Will Amazon's Tablet Finally Challenge The iPad?

The retailer's big announcement, and a big challenge to Apple, is expected Wednesday

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Speculation is mounting in advance of Wednesday's Amazon press conference, at which the company is expected to announce a new tablet computing device aimed at competing with Apple's wildly successful iPad. The path of competition with the iPad is well-trod, and it has led, so far, to heartbreak. But tech experts think Amazon – maybe only Amazon – has the ability to compete with Apple, and even to force the inventor of the iPad to drop its prices to compete with a new arrival.

Hopes are high. From The New York Times:

The Amazon tablet, analysts believe, will most likely sell for about $250, half the price of the basic iPad. Its screen will be seven inches as opposed to the iPad’s 10 inches. Unlike the current Kindle but like the iPad and iPhone, it will operate by touch. A second tablet, with a bigger screen, is expected next year.

The competition will be asymmetrical. Apple sells movies, music and books in order to sell devices. Amazon sells devices in order to sell books, movies and music. Apple has never faced an opponent with such a vastly different strategy. Apple declined to comment on its strategy against Amazon. Few if any analysts expect Apple to seriously stumble, but that is not to say it will emerge unscathed. The Amazon tablet might be underpowered when set against the iPad, a Corolla to Apple’s Lexus, but that might not matter.

“The No. 1 thing consumers do on tablets is e-mail,” said Sarah Rotman Epps, a Forrester analyst. “The No. 2 thing is look up stuff on the Web. Then playing games and watching video. Amazon will offer all the tablet that many consumers need.” She estimated initial sales of as many as five million devices.

Tech observers are already tallying up the expected features of the still-unseen device. (If we're looking for a sign that Amazon's device is a real threat to Apple – unlike those of Hewlett-Packard, Acer, or others that came before – how about the fact that Amazon device-speculation is keeping pace with rumor-mongering about the new iPhone?)

Information Week says it'll be slimmed down, simple, and above all, cheap.

That's the right place to focus, said the International Business Times, since pricing is the main obstacle in selling tablet computers. And Amazon is the "only viable" competitor in the market against Apple, in part because they're the only ones who can afford to drop the price of their new device in order to compete on volume.

A survey by Citigroup showed the primary inhibiter to tablet purchases among consumers was the price, and most struggling would-be iPad manufacturers, like Motorola and Research in Motion, cannot afford shrink margins to undercut the iPad.

While the cost to manufacture the Amazon tablet is not yet known, Amazon itself is one of the few companies that can even afford to sell a device at a loss to firmly plant its platform. It is expecting $10 billion in revenue in the current quarter.

HP figured that out too late, when its liquidation of the discontinued Touch-Pad triggered a frenzy of actual sales. Amazon is hoping they can hold out long enough at low prices that the market for tablets comes down from Apple's rarified level to find them.

This article is from the archive of our partner The Wire.