be a big deal. Huge, potentially.

This will be the first Kindle with a full-color screen. And yes, it is back-lit. There is no e-ink to be found anywhere on this device.

Now they’re betting everything on the 7-inch. If it’s a hit, they will release the more expensive 10-inch tablet in Q1 2012.

He claims lots of other interesting things –

  1. The UI is Kindle themed with black, dark blue, and orange.
  2. There is no hint of Google at all.
  3. Main Screen is a cover flow like interface.
  4. It’s integrated with all of Amazon’s services such as Amazon MP3s and Amazon Movies.
  5. The book reader is similar to Kindle for Android.
  6. Amazon’s Android App Store is on there.
  7. 6 GB of internal storage
  8. WiFi-only.
  9. A micro-USB port.
  10. No Camera.
  11. Buyers will get a free subscription to Amazon Prime.

The final claim, and perhaps the most interesting one, is that Amazon is also working on a multi-touch screen/eInk hybrid Tablet.

Amazon Kindle Tablet – finally a name that’s simple and sweet. Very interesting that Kindle Tablet will be aimed at Nook Color 2 (there are rumors that Nook Color 2 will launch by end of September) and not at the iPad.

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 ‘ 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?