Amazon (NASDAQ: AMZN) is likely to succeed where Hewlett-Packard (NYSE: HPQ), Dell (NASDAQ: DELL), Research In Motion (NASDAQ: RIMM) and several other PC and consumer electronics companies have failed. Its new Google (NASDAQ: GOOG) Android-based tablet is expected to sell as many as five million units in the fourth quarter.
Forrester Research reports that “Apple will maintain a strong lead in market share, but Amazon will gain ground quickly and give product strategists from media, software, retail, banking, and other firms a reason to kick app development for Android tablets into high gear.”
Only two years ago Amazon seemed an improbable challenger to Apple (NASDAQ: AAPL). The world’s largest e-commerce company had some success with the Kindle e-reader, but that e-reader had few of the features of tablets. It also lacked the processor power to run multiple applications. The Kindle dominated the e-reader market, but was unlikely to have any success against Apple’s iPad.
Amazon almost certainly will change the tablet PC sector. It brings advantages to the industry that other companies cannot. The first of these is its brand, which has migrated from e-commerce to consumer electronics. The second is the inventory of its huge online store operations. Amazon not only offers e-books; it has already created a music and video content service, one of the most critical factors for tablet success. No other company has close to Apple’s media content service.
Amazon also has a tremendous Web presence. Comscore shows that Amazon sites had 97.1 million unique visitors in the U.S. during July. Apple had 75 million. Amazon has a large and ready audience to which it can offer its tablet, as well as the multimedia content that will run on it. And Amazon’s customers are accustomed to buying products online, as they have done for years.
Amazon’s product should not be the biggest challenger to the iPad. That position should belong to HP or Dell. But, Amazon has a brand tied to innovation, and it has a vault of content that has nearly no equal.
Douglas A. McIntyre
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