Amazon Tablet Could Be Ad-Supported iPad Rival: Arment

Instapaper creator Marco Arment suggested Amazon could build a tablet and subsidize it with ads-not unlike what it's doing with the new $114 Kindle. The idea is to wrest market share from Apple's iPad.

Research In Motion's PlayBook launches April 19 against a backdrop of sharp criticism, which has already forced some folks to write off the device as a credible challenger to Apple's vaunted iPad. This after reports of weak sales for Motorola's Xoom and reported delays for future Android 3.0 "Honeycomb" tablets; specifically, some industry watchers are again calling for an Amazon.com to launch a tablet that could, if not topple, at least shake the iPad from its position as the dominant tablet in the computing industry.

Marco Arment, an application programmer who built the Instapaper Web page saver app, revitalized the meme April 15 when he wrote that Amazon.com's introduction of an ad-supported Kindle e-reader suggests the e-commerce giant is laying the foundation for a larger ad-subsidy system.

Amazon CEO Jeff Bezos said that a Kindle with special offers and sponsored screensavers would help anyone who wants a Kindle to be able to afford a Kindle. The ad-loaded Kindle retails for $114, compared with the $139 base Kindle model and the $189 Kindle 3G.

One imagines such a system would give pause to readers trying to decide whether to buy a Nook from Barnes & Noble or an iPad for consuming books.

Arment, on his blog, imagined this system applied to a tablet as looking something like this:

• A 7-inch tablet, to keep costs down, named something like the Kindle Color, Kindle Tablet, or Kindle Touch.

• Android, but with Amazon's media-storefront apps and the Amazon App Store to download new apps all pre-linked to your Amazon payment information (like today's Kindle) for one-tap purchases.

• A very aggressive entry price of $200-300, with the entry-level model being subsidized by up to $100 worth of ads; the idea is to compete with the iPad on price.

• Prominent promotion on Amazon's front page every day.

Part of what makes the idea interesting is that it seems like something Google, the largest Internet advertising company, could and would do to promote its own Android tablets but hasn't to date. Google has marketed its own Nexus line of phones, of which there are currently two, and is rumored to be building a Nexus tablet.

But what if Amazon beat Google to the punch with a device that cost about half as much as the iPad 2 and had all of the requisite competing features, from dual cameras to being super thin and light (thinner than a pen, under a pound) and available via WiFi or with a 3G/4G data contract from Verizon Wireless or some other carrier?

Arment said an Amazon tablet would be one way for Amazon to get around relying on the popular Amazon Kindle app for iOS devices. This would cause a "pretty big short-term headache for Apple that could pose a credible threat to the iPad's market share."

The Amazon tablet meme doesn't quite come from out of left field. Forrester Research analyst Sarah Rotman Epps wrote in a blog post March 10 that Amazon could create a compelling Android- or Linux-based tablet and entice users with apps from its Amazon Appstore for Android and features such as one-click purchasing, Amazon Prime service and its recommendations engine.

The idea would be to offer users an alternative to the stringent rules Apple has created for e-book sellers and publishers that require in-application payments, which potentially freezes out Amazon. Other analysts differed in their feeling on the matter. Analyst Jack Gold acknowledged Amazon's brand recognition and ability to sell products but said the price of the device would be key.

"A Kindle-Android device could prove popular, building on the large installed base of Kindle users. And Amazon clearly has the largest 'store' out there-bigger than the iTunes/app store world-so that could be a swaying factor if they got aggressive with offering special deals on their own device," Gold said.

However, Gartner analyst Van Baker told eWEEK that Amazon's interest is in the reader market because it supplements its book selling business.

"It is more likely that Amazon will make the Kindle free to Amazon Prime subscribers and then make their money selling ebooks rather than introduce a full-featured tablet," Baker said.