The Only Non-iPad Tablet That Matters

Rick Aristotle Munarriz, The Motley Fool
Updated

Amazon.com's (NAS: AMZN) tablet may be vaporware right now, but it's real -- and it's coming soon.

A Barclays Capital analyst is now expecting the leading online retailer to sell 2 million of its Android-fueled tablets this year. That's actually on the conservative side, since other estimates have gone as high as 5 million.

Will Amazon selling millions of tablets make Apple (NAS: AAPL) lose any sleep? Of course not. Apple sold 9.25 million iPads in its latest quarter, and it's going to sell a lot more iPad 2 gadgets during the holiday quarter.

However, remove Apple from the equation, and it's more than reasonable to expect Amazon's tablet to be the top dog among Android tablets in a few months.

Don't judge Amazon's tablet by how well it does this holiday season. Amazon didn't sell a lot of Kindles when it was introduced before the 2007 holiday season, and it's an undeniable juggernaut now. We also will only be getting part of the Amazon playbook, as several recent reports have indicated that we'll be getting just the seven-inch tablet next month. The more iPad-ish 10-inch model likely won't be out until next year.

It's true that Android tablets have been a hard sell until now. It's been even harder for proprietary platforms as Hewlett-Packard's (NYS: HPQ) TouchPad and Research In Motion's (NAS: RIMM) PlayBook have been hype-deflating duds.

  • Amazon has several advantages that the earlier entrants have lacked.

  • Amazon already has a cloud-based digital music locker in place.

  • The video streaming ecosystem is already in place, including 8,000 free titles for Amazon Prime members.

  • Obviously the tablet is going to dovetail perfectly with its Kindle e-books and publications.

  • The Kindle has taken off with Amazon promoting the e-reader on its home page for the past four years. The tablet should get the same kind of loving.

  • Amazon's pricing strategy with the Kindle has been aggressive, and the same is likely to happen with the tablet where the e-tailer has to make up for lost time. The chatter has the seven-inch tablet selling for as little as $250 to $300. Unlike other manufacturers, Amazon doesn't need to turn a profit on its tablets if it has the ecosystems in place to drive incremental sales elsewhere.

In other words, it doesn't matter if Amazon sells 2 million or 5 million, or if delays bump Amazon out of the 2011 holiday shopping season altogether. Amazon has shown the patience to cultivate an attractively priced winner with the Kindle that previous tablet pushers have sorely lacked.

Apple will own this space for the next few years at least, but Amazon should go from zero to silver medal in a matter of months when it does show up to play.

If you want to see how the tablet wars play out, consider addingAmazon.comandAppleto My Watchlist.

At the time thisarticle was published The Motley Fool owns shares of Research In Motion and Apple.Motley Fool newsletter serviceshave recommended buying shares of Amazon.com and Apple.Motley Fool newsletter serviceshave recommended creating a bull call spread position in Apple. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story, except for Hewlett-Packard. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

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