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The announced launch of the new “Fire” tablet by Amazon has grabbed a lot of media real estate the last couple of days. Some are heralding this new product as an “Apple slicer”, and others as a “toy”. As for me, I don’t think it is either. I see the Fire as a category expander…and I suspect Apple would agree.
Just as Lexus benefits from Toyota, the iPad and Fire address different market segments, serving to open up the entry-level with a quality, functional product from a name synonymous with innovation. The Amazon Fire, simply put, will bring more consumers into the tablet market.
Once engaged with the technology, those who purchase the Fire may be more susceptible to a compelling case to “move up” to the iPad. This notion that higher-tier players need strong entry-level brands to expand the total market is true in most product and service categories. The wine industry is one example… a $6 bottle of merlot may bring a new consumer into the category, where a $30 bottle won’t. At some point, though, a percentage of those who enjoy their experience with wine will move up the price/quality ladder. Had they never taken a chance on developing a taste for inexpensive wine, you would have to wonder if they would ever purchase a more upscale bottling.
Having Amazon move into the lower space, with no up-market extension that competes directly with Apple (and the unlikely probability of going up against the entrenched leader) also relieves Apple of the temptation to build an entry-level tablet. Samsung, Android and others who contend with Apple on the higher tier also lose the chance at first-to-market on the entry level, just as they lost it on the premium market. They are left to battle it out for the #2 position.
This is a great day at Apple. And the market just got bigger, which is every marketer’s dream.
Image may be NSFW.
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