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The Kindle Fire is igniting the tablet market and will come in second after the iPad only two weeks after being on the market reported IHS. The Amazon branded tablet is followed by Samsung Galaxy Tab, Barnes and Noble Nook and HTC tablets.
Starting off with nothing in the third quarter, Amazon will ship 3.9 million Kindle Fire tablets during the last three months of 2011. Previously second place was held by the non-defunct HP TouchPad. The Kindle Fire 's price of $199.99 contributed to its growth.
Amazon will have 13.8 percent share of global media tablet shipments in the fourth quarter, exceeding the 4.8 percent held by No. 3 Samsung, and second only to Apple’s 65.6 percent portion of the market.
The Kindle Fire’s rapid ascent will help fuel the expansion of the entire market, with the additional shipments contributing to a 7.7 percent increase in the IHS forecast of total media tablet shipments in 2011.
IHS now predicts global media tablet market shipments will amount to 64.7 million units in 2011, a 273 percent growth from 17.4 million units in 2010.
Sales of the Kindle Fire alone will account for much of the growth in sales. Dramatically reduced pricing in general in the non-Apple portion of the media tablet market also will play a role in expanding sales.
The Kindle Fire has set a new bar for pricing, bringing the media tablet within reach of a larger portion of the buying public.
“At a rock bottom price of $199—which is less than the $201.70 it now costs to make the device—the Kindle Fire has created chaos in the Android tablet market,” said Rhoda Alexander, senior manager, tablet and monitor research for IHS “Most other Android tablet makers must earn a profit based on hardware sales alone."
In contrast, Amazon plans to use the Kindle Fire to drive sales of physical goods that comprise the majority of the company’s business. As long as this strategy is successful, the company can afford to take a loss on the hardware—while its Android competitors cannot.
Amazon’s retail strategy Millions of Kindle owners will be accessing digital content from the Amazon.com site to play on their tablets. Once these users are on the site, Amazon hopes to sell them all kinds of other goods, ranging from shoes to diapers. Amazon has taken several steps to promote this strategy.
IHS predicts that in order to deal with the new competition Apple may reduce the price of the iPad 2 when the iPad 3 comes out.