In a recent interview with Consumer Reports, Amazon CEO Jeff Bezos was asked if Amazon would make a tablet. He coyly responded with the comment "stay tuned" but gave no other specific details about a product of this nature. He basically confirmed, however, that something like this was in the works. He also pointed out that if Amazon made a tablet device, the reading experience would be at the center of its design.
My sources in Taipei say that the actual product is set to debut in time for the holidays and that the device will use a display similar to the one in the Nook and the Galaxy Tab. They also tell me that the original RFQ wanted a screen that could switch between an easy-to-read black and white E Ink-like display and a color LCD, but that this type of screen, which is already in the works by at least two vendors, will not be ready for the market until at least 2012 or early 2013. So Amazon was forced to use a 10-inch screen that was available now, which is LCD-based. It will also reportedly have a 7-inch model. And I am hearing it will sport a new version of Nvidia's Tegra quad-core chip and will be using Android as its OS.
I find the idea of Amazon entering the tablet fray both interesting and strategic. It's interesting because it will be entering a very crowded market. At CES, we saw at least 75 new tablets introduced, and when I go to Taipei for Computex in a few weeks, I am told I will see at least another 50 new models at this big tech show. The tablet has become the new Holy Grail for all types of vendors, and they are rushing them to market at a fast and furious pace.
Amazon's possible move to tablets would be strategic for the company and the tablet industry in general. As I have written in this column multiple times over the last few months, just bringing out tablet hardware without a connection to great software and especially services is a non-starter for most of these vendors. In fact, of the 100 or so tablets that will flood the market this year, only four or five will end up being real contenders and those will be the tablets that employ valuable service as part of their offering.
Most of those tying services to their devices will do so in what I would call a "piece meal fashion." They will use various third-party stores, third-party music and movie services, and other third-party products that they will try to weave into a solid solutions platform. They will then be forced to share revenue with the third-party tie-ins.
But of all of the potential competitors to Apple, Amazon has the best shot of being Apple's only real competition. In its arsenal, Amazon has its own music, movie, books and related content offerings, which makes it very easy for Amazon to integrate everything into its own customized, service offering. It also has its own Android store. And it even has a cloud-based, storage service, which may be similar to what Apple will offer with its cloud offering sometime this year.
Owning these services and tying them to a solid tablet would be a brilliant move by Amazon, and this is why it's a no brainer for Amazon to add tablet hardware to its already successful Kindle ebook reader line of products. And if my sources are correct, it could price the 7-inch version around $349 and the 10-inch model around $449, which would be one of the more aggressive tablets on the market.
While this would surely be a competitive offering against Apple's iPad, I believe Amazon's move would be aimed more at the other Android competitors instead. In fact, I believe Amazon is smart enough to know that trying to go after Apple, with its huge marketing budget and well-run retail stores, would be folly.
Rather, I believe Amazon looked at the Android market and saw that it was becoming fragmented and that it would be quite difficult for any of these players to create their own fully integrated app store, media cloud, and storage solution. As I stated earlier, any Android competitor can only do this in a piece meal fashion, not in a highly integrated manner.
This is why I believe Amazon is quite confident about entering the crowded tablet market. It knows that combining its own app store with its content and storage would allow it to compete extremely well with Motorola, Samsung, RIM, and all of the other tablet vendors, since its offering would be pretty close to what Apple has. And it already has a powerful brand that would serve it well.
If it enters this market, one can be sure that reading and books will be front and center. While it will try to make that experience superior, one could expect it to leverage its app store and apps in general, as well as a flash-based browser to deliver a pretty powerful tablet offering that should have the other Android vendors trembling in their boots.
Over the next few weeks, there will be a lot of speculation about an Amazon tablet. You may even hear that it will be an iPad killer, but don't fall for that malarkey. Yes, it will be competitive with Apple's iPad, but I believe Amazon's real target is not Apple, but the other Android vendors who are going after the market with mostly a hardware play and jerry-rigged service offerings. And if what I am hearing is correct, then this Amazon tablet offering would be a serious threat to any Android tablet vendor, since Amazon has brand, clout, integrated services, and a very loyal fan base.