Amazon Wants to Crash Apple's iPad Party

Apple launches its brand-new iPad Air on Friday, but plenty of consumers are anxiously awaiting the arrival of the iPad Mini with Retina display. The smaller tablet might be hard to come by this holiday shopping season, but starting Friday The Motley Fool will be hosting a contest to win a free iPad Mini with Retina display! Make sure to check back on Friday to find out how you can win!

You can't blame for trying.

The leading e-tailer's home page is pitching the new 8.9-inch Kindle Fire HDX tablet at the moment. A picture of the sleek device is the most prominent image when one visits, and then comes the pitch.

  • 20% lighter
  • 950,000 more pixels
  • $120 less than the iPad Air

Now, does the Kindle Fire HDX have a legitimate shot at unseating Apple in tablets? No. Apple remains the company to beat in this growing niche; the iPad Air is drawing rave reviews. The Wall Street Journal consumer tech guru Walt Mossberg is calling it the best tablet that he's ever reviewed!

However, Apple is vulnerable. It's losing market share to Android-fueled tablets, and the Kindle Fire is built on top of Android. Apple announced this week that it sold 14.1 million iPads in its latest quarter, just ahead of the 14 million it sold a year earlier.  That may seem like improvement, but revenue actually slipped 13%, since the new figure includes the cheaper iPad Mini that wasn't around during the prior year's comparable quarter. However, even in terms of units, we're seeing Apple fade in leadership. Tech tracker IDC reports that worldwide tablet shipments have climbed 36.7% over the past year. Apple's flattish showing means that it's missing out, and IDC estimates that Apple's market share of the tablet market has declined from 40.2% to 29.6% since last year. 

So it's clear that Amazon thinks it can attack, and it has the advantage of using its popular landing page to promote its gadgetry initiatives. Would the Kindle and eventual Kindle Fire be as popular today if it weren't for Amazon's incessant marketing on its home page? 

Amazon knows that a good push is all about timing. It's not a coincidence that Amazon is promoting its most expensive tablet now. Apple begins selling the iPad Air tomorrow, and anything that it can do to try to woo shoppers by pointing out how it can save them $120 will help. Yes, Apple's iPad may seem to be the brand that everyone thinks about when talking tablets. For many tablet seekers, nothing but iOS will do. However, the numbers show that now less than a third of tablet buyers are going iPad.

Here is where Amazon's unflattering income statements comes into play in its favor. Savvy consumers know that Amazon is pricing its tablets aggressively, willing to forgo meaty markups on the hardware for a hand in the more lucrative ecosystem. The large Kindle Fire HDX may be priced $120 cheaper than the iPad Air, but no one believes that it costs Amazon $120 less to make it. Amazon's playing for market share right now, and that will make it a compelling value this holiday season.

Apple's iPad Air is still the tablet to beat, but Amazon's doing a smart thing by putting its comparable gadget front and center on this week.

It's not just Amazon willing to go for broke
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Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends and owns shares of 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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