Why we want to see Amazon challenge the Apple iPad

With several big consumer tech companies entering the tablet market on the Google Android 3.0 honeycomb platform this year, including Samsung with the Galaxy Tab 10.1 and Motorola with their Xoom tablet, some believe that the only real challenge to Apple iPad 2 could come from Amazon.

It is renowned research company Forrester that suggest in a recent report that the only real challenge to the iPad market dominance could come from Amazon this year. Although they agree that many of the new Android tablets entering the market or the new PlayBook from RIM are solid products, they feel that their all important product strategy is flawed.

Their research indicates that two of the reasons why Apple has such a strong position is down to; competitive price and the Apple Store experience.

Lets look at the first one, the price. What Apple has done with the iPad 2 is up the specs to align itself with the new tablets entering the market, while keeping the price at the same level that people have become used to, and actually in most cases matching prices from other tablet providers. Apple is already considered on the top of the shelf so no need to undercut competitor pricing a the moment. Keeping it close is good enough.

As for the Apple Store experience, Forrester says that none of the competitors can match the in-store experience that Apple delivers, a factor that according to their research attributes a higher value to their products. Walking into an Apple store you are guaranteed that whoever is there to assist you will have in-depth knowledge and expertise on the Apple iPad, helping you become comfortable with the product ahead of buying. Just the fact that you are free to play around with in the store is a big help. None of the competitors can match that experience for the consumer.

Not to say that you don’t get a good level of knowledge and expertise walking into any other high street consumer electronics store stocking a wide range of tablets, but the fact that they are selling perhaps 4-5 similar tablet solutions makes their job more difficult in being masters of each product.

Forrester believes that regardless of the new tablets entering the market in 2011, Apple will still have around 80% marketshare in the tablet market by the end of the year. Unless Amazon enters the market.

So why is it that Amazon could pose such a threat to the Apple iPad? In short, content and distribution!

Amazon is one of the largest and must trusted retailers in the world, as witnessed by numbers referred to by Forrester stating that 28% of consumers would prefer buying from an online retailer like them compared to from a mobile network carrier. Consumers enjoy choice and control as much as price. The carrier distribution model might reduce the up front cost of a tablet, but locking consumers into data traffic contracts is not received as well. What Amazon could do is actually launch a tablet running Android or Linux that is equally as good in terms of technical specifications, but actually sell it a lower price and make up for it by selling content and services already available through their online stores.

Other manufacturers, like Sony and Samsung, are also trying to build up the content side of their offering, but their content is still insignificant in relation to what Apple can offer through the iTunes Store, and not to mention what Amazon can offer through their website. Wide ranging content distribution is outside of their core business, at least for now, making their entry and success in the tablet market reliant on lower prices and good quality, which still might not be enough to compete with Apple.

Now it still is possible for other providers to challenge Apple in the tablet market, just look at what HTC and their Android phones have been able to achieve in the smartphone market. But it does require competitive pricing and a mass market appeal that we are currently not seeing from a still maturing tablet market.

From ebooks to digital music and movie, and soon also apps for Android phones and tablets through their very own Amazon AppStore. Amazon seem poised for entering the tablet market at a level above their current Kindle ebook reader. Only time will tell if that will be the case, but we like the idea.

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It is natural for a business to chase growth and wanting to get bigger and more successful. But there are many potential traps along the growing path, with one of the key ones being customer experience with your brand and managing brand perception along the way.



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