Amazon: Tablets Aren't Kindle-Killers After All

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Amazon.com CEO Jeff Bezos says many holiday shoppers who purchased its Kindle e-reader already own a tablet computer, refuting those in the industry who have forecast that the tablet devices would be Kindle-killers.

For Amazon (AMZN), the death of its Kindle would have significant repercussions, given the e-reader is its best-selling product and one that Amazon leverages to sell reams of e-books from its online store.

Amazon, which doesn't break out its Kindle sales, had this to say about the competition it faced from tablet computers this holiday season:

"We're seeing that many of the people who are buying Kindles also own an LCD tablet. Customers report using their LCD tablets for games, movies, and web browsing and their Kindles for reading sessions. They report preferring Kindle for reading because it weighs less, eliminates battery anxiety with its month-long battery life, and has the advanced paper-like Pearl e-ink display that reduces eye-strain, doesn't interfere with sleep patterns at bedtime, and works outside in direct sunlight, an important consideration especially for vacation reading," said Bezos in a statement released Monday. "Kindle's [WiFi version] $139 price point is a key factor -- it's low enough that people don't have to choose."

A Tsunami of Tablets


Amazon, facing steep competition from Barnes & Noble's Nook e-reader (BKS), engaged in a price war earlier this year that resulted in a 30% price cut for a 3G-WiFi version to $189. This year also marked the launch of Apple's (AAPL) highly touted iPad, which debuted at $499. The iPad launch drove a number of other computer companies, like Dell (DELL), to debut tablets and prompted cell-phone makers, like Samsung, to supersize their devices to a tablet form.

This tsunami of tablet computers also have the capability to download Amazon's Kindle app to access its large online bookstore, which fueled forecasts that Kindle's days were numbered.

Bezos statement about Kindle's holiday sales and its co-existence in households where a tablet computer resides were clearly meant to address industry naysayers. Amazon said its Kindle 3G, which it launched earlier this year, was its best-selling product in the company's history.

Replaced by an App?


But some analysts are skeptical that Kindle will ultimately survive in a sea of tablet computers.

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"I don't think Bezos' assertion is widely accurate. Our research shows there's been a large number who have downloaded the Kindle app," says Trip Chowdhry, an analyst with Global Equities Research. "Kindle will survive, but not as a hardware device. It will survive as an app. It's a matter of time before Amazon exits hardware."

He added that consumers are tired of carrying multiple devices that do the same thing. For example, electronic paging devices have given way to cell phones that can deliver text messages, and stand-alone GPS devices are facing a tough time as smartphones become enabled with that capability.

If e-readers like Kindle and the Apple iPad will co-exist, Apple or Amazon may be wise to develop a carrying case that fits both devices snugly in one sleeve.










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