Amazon Tabs before Christmas

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Watch out Apple, there is a new player in town, named Amazon!

Many of us may know Amazon as an online book store. Well now this giant has decided that not only does it Kindle but it also Tabs.

Amazon.com Inc. will launch a Tablet computer this year to extend its position as the worlds largest Internet retailer, expand in mobile commerce and sell more digital goods, according to analysts and investors.

Rivalry

The new Tablet will intensify a growing clash between Amazon and Apple. The two tech-industry titans are already fighting for customers for their respective digital book, music and video businesses. Now Amazon will have a device that will compete closely against the iPad, but also as other Tablets such as Samsung Electronic Co.’s Galaxy Tab.

Amazon has proved time and again that it knows how to sell, but with the Kindle, it has proved that it also knows how to ship a consumer electronics product.

At least 1.5 million Amazon-branded Tablets are being built for the third quarter and the target for 2011 as a whole is 4.5 million to 5 million units, computer hardware analysts at Canaccord Genuity wrote in a recent note to investors.

“In the Tablet market, the No. 2 player will be Amazon,” Mark Gerber, director of technology research at Detwiler Fenton, told Reuters. “None of these other Tablets have really taken off.”

Motorola Mobility’s (MMI.N) Xoom and Research in Motion’s (RIM.TO) PlayBook have struggled partly because the Tablets are not clearly connected to content, Gerber explained.

In contrast, the iPad is intertwined with iTunes, where users can buy music, videos and digital books.

Amazon already has lots of content that Tablet users will be able to access, including Kindle ebooks, music downloads and videos to buy, rent or stream.

Gerber said Amazon’s Tablet may come with free access to the company’s video-on-demand streaming service for at least an introductory period.

Amazon Tab

The Amazon Tablet will have a roughly nine-inch screen, people familiar with the product said, and will run on Google Inc.’s Android operating system. The online retailer isn’t designing the device itself, but is outsourcing production to an Asian manufacturer, these people said.

The device will not have a camera, said one person familiar with it.

The Tablet will allow Amazon customers to easily watch videos, read electronic books and listen to digital music they purchase or rent from the online retailer.

The hidden factor

In May, Reuters asked Amazon Chief Executive Jeff Bezos about a Tablet. He declined to comment specifically, but suggested that there was enough room for a rival to Apple.

“It is very useful when you are thinking about how (with) any kind of new product introduction, probably the company is not hoping to completely kill any other company,” Bezos said. “They are hoping they can be part of something big.”

Gene Alvarez, who analyzes Amazon strategy at Gartner, says that While Amazon is encroaching on Apple’s turf, the online retail giant is launching a Tablet for different reasons.

Apple offers content to drive sales of its gadgets, while Amazon wants a tablