Quote:
Originally Posted by maxtower
But fundamentally they do almost the same thing. Kindle is smaller, so there is that. What happens when Amazon releases a $300 Kindle that is the same size? That will have to pressure Apple's margins right?
In theory they do almost the same thing. But the key here is 'in theory' and 'almost'. You can consume movies and books on the iPad and Kindle Fire equally as well, but the app store and the browsing experience is significantly better on the iPad. The Kindle will probably have a lot of impulse buyers, and buyers who want to see what the tablet hype is about, but for those reasons above, very few people who want an iPad will end up with a Kindle.
Also it's a big assumption that Amazon can release a $300 kindle the same size. They are already taking a loss (or at best breaking even) on the 7" Kindle. Can they afford to develop/manufacture/distribute a 10" Kindle at $300? And the opposite is true as well- what if next year, Apple releases a smaller iPad in the $300-$400 range? Or when they release the iPad3, they cut iPad2 prices?
And the big advantage Apple has, is that they sell the iPad globally, and the Apple ecosystem supports it, while the Kindle Fire is basically only usable in the US. Licensing musics/movies/tv shows- the core functions of the Kindle- around the world is a huge hurdle for Amazon to clear. Until then, Apple will continue dominating the non-US market.
All that said, margins/market share % probably can't stay as astronomically high as it is now. But the small declines in margins/market, they will make up in volume.