Amazon Kindle Fire vs Apple iPad !! : With the $199 Kindle Fire taking on the iPad

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Apple’s iPad has so dominated the tablet-computer market that one Silicon Valley venture capitalist recently told me that “there is no tablet market—there is an iPad market, and then some hangers-on.” Earlier this year, Amazon launched the Amazon Appstore for Android apps, and Apple quickly sued for trademark infringement. (Amazon maintained the term was a generic.) Shortly after, Amazon unveiled its Cloud Drive and Cloud Player, two media-storage services that put it on a collision course with Apple's plans for iTunes.


When Amazon announced...or leaked, its new tablet design, now thought to be called the Kindle Fire, the tech blogs lit up with anticipation that this could be the device that truly has a shot at taking market share from Apple’s iPad. OK, it is being called an Apple-Killer. First, Amazon announced its Kindle Fire, a tablet that many are saying could be the first solid competitor to the iPad, which still holds an 80% share of the North American tablet market. Then, Apple said its iCloud service, announced last June, would ship Oct. 12.

The “Kindle Fire” is quite an unknown entity as of yet, the official announcement is anticipated to be tomorrow. Amazon's store and iTunes have competed for years with little detriment to either. (The same can't be said for Wal-Mart (WMT), however.) After Steve Jobs began publicly chiding music publishers, iTunes began offering DRM-free songs in April 2007. Amazon, following suit in May, made it that much harder for the labels to keep pushing for DRM.

The device may not be altogether unfamiar however. According to insiders it has already made the rounds in the marketplace. As appealing as an iPad is, many people in these tough economic times have held off on spending $500 for a tablet computer. That's a big reason why the Kindle has remained a hot seller in the age of the iPad, defying early predictions that the iBooks and Kindle apps on the iPad would turn the Kindle into a fringe device.

For Apple, the concern is more likely to surface a few years down the road. Ever since the iPod, Apple has offered each of us a virtual personal biosphere; where we can insulate ourselves with our very own personal devices that are loaded-up through a secure, private, individual portal called the app store. It’s like a child sucking sweet nectar from a straw (or other soothing delivery vehicle). Apple will be pushing to maintain its leadership without Steve Jobs, and maintaining the iPad's allure as a high-end tablet will be grow harder in time (the iPhone 4S announcement left some convinced this is already happening in smartphones.) Apple makes us feel liberated and individual...and yet strangely connected in a way we really don’t know how to describe, right? So why do we bristle with excitement when we hear about an Apple-killer? Maybe we just like to see the success-ugly fall from grace-rebirth cycle that is so much a part of American pop culture.

When markets mature they become commoditized over time. This happened in the PC industry: What were once features exclusive to premium products migrate slowly down to the lower-end of the market, and price becomes the paramount factor for consumers. When that happens, the high end gets smaller, becoming a niche. But now the battle has shifted into open warfare, with Bezos even mocking Apple for forcing users to sync their iPads by connecting the device to a computer with a cable, calling that “a broken model.”

The irony is that the Kindle Fire, or whatever it will be called, is widely believed to be a relatively low-tech, mid-performance tablet, with limited connectivity options. Apple's Macbooks have given it a lucrative and growing position at the high-end of a PC market where most of the machines sold are commodities priced at a several hundred dollars. For the next few years, the iPad will do the same in the tablet market.