“Apple still rules the tablet world,” writes Brian White of Topeka Capital Markets. Indeed, the expected release of a 7.85-inch ‘iPad mini‘ will expand the the company’s customer base, “potentially even surpassing sales of the regular-sized iPad.” In short, Apple investors should relax…
Although crediting the new 8.9-inch and 7-inch Kindle Fire HD as “ambitious,” Sterne Agee analyst Shaw Wu said Amazon’s new entry could actually help Apple by limiting some competitors, such as Samsung and Research in Motion to minor annoyances. As for Apple’s major threats — Google’s Nexus 7 and Microsoft’s Surface — the $199 Amazon device could increase competition while shrinking profit margins.
Although the $199 Google Nexus has experienced strong demand since being introduced in July, the tablet “could see competitive pressure” from the 7-inch Kindle Fire HD. Although both products are priced the same, Amazon has doubled the Kindle Fire’s storage to 16GB from 8GB, Wu said.
As for Microsoft, the introduction of the Kindle Fire HD will force the company to drop the Surface price from $299. But this race to the bottom rarely pays off, warned Wu. Not even Apple has been able to profit much from just selling content via its App Store.
“Reselling content has historically proven to not be a very profitable venture,” he notes.
Apple is expected to announce the ‘iPad mini’ in October with a $250-$300 price.
What do you think? Will Amazon’s new Kindle Fire HD eat into demand for the iPad (either the full-size or upcoming mini)?