By Chantal Tode
April 30, 2012
The Kindle Fires significant success is rewriting the Android tablet ecosystem with Amazons entry controlling over half of the market in just six months. For other players who are losing share, the question is what can they do to regain ground or should they just cut their losses and run?
Within the Android tablet market, Kindle Fire has almost doubled its share in the past two months for a total market share of 54.4 percent in February, making it the leading Android tablet by a wide margin. The success of the Kindle Fire is also helping to lift Amazons revenue from digital movies and books, helping the company to post strong first quarter profits last week.
If you are not Samsung or Amazon, you are really struggling in this market, said Carl Howe, vice president of consumer research at Yankee Group, Boston . Generic Android tablets are not selling tablets in any sizable numbers.
This is going to serve as a great product for Amazon because it sells a lot of for them but I dont think it is indicative that they are going to dominate tablets, he said.
This is a fight for number two.
Differentiation is key
Samsungs Galaxy Tab family is second after the Kindle Fire with a 15.4 percent market share, down from 23.8 percent in December, according to comScores data. Samsung is followed by Motorola Xoom with a 7 percent share, down from 11.8 percent in December.
Asus Transformer, Toshiba AT 100, Acer Picasso, Acer Iconia, Sony and Dell Streak all lost share during this period as well. The only other Android tablet to gain share was Lenovo IdeaPad Tablet K1, which saw its market share grow from 0.7 percent to 1.2 percent during the same period.
The Kindle Fires success can be attributed to several factors, including that Amazon successfully created a differentiated experience designed specifically for consuming media via Amazon. Additionally, the tablet is offered at a competitive price and Amazon has put aggressive marketing behind it.
The competition, in contrast, is struggling to find a compelling selling proposition and, as a result, is competing on price alone.
The other plays likely to continue to lose market share unless they are able to find a point of differentiation.
You cant just say it is the same as the iPad, just half the price, Mr. Howe said. Thats not enough to get into a market leadership position.
Specialize in things you think have really important use cases and then there is a lot of room left in this market other than the general purpose consumer market, Mr. Howe said. Amazon illustrated one other niche and there are probably others in the consumer market.
The tablet market is still young as is the Android ecosystem, which means new players and new strategies still have room to capture sales.
There have been a few false starts and now manufacturers are beginning to restrategize and consider ways to reposition themselves in the Android tablet market.
You are seeing a whole realignment in the ecosystem and seeing vendors redo their product lines, said Rhoda Alexander, senior manager of tablet and monitor research at IHS/iSuppli, Santa Clara, CA . We are also seeing more move to do what Amazon has done and create a modified version of Android.
The competitors with the most aggressive pricing have been moving the most, she said.
Despite the strong numbers for Kindle Fire, the Android tablet market is still significantly smaller than the iPad market.
Additionally, it is not clear if Kindle Fire can maintain its momentum, which will depend in part on how quickly it can expand beyond North America.
While 14 percent of consumers surveyed by Yankee Group said back in December that they were interested in buying a Kindle Fire, that number has dropped to 6.2 percent more recently.
Fifty percent of the Android market is very small compared to the iPad market, which is very big, Mr. Howe said. We are not talking about something that is even much more than a few million units.
I am a little skeptical that it will continue to gain share, he said.