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Amazon Tablet Getting Closer, LCD Kindle Would Counter iPad and NOOK Color


What We Know About Amazon's Forthcoming Tablet (Hint: Not Much, Yet)

Rumors have been flying for months that Amazon — maker of the best selling Kindle line of E Ink standalone e-readers — would be entering the tablet fray, with a an LCD display tablet running an Android variant. Chatter about the e-book world's worst kept secret ramped up last week after a report by DigiTimes that Amazon has placed an initial order for between 700,000 and 800,000 units per month through Taiwan-based notebook manufacturer Quanta. The purported timeframe for this new hardware run is the second half of 2011, which means that if all the stars align, we could be looking at an Amazon tablet by summer or fall. Amazon already has its own Appstore for Android in place and operational and Kindle e-reading apps for Android have been perfected, so really the only thing missing is the hardware. Size is open to speculation. Right now, the only real games in town for tablet PCs are the 7-inch display (think PlayBook) and the 10-inch form factor favored by Apple. My guess is that Amazon will go with a 7-inch display, a size that reduces cost, makes the device more portable and most closely resembles both the existing Kindle display and the dimensions of a paperback page.

Why Would Amazon Risk Selling a Tablet When iPad Continues to Crush the Competition?

In the first quarter of 2011, Apple sold a reported 4.69 million iPads, an impressive number but a decrease from the 7.5 million sold the previous quarter. The slip has been attributed to manufacturing issues and numbers are expected to be trending up again. In contrast, Motorola shipped an estimated 250,000 Xoom tablets during this time (no concrete numbers on how many of those they actually sold) and RIM is hoping to sell 500,000 PlayBooks during it's first quarter of sales. The market is competitive and becoming saturated as every hardware manufacturer out there seems to be throwing glass slabs at the iPad with little effect, so why bother?

Two reasons: NOOK Color and in-app purchases. 

Sneaking under the radar, Barnes & Noble has sold an estimated 3 million NOOK Colors, its stealth tablet e-reader. While the NOOK Color hasn't been factored into equations showing the dominance of iPads over the competition (since it was marketed as an e-reader and then began to transform into a lower end tablet through firmware updates), if it had been counted as an Android tablet, that would likely have been enough to make the 7-inch NOOK Color the second best selling tablet after the iPad. Barnes & Noble may be planning a refresh of the NOOK Color. Suddenly, that tablet market looks as though it might have some opportunity after all. And Amazon certainly doesn't want to cede bragging rights for anything to Barnes & Noble.

The other issue that's galling Amazon is the potential of having to fork over a cut of e-book sales through in-app purchases. Apple, through iPads and other iOS devices running Amazon's Kindle app may represent a small percentage of e-book sales, but if Apple does follow through with threats to start taking a chunk of sales, Amazon won't be happy. If having its own tablet captures even a few potential iPad buyers, eliminating Apple as an e-book middleman for those customers, Amazon will be happier. 

Will an Amazon Tablet Mean No More Kindle?

I can claim no insider knowledge here, but I can say with almost 100 percent confidence that the Kindle will continue to be produced and sold in volume. Given the success of tablet PCs (and Apple's iPad, in particular), it is pretty much a no-brainer that Amazon would go after this market, especially when surveys of tablet users repeatedly show that e-book reading is one of their primary uses. However, in the grand scheme of things, Amazon is in a war to maintain its dominant share of the e-reader (and e-book sales) market. Tablets are considerably more expensive to manufacture than standalone, E Ink based e-readers. Abandoning the cheaper e-reader market would mean leaving a huge number of future e-book buyers looking to Barnes & Noble, Sony, Kobo and other e-reader makers if they don't have $300, $400 or more to pay for hardware. The other issue is the trade-offs inherent in a multipurpose LCD tablet. Many people prefer using a standalone e-reader for reasons such as portability, battery life and outdoor use (see here for a more thorough discussion on this topic), and Amazon is not about to abandon this market either.


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