Tablets

Kindle Fire will Shine Despite Mixed Reviews, Analyst Says

While Amazon's Kindle Fire tablet has received mixed reviews from the tech press, one Morgan Stanley analyst thinks it's all a big misunderstanding.

ANALYSIS: Tablet throwdown: Amazon Kindle Fire vs. Apple iPad 2

In a report written this week, Morgan Stanley analyst Scott Devitt said that many reviewers "strategically misunderstood" the Kindle Fire and that Amazon's main goal isn't to deliver a tablet experience that matches Apple's popular iPad. Rather, he writes that the large content ecosystem that Amazon has already built around the tablet, combined with its low price, will more than make up for its technical inferiority to the iPad.

"We view Kindle Fire as a similar scenario to the original Kindle eReader launch in November 2007," Devitt writes. "Many 'tech-spec jocks' and hardware reviews have applied a one-dimensional evaluation of the Kindle Fire. However, we argue that Amazon.com has created an entire content ecosystem and operating system platform that supports the Kindle Fire, making it a better value proposition than any other Android-based tablet on the market. A compelling price point more than makes up for the relatively lighter tech specs."

Devitt also says the Kindle Fire's $199 price tag has been designed to act as a gateway for consumers who will purchase a cheap tablet but will then stick around to pay for all the content they can access through Amazon. He also thinks that having a widely adopted tablet with a free-to-use mobile operating system will provide incentive for mobile app developers to create apps specifically for the Kindle Fire.

"We believe that to control the monetization points of its device, Amazon.com has to facilitate the flow of content," he writes. "In order to do this, Amazon priced its device at $199 to drive consumer adoption. With a large installed base, app developers would have a real incentive to produce content that Kindle Fire owners will purchase."

Although Apple's iPad has dominated the tablet market over the past two years, Amazon's Kindle Fire tablet has been hyped as the first tablet to give the iPad a run for its money due to its lower price, integration with Amazon's cloud services and unique Android interface designed by Amazon. Amazon has also created new Web browser called Amazon silk that utilizes Amazon's cloud capabilities to speed up page load times by tracking your Web browsing patterns and preloading pages you typically visit through Amazon's Elastic Computer Cloud (EC2). In other words, Amazon's cloud requests your frequently-visited pages before you even ask for them so they're ready to go for you.

A survey of more than 1,000 consumers released by Retrevo last month showed that 44% of U.S. consumers said they would consider buying an Amazon Kindle Fire instead of an iPad 2 this coming holiday season, although an equal number said they didn't know enough about the Kindle Fire to make a decision. Additionally Forrester Research has estimated that the Kindle Fire could sell around 5 million units by the end of January, easily making it the No.2 tablet on the market behind the iPad.

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