Amazon CEO Jeff Bezos introduced the long-awaited, heavily anticipated Kindle Fire Sept. 28 in New York. The slate, which uses a custom version of Google's (NASDAQ:GOOG) Android operating system, costs $199.99 and is expected to ship Nov. 15.
This may not surprise many people following the red-hot tablet market Apple (NASDAQ:AAPL) created, but Piper Jaffray and other analysts don't believe the Amazon (NASDAQ:AMZN) Kindle Fire will compete head-to-head with the iPad.
No one was really expecting Amazon to produce a premium consumer electronics device. The e-commerce giant's legacy of low-cost Kindle e-readers put wood behind that theory.
Sure, $199 is an aggressive enough price point to dupe pundits into thinking Amazon deigns to claw at the stout underbelly of Apple, which sells its 16GB iPad 2 for $499, but the product specs show otherwise.
There are major differences between the forthcoming Kindle Fire and Apple's freshest tablet, the iPad 2, that put the Kindle Fire at one end of the market and the iPad 2 at the top.
Apple's iPad 2 has a 9.7-inch screen. The Kindle Fire possesses a 7-inch display. The iPad 2 has front- and rear-facing cameras to enable photo and video shoots, as well as video chats.
The Kindle Fire has no cameras. iPad 2 has a microphone. The Kindle Fire doesn't. iPad 2 may be purchased in 16GB, 32GB and 64GB models. The Kindle Fire comes with 8GB of internal storage, but offers all of the cloud storage a consumer can eat.
Where Apple reigns atop the high end of the tablet market, Amazon has targeted the low-hanging fruit grabbers, and plans to rely on its toy chest of Web-based music, movies, books and storage to woo consumers.
Piper Jaffray analyst Gene Munster noted, "With the Kindle Fire, we believe Amazon is attempting a unique tablet strategy by leveraging a superior cloud-based content delivery system tied with Prime to make money off of a device we believe will sell at a loss."
Of course, his caveat is that because Amazon is relying on a superior cloud-based content system to counter Apple's premium hardware and software choices, the Kindle Fire remains a step or two behind the iPad for the time being. This thinking puts the spotlight back on the rumor that Amazon will soon launch an improved Kindle Fire with a 10-inch screen.
""The iPad takes it on from the high end. It's the best possible device in that price range from the world's best maker of devices. The Kindle Fire takes it on from the low end. The iPad is a credible laptop replacement for many people-and with iCloud and another year or two of hardware improvements, that's going to be true for more and more people. The Kindle Fire is a laptop replacement for almost no one. It's a peripheral, not a second computer-and it's priced accordingly.""
Munster remains comfortable with his previous estimate that Amazon will sell 2.5 million Kindle Fires this quarter to close out the year.
Interestingly, Munster noted that his conservative sales estimate is based on Amazon's history with Kindle e-reader shortages that he believes will extend to the Kindle Fire. "If supply were not an issue, we believe Amazon could sell closer to 4 million Kindle Fires in the holiday quarter," he said.
Munster expects the Fire to lead the pack of Android tablets that will take share from the iPad in 2012. He expects the iPad to go from its current 90 percent market share to 60 percent in 2012 as the Kindle Fire and other popular Android slates emerge to entice consumers.
Munster is still modeling for Apple to sell at minimum 50 million iPads next year.