ABI Research reports that Amazon has set the tablet market “ablaze” thanks to the launch of its $50 Fire Tablet. The device was released in late September 2015, sporting a 7″ display, a 1.3 GHz quad-core processor, and 8 GB of internal storage. Even more, it features a microSD card slot allowing the owner to beef up the internal storage to a massive 136 GB (total). Amazon evidently expects customers to download media left and right from the company’s various online services.
According to ABI Research, Amazon took a big chance by launching the tablet with such a low price point. The move was a “calculated risk,” one that the company could clearly make financially as it shifts its primary focus away from hardware sales and on recurring digital content sales like music, movies and TV shows. Perhaps even more important was the launch of Fire for Kids, which is a $79.99 version of the $49.99 tablet with a child-proof case and a child-proof warranty. That’s right – Amazon is offering child-proof warranty and perhaps this is the reason why Fire sits on #1, #2 (Fire for Kids Blue) and #3 (Fire for Kids Pink) spots for best-selling ‘Computers & Accessories’.
Are Fire for Kids tablets the reason why sales of Amazon tablets exploded?
“Unlike other tablet manufacturers, Amazon views hardware as a commodity and emphasizes focus on its recurring digital content revenue stream, generated from selling digital books, music, TV, and video programming to owners of its devices,” says Jeff Orr, Research Director at ABI Research. “The incredibly low pricing of the Fire Tablet is a smart and strategic move, as few others can afford to accept a lower margin on their tablet devices in favor of driving a surplus of content-related revenues.”
Fire Table is powered by Amazon’s new Fire OS 5 operating system, which currently does not offer device encryption. However, the company recently said that it plans to bring encryption back to the platform in an upcoming update. Files will not automatically be protected: users must manually set the encryption feature to protect sensitive information like passwords and credit card numbers.
Did Amazon’s move to offer a $50 tablet pay off? ABI Research reports that the company sold 5.0 million units in 4Q 2015 compared to the 1.5 million tablets it sold in the same quarter back in 2014. All in all, Amazon sold 7.6 million units in calendar year 2015, but it still fell short when compared to the units pushed by Apple, Samsung, and Lenovo.
In a chart provided by the research firm, Apple sold 49.6 million units in calendar year 2015, followed by Samsung with 34.1 million units, Lenovo with 11.5 million units, Huawei with 7.7 million units, and Amazon with its 7.6 million units. Amazon was actually one of two companies that saw tablet growth in 4Q 2015, the other being Huawei with 2.3 million units sold in that quarter compared to 1.3 million units sold in 4Q 2014.
“Most tablet vendors continue to take a wait-and-see approach to Amazon’s Fire Tablet release,” continues Orr. “It’s a path only few can follow, as vendors without content distribution rights and value-added services can only rely on the transaction price of their hardware to stay in business. For instance, LeEco, formerly LeTV, in China is attempting a similar model. Conversely, content owners may find value in broadening their ecosystems by striking relationships with tablet vendors to get their programming in front of more users.”
Amazon’s $50 Fire Tablet is supposedly nearly two times more durable than the latest iPad Air tablet from Apple, and has both front-facing and rear-facing cameras. The tablet also sports Amazon-exclusive features like the Amazon Underground app store, an Activity Center for kids who have outgrown Amazon FreeTime, X-Ray, Second Screen, and more. Customers can purchase this tablet in a six-pack for $250.
Although there’s talk in the industry that the tablet sector is growing stale, ABI Research’s latest discovery shows that consumers are looking for a quality solution for a relatively low price. Amazon has indeed taken a bold move, one that seems to be paying off as more cheaply-priced Windows 10-based solutions are saturating the computing market with various high-performance form factors.
