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Amazon Attacks iPad Mini with Big, Aggressive Home Page Ad

October 29, 2012 Leave a comment

Trying to decide between a Kindle Fire HD or an iPad mini? Amazon is all too happy to assist. Marking what might be the beginning of a tiny tablet war, Amazon over the weekend posted a giant advert on the top of its main website comparing the two devices, and you can guess which one came out on top.

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Apple’s iPad Mini pricier than rival tablets

October 24, 2012 Leave a comment

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SAN JOSE, Calif. — Apple Inc.’s pencil-thin, smaller iPad will cost much more than its competitors, signaling that the company isn’t going to get into a mini-tablet price war.

The company unveiled the iPad Mini on Tuesday, with a screen about two-thirds the size of the full model, and half the weight. Customers can begin ordering the new model on Friday. In a surprise, Apple also revamped its flagship, full-sized iPad just six months after the launch of the latest model.

Apple’s late founder Steve Jobs once ridiculed a small tablet from a competitor as a “tweener” that was too big and too small to compete with either smartphones or tablets. Now Apple’s own Mini enters a growing small-tablet market dominated by Amazon.com Inc.’s Kindle Fire.

Apple is charging US$329 and up for the Mini — a price that fits into the Apple product lineup between the latest iPod Touch ($299) and the iPad 2 ($399). Company watchers had been expecting Apple to price the iPad Mini at $250 to $300 to compete with the Kindle Fire, which starts at $159. Barnes & Noble Inc.’s Nook HD and Google Inc.’s Nexus 7 both start at $199.

“Apple had an opportunity to step on the throat of Amazon and Google, yet decided to rely on its brand and focus on (profit) margin,” said Bill Kreher, an analyst with brokerage Edward Jones.

Apple shares fell $20.67, or 3.3 percent, to close at $613.36 after the price was announced. Shares of Barnes & Noble jumped 88 cents, or 6.1 percent, to $15.32. Shares of Amazon rose 53 cents, or 0.2 percent, to $234.31.

Apple has sold more than 100 million iPads since their debut in April 2010. Analysts expect Apple to sell 5 million to 10 million iPad Minis before the year is out.

Apple starts taking orders for the new model on Friday. The iPad Mini will be competing for the attention of gadget shoppers with the release that same day of computers and tablets running Windows 8, Microsoft’s new operating system.

Wi-Fi-only models will ship on Nov. 2. Later, the company will add models capable of accessing cellular, LTE data networks.

The screen of the iPad Mini is 7.9 inches on the diagonal, making it larger than the 7-inch screens of the competitors. It also sports two cameras, on the front and on the back, which the competitors don’t.

The iPad Mini is as thin as a pencil and weighs 0.68 pounds, half as much as the full-size iPad with its 9.7-inch screen.

The screen resolution is 1024 by 768 pixels, the same as the iPad 2 and a quarter of the resolution of the flagship iPad, which starts at $499.

The new model has better apps and is easier to use than competitors such as Google’s Nexus, said Avi Greengart, a consumer electronics analyst with Current Analysis.

“This really is not in the same category as some of the other 7-inch tablets,” he said. “And that’s before you consider that it has a premium design – it’s made of metal that’s extremely lightweight.”

Jobs attacked the whole idea of smaller tablets in his last appearance on a conference call with analysts in October 2010.

“The reason we wouldn’t make a 7-inch tablet isn’t because we don’t want to hit a price point. It’s because we don’t think you can make a great tablet with a 7-inch screen,” Jobs said. “The 7-inch tablets are tweeners, too big to compete with a smartphone and too small to compete with an iPad.”

Job’s chief objection was that a smaller screen would make it hard to hit buttons on the screen with the fingers – never mind that Apple’s iPhone, with an even smaller screen, was already a hit at the time.

Apple senior vice president Eddy Cue started working on changing Jobs’ mind. In an email sent to other Apple managers in January 2011, Cue said the CEO had started warming to the idea of a smaller tablet. The email surfaced as part of Apple’s patent trial against Samsung Electronics Co. this year. Jobs died last October.

Company watchers have been expecting the iPad Mini for a year and most of the details, except the price, had leaked out.

Apple also said it’s upgrading its full-size iPad, doubling the speed of the processor. Previously, the company has updated the iPad once a year.

The fourth-generation iPad will have a better camera and work on more LTE wireless data networks around the world. Apple is also replacing the 30-pin dock connector with the new, smaller Lightning connector introduced with the iPhone 5 a month ago.

The price of the new full-size model stays the same as the previous version, starting at $499 for a Wi-Fi-only version with 16 gigabytes of memory.

Apple also introduced a 13-inch MacBook Pro laptop with a Retina display sporting four times the resolution of the older model.

The new model, which follows a 15-inch MacBook Pro with a Retina display introduced in June, goes on sale Tuesday for $1,699.

The old MacBook Pro will still be sold, starting at $1,199.

The new model dispenses with an optical disc drive and a traditional hard drive. Instead, it uses solid-state flash memory. This makes it 20 percent thinner and at 3.75 pounds, nearly a pound lighter than the previous model.

Apple also eliminated the optical drive from its new iMac desktop computer, helping slim the edges down to 5 millimeters, one-fifth the thickness of the old model. That makes the edges thinner than most stand-alone computer monitors. It bulges in middle of the back, however.

An iMac model with a 21.5-inch screen will start shipping in November for $1,299 and up. A 27-inch version will start at $1,799.

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Kindle vs. iPad Just Start of Amazon vs. Apple Deathmatch

October 15, 2012 1 comment

Forget the tablet wars – what will really define these tech stocks going forward is the CONTENT war these devices will spark

The war between Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN), on the surface, seems to be a choice of high-end vs. low-end.

