Is Kindle Fire a PlayBook in Disguise?
When hundreds of thousands of consumers purchased a Kindle Fire last Christmas, they had no idea what they were getting.
It turns out that the $200 tablet they acquired just happens to be a slightly modified version of a $500 tablet that no one wanted: the ill-fated PlayBook from Research in Motion (NASDAQ: RIMM).
This revelation first came late last year when iFixit explored the Kindle Fire's components. Now that others have had the chance to research the device, Trip Chowdhry (the Managing Director of Equity Research at Global Equities Research) is convinced that the Kindle Fire is indeed a PlayBook in disguise.
In an e-mail update on Amazon (NASDAQ: AMZN), Chowdhry said that the “converged view” (gathered at various design, cloud and social media-related events that he is visiting) is that the Kindle Fire was made using almost 90% of the PlayBook's components.
“Converged view is that about eight months back Amazon approached the PlayBook contract manufacturer Quanta, and purchased all the un-sold inventory of [the] Research in Motion PlayBook at a very attractive low price,” Chowdhry wrote. “People we met say that they are 100% certain that AMZN Kindle Fire is the same as RIMM Playbook, but with a different OS. These people have [torn] down both devices and have seen almost the same [components] and layout in both devices.”
In short, Chowdhry said that the converged view is that Amazon had a “sudden sense of urgency” to develop and release a “colored tablet to confront Apple['s] (NASDAQ: AAPL) iPad and Barnes & Nobel's (NYSE: BKS) Nook – both of which have colored screen[s].”
The eight-month timeline matches up with the timeframe in which Amazon supposedly approached Research in Motion about a potential takeover. The buyout offer was never confirmed, and now we know why: Amazon didn't want to buy the BlackBerry maker – it just wanted a few components from its contract manufacturer.
From a marketing standpoint, it makes sense that Amazon would want to hide this fact from the general public. Most people were not happy with the PlayBook, as it proved to be a cheap and clunky tablet with very little to offer consumers outside of an exorbitant price tag. But the same could be said for Hewlett-Packard's (NYSE: HPQ) first tablet, the TouchPad, which launched at $500 but quickly lost 80% of its MSRP. After dropping to $99, the device flew off store shelves. While consumers were disinterested in the tablet at full price, it became a hot commodity when retailing for a too-good-to-be-true price point.
Hewlett-Packard no doubt lost money on the sale of every $99 TouchPad. Thus, it is very unlikely that we will ever see another high-end tablet retail for that price. But if Amazon had come clean about the Kindle Fire's true history, consumers might have been just as excited for its release as they were for the TouchPad clearance. After all, the Kindle Fire is essentially a $500 tablet that retails for $200. Up until now, most consumers just assumed that it was a $200 tablet retailing for $200, period.
Then again, Amazon might be keeping quiet to protect the future of its brand. As the Kindle Fire continues to evolve, the tablet will inevitably move beyond its Research in Motion roots. At that time, Amazon isn't going to want people to think, “Wow, look at what the PlayBook inspired!” Amazon would prefer that we simply think about the Kindle brand, the Amazon name, and the multitude of books we can download online.
There is, however, one mysterious piece to this puzzle: the fact that Amazon had a “sudden sense of urgency” to release a colored (or more advanced) e-reader to compete with the iPad and the Nook. Did Amazon really see those devices as a threat to the Kindle? Or did the company simply see an opening to expand the Kindle brand by selling a new device?
Finally, we are left with this question: of all the tablet components available, what made the PlayBook – one of the least popular tablets – appealing to Amazon? Was it the simple fact that there were plenty of components to go around? It's not as if Research in Motion needed them. Or was Amazon attracted to the PlayBook because it was cheaper to manufacture?
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