Windows 8 Could Benefit from Kindle Fire Sales: Analyst

 
 
By Nicholas Kolakowski  |  Posted 2012-02-16
 
 
 

Microsoft€™s Windows 8 stands to benefit from solid sales of Amazon€™s Kindle Fire and Barnes & Noble€™s Nook Tablet, according to a new report from research firm IHS.

That report notes Apple€™s shipments of 15.4 million iPads during the fourth quarter of 2011, and estimates that Amazon came in second with 3.9 million Kindle Fire units.

In a Feb. 16 note, IHS analyst Rhoda Alexander termed those Kindle Fire shipments a €œrespectable start,€ adding that €œthe long-term viability of the product will hinge on the success of Amazon€™s business gamble, which depends on tablet sales driving substantial new online merchandise sales at Amazon.com in order to attain profitability.€

Respectable start or no, low prices for both the Kindle Fire ($199) and Barnes & Noble€™s Nook Tablet ($249) are apparently having a ripple effect on other Android tablets on the market. €œThe surge in non-iPad shipments in the fourth quarter was achieved at considerable financial cost,€ she wrote, €œwith sharp price reductions across most of the competing Android tablets and actual product giveaways from a number of vendors as part of promotional efforts for other electronic products.€

Those price reductions, in turn, could benefit Microsoft as it preps to enter the market segment in a big way with its Windows 8 tablets. €œIn the wake of the new low bar for pricing set by the Fire and the Nook and the looming Google acquisition of Motorola Mobility,€ the firm€™s note continued, €œmanufacturers and branded vendors are looking to Windows 8 tablets as a more profitable alternative.€ It predicts those Windows 8 tablets will hit the market in late 2012 and early 2013, which fits with other analysts' predictions.

Although the Kindle Fire has become a bona fide competitor to the iPad, Apple has been careful to downplay its potential on the tablet market. €œPrice is rarely the important thing,€ Apple CEO Tim Cook said during a Feb. 14 keynote at the Goldman Sachs Technology and Internet Conference in San Francisco, according to an edited transcript provided by Fortune. €œI think people at the end of the day, they want a great product.€

He conceded that Amazon€™s Kindle Fire would ultimately sell a lot of units€”while adding that €œthe customers that we€™re designing our products for, are not going to be satisfied with a limited-function kind of product.€

But as Microsoft is making clear in presentation after presentation, Windows 8 tablets will not be limited-function devices. They will feature modified versions of Office, include the ability to run apps, and almost certainly hit the market at a competitive price-point. And if the Kindle Fire somehow drives more tablet customers into Microsoft€™s waiting arms, however indirectly, it could end up having more of an effect on the iPad than Cupertino would probably like to admit. 

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