Apple has its ridiculously profitable iPad. Amazon has driven e-reader and tablet prices lower, with its new Kindle Fire HD starting at $199 with its older version starting at just $159.

The gadget forums light up like a pinball machine, comparing the functionality of the Apple iPad vs. the Kindle and its Google (NASDAQ:GOOG) Android operating system. And you inevitably get the comparisons between struggling tech giant Research In Motion (NASDAQ:RIMM) and its poorly received PlayBook, the relatively new Surface from Microsoft (NASDAQ:MSFT) or Samsung and its Galaxy tab.

But that debate over gadgets is a bit short-sighted. Because the real future of mobile isn’t going to be hardware — it’s going to be content.

Apple Retreating on High-Margin Hardware

And here’s where Apple and Amazon are really going to roll up their sleeves and fight with earnest, leaving RIM, Samsung and others in the dust.

You see, Apple has redefined the consumer tech space with “insanely great” products that consumers are willing to pay big bucks for. The iPhone, by most estimates, garners a margin north of 50%.

But Apple is starting to loosen its grip on those margins. CNET reported a few months ago that iPad margins are nearly half what they are for iPhones. And you can bet if the Apple rumors about iPad mini coming in a few weeks are true, this device will see even thinner margins than the flagship Apple iPad.

And beyond tablets, you have Apple driving down the margins on older iPhones by giving the technology away at a fraction of the cost of newer models. With the iPhone 5 launch, you can get an iPhone 4 free from a wireless carrier like Verizon (NYSE:VZ), AT&T (NYSE:T) or Sprint (NYSE:S) with a two-year contract.

Apple isn’t going broke by any means, and it’s still making a pretty penny here. But the high-end isn’t what it used to be for Apple, and margins are about to feel some big pain in the next 12 to 18 months.

The Future Is About Scale

Why the retreat on margins? Because Apple knows that if it’s going to remain dominant in tech, it needs to remain dominant in the device category simply to tap into the content sales that come with it.

You see, just as Apple pioneered many of the now-ubiquitous tech gadgets we use, it also pioneered a slick way to ensure those gadgets continue to throw off cash via the App Store. The tech giant skims off 30% of the profits from its App Store sales to ensure a nice flow of cash long after the initial hardware sale.

That model is predicated on reach, however. Without scale, this kind of model would never work.

The scale of Apple’s audience allows the company to tap into a huge amount of customers and thus make the 30 cents for each $1 video game add up. Equally important, it also ensures that developers will keep the App Store ecosystem on top. Back in 2011, I read a great post from a developer who racked up a million bucks in App Store sales in just 20 days after coding image-editing software for Apple devices. And he was all to happy to dish out the 30% for the payday, because there was simply no way for him to ever get that kind of sales and exposure on his own.

But what happens if a rival marketplace is siphoning off both sales and developers? Well, you feel the pain. And since many consumers don’t feel the need (or have the means) to upgrade their tablet every 12 months like clockwork, that means application and media sales are key.

What’s more, the future of mobile isn’t as pedestrian as a $1 puzzle game you buy to entertain your toddler on your Apple iPad or that 99-cent song download from iTunes that you work out to. The future is all media, including movie archives on the cloud, live TV news and recent sitcoms, digital coupons and banking, and even mobile advertising on free content.

You have to have scale and you have to keep it to win the mobile wars. In many respects, these revolutionary devices are simply the first shots that have been fired. What comes next for companies like Amazon, Apple and Google will really be what defines mobile computing going forward — and most important, where the money goes from this revolution.

Apple or Amazon: Who’s the Front-Runner?

It’s hard to pick a winner here in an fast-evolving business between the Apple iPad and Amazon Kindle. But those folks who look only at the Kindle are missing the big picture of how dangerous Amazon is right now to its competitors. Amazon is selling its Kindles at cost simply to get a foothold in the content space, and that’s where it really has potential.

The dominance of Amazon’s e-books is obvious: This year, e-books topped hardcovers in total sales for the first time ever, and the Kindle and its associated Kindle reader are the platform of choice for most Americans with roughly 60% of the market.

Then there’s Amazon Prime, which AMZN and its CEO Jeff Bezos are investing heavily in to take on cable companies as well as streaming video giant Netflix (NASDAQ:NFLX). Amazon is selling its service for the lower price of just $79 a year, and including all kinds of perks to its e-commerce site in tandem with a membership.

And, of course, there is the Amazon Appstore (notice the one word to avoid Apple’s lawyers…). Google has an Android app store, but every Kindle device is programmed to go here. Amazon is shady on its specific Kindle numbers so there’s no way of knowing the true reach, but it’s surely impressive and growing as fast as the AMZN tablet is.

Of course, Apple is hardly going bankrupt here. It remains the leading tablet by a long shot, with a stunning 70% market share, a robust App Store and its iTunes marketplace that has become synonymous with media downloads.

But it’s worth noting that despite Apple’s powerful brand, it’s now No. 2 in the smartphone war behind Android-powered devices, according to ComScore. Some analysts are worried that Apple’s smartphone dominance will slip soon — either in unit sales as it fails to keep up its growth rate, or in the margin department as it sacrifices profits for scale.

One has to wonder whether the iPad will suffer the same fate, or if Apple has been fast enough to get competitive on pricing and maintain its dominance despite lower-cost competitors.

It will be interesting to watch going forward. But all investors need to remember that regardless of whatever Kindle or iPad incarnations we see next, content is going to be key for both of these companies moving forward.

Sources:

Article http://slant.investorplace.com/2012/10/kindle-vs-ipad-just-start-of-amazon-vs-apple-deathmatch/

Image http://www8.pcmag.com/media/images/284838-new-ipad-vs-kindle-fire-which-tablet-is-right-for-you.jpg

Categories: Tech Tags: , , , ,
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