Amazon's Expensive Kindle Voyage Highlights a Problem With Apple's iPad
On Thursday, Apple will hold its next major media event, at which it is widely expected to unveil a new generation of iPads, including a new version of the iPad Air and iPad Mini.
A week later, the first customers who preordered Amazon's new Kindle Voyage e-reader will receive the device.
Although the products differ greatly, they seem to be inextricably linked. The Kindle Voyage is unlikely to move even a fraction as much volume as Apple's iPad, but its very existence highlights a weakness in the tablet market.
The death of the e-reader?
At first glance, the Kindle Voyage is a strange sort of product -- something that, just a few years ago, might not have been expected to exist. Starting at $199 (and retailing for as much as $289), the Kindle Voyage costs nearly as much as many quality tablets (including Apple's first-generation iPad Mini), yet it offers far fewer features.
Indeed, the Kindle Voyage is capable of only a single task: displaying ebooks. Without an app store or even a browser, the Kindle Voyage's Internet connection serves only to download more Kindle books from Amazon's website. A tablet, like Apple's iPad, in contrast, is also capable of displaying ebooks, but offers so much more. For this reason, the steady rise, and proliferation, of tablets has been expected to eventually wipe-out the market for traditional e-readers. Dubbed "the next iPod," the e-reader's death has been widely proclaimed -- another victim of the "do-it-all" tablet.
Certainly, the market for e-readers is not what it once was: E-reader sales appear to have peaked in 2011 at just over 26 million units, and have been on a steady decline ever since. Analysts at Forrester research project that, by 2017, annual e-reader sales in the U.S. will fall to just 7 million.
The disappointing iPad
In contrast, Apple sold 13.3 million iPads just last quarter. Compared to e-reader sales that's an impressive figure, but Apple's iPad business isn't as healthy as it might seem: That third quarter number represented a 9% sales decline year over year and continued a trend that has, over the last year, seen Apple's iPad business post steady quarterly drops.
Apple's disappointing iPad sales (and more tepid growth in the larger tablet market) have caught many analysts off guard. Once overly optimistic expectations proclaimed the inevitably of the tablet age: In theory, ever-more powerful tablets would eventually emerge as the dominant computing device, leaving the traditional PC, e-reader, and other specialized products in its wake.
That may happen, eventually, but probably not any time soon. Unfortunately, Amazon does not provide exact sales figures for its products, instead only commenting about their success relative to its own expectations; however, there's some anecdotal evidence to suggest healthy demand for the Kindle Voyage: Shortly after it went up for preorder, the device sold out. Depending on the model, buyers who have not already reserved their Voyage will have wait until December to receive it.
Dedicated devices live on
Analysts have used a variety of reasons to explain Apple's disappointing iPad sales -- longer refresh cycles have been a common refrain, and relatively modest improvements in the underlying tech have often been cited.
But I think the existence of the Kindle Voyage -- a high-end, absurdly expensive e-reader -- speaks to something else about the tablet market, and the iPad in particular: Though it offers many different functions, it's not particularly good at any one thing. It can serve as an e-reader, certainly, but it isn't nearly as good as a dedicated one -- the e-ink display and weeks-long battery life offered by the Kindle Voyage blow the iPad away. By the same token, traditional PCs have seen their sales rebound, as tablet uptake remains relatively tepid in the enterprise segment.
Going in to the holiday shopping season, Apple's refreshed iPad lineup will be expected to help reignite sales. That may happen, but without any revolutionary improvements, it's hard to see the iPad fulfilling the lofty expectations analysts once had for the product.
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The article Amazon's Expensive Kindle Voyage Highlights a Problem With Apple's iPad originally appeared on Fool.com.Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends Amazon.com and Apple. The Motley Fool owns shares of Amazon.com and Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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