Amazon's Fire tablet will position the company nicely in the tablet and digital content spaces.
Tablets are surely changing mobile marketing and the way consumers use the Web. The iPad 2 is the obvious current gold standard, though many other tablets are being released that rival the iPad in in various aspects. Amazon is entering the game with its upcoming Fire tablet, a 7-inch tablet that will be available for $199 this holiday season.
Some people have criticized the move. According to Business Insider, Piper Jaffray analyst Gene Munster estimates Amazon will lose $50 or more per tablet, once marketing and production costs are factored in. However, this short term loss could be a huge long term gain for Amazon. Let's look at some numbers.
According to Forrester Research, conversion on tablets is 4-5%, compared to 3% for PCs. Tablets also produce 10-20% larger carts than PCs. So, consumers are buying more, and more often, using tablets than PCs. Therefore, if Amazon gets its own tablets in the hands of consumers, it's a good bet that those consumers will make future purchases at Amazon as opposed to other sites.
Also, the Amazon Fire helps Amazon in its battle with Apple over who rules the digital content space. Consumers who use tablets to buy music or videos are steered by the device. iPads send people to iTunes or other Apple services. The Fire is Amazon's counter attack. It will guide users towards making purchases on Amazon, and not Apple or other digital content providers.
Lastly, the Fire is a good move for Amazon's reputation. Consumers like companies that constantly push for innovation. Blackberry was popular, but the phones didn’t change much after a few years, so consumers moved to other smart phones. Palm, Yahoo, and AOL are other examples of companies that have lost out by playing it safe. Apple and Google, on the other hand, constantly keep consumers on their toes through fast-paced innovation. A powerful and inexpensive tablet might be just what the doctor ordered for Amazon and its reputation as an innovative company.
