Kindle Fire, iPad, and the Tablet Market

In the next month, Amazon will release their hotly anticipated rebuttal to the iPad, the Kindle Fire.  This full color, app touting, multimedia playing, web browsing machine is clearly taking aim at the iPad's total dominance in the tablet market and trying to win some share for Amazon's hardware and software.  

The Fire looks to be the most complete tablet out there next to the iPad, starting with a wealth of content and apps, and it is priced to move at  just $199 ($300 less than the iPad and most other tablets).  These factors instantly led analysts and pundits to say that the Fire has an opportunity to steal significant market share from the iPad.  While I see the Fire as a great product at an amazing price, I still don't think it poses a threat to the iPad and the shift in market share will be marginal.

The iPad has already cemented itself as the tablet of the enterprise and technophiles.  In this case, enterprise doesn't mean a Fortune 500 company, but just the subset of individuals who want to use (or pretend to use) their tablet for purposes more focused on work like email, google docs, etc.  While the iPad may not actually be that much better suited for those activities, aside from its larger screen, it has already established itself in that role in the market.  Employees aren't going to be making the case to their CEOs that they need Fires -- that distinction will remain with the iPad.

The Fire may win over some small percentage of people who wanted something more powerful than a classic Kindle, so they went iPad, two years ago, and they'll now trade in their iPad to get a Fire.  That group of people is very small though.  Apple has continued to demonstrate that people who try their products don't really switch back, so they're not in a RIM situation where they got an early start and are going to start bleeding as people switch.

The Fire will certainly boost the whole category as $199 is a much more gift-ready and impulse-friendly price.  People will buy plenty of Fires and that will dilute the iPad's market share, but I don't see the iPad dipping below 60% market share anytime soon.  People looking at the Fire will also check out the iPad and some of them may decide to spring for the more robust device.

Overall, I think the Fire is great product execution by Amazon and demonstrates that they're still one of the most innovative tech companies out there.  However, while millions of Fires will ship and the tablet market will continue to grow, iPad is going to remain the dominant player for the foreseeable future.