Analysis: Amazon tablet could sell 5 million units

Posted by Mark Raby

Amazon could be the biggest threat the iPad has seen yet, with the online retailer expected to launch its own tablet later this year.

 The Internet giant has proven its manufacturing and design chops in spades, with the Kindle far exceeding the admittedly optimistic expectations many analysts originally had for it.

In fact, even though the two products are radically different in scope and functionality, the Kindle is still seen as a rival to Apple's iPad, since Apple has tried to market its tablet as a cogent e-reader.

So it would make perfect sense for Amazon to launch its own branded Android-powered tablet. In fact, analyst group Forrester sees a market where such a tablet would reach 5 million unit sales in the final three months of 2011.

Forrester analyst Sarah Rotman Epps noted, "Thus far, Apple has faced many would-be competitors, but none have gained significant market share. Not only does Amazon have the potential to gain share quickly but its willingness to sell hardware at a loss, as it did with the Kindle, makes Amazon a nasty competitor."

The tablet environment is highly competitive, and it's much more difficult to offer a differentiated product given the standards and restrictions Google has in licensing Android.

Nevertheless, given the Kindle's wild success, no one should dispute Amazon's potential to shake up the consumer electronics sector.

As Epps rationalized, "If Amazon's Android-based tablet sells in the millions, Android will suddenly appear much more attractive to developers who have taken a wait-and-see approach."

 Of course, Amazon would be entering the tablet market in a starkly different position than when it entered the e-reader market. For starters, the latter market was rather nascent and by all accounts Amazon was in the right place at the right time.

The iPad had a similar good fortune, making the stories of Apple and Amazon quite parallel with one another. So seeing the two of them directly compete in the exact same product category should be fascinating.

In fact, if Amazon does manage to be the one to actually provide worthwhile competition against the iPad, it could put the entire CE industry on its head. For a retailer with only limited experience in actual product creation to do what companies like Samsung, Toshiba, Motorola, and HP were unable to would be historic indeed. This market has proven that the traditional, establishment companies are on the way out and consumers want something new and different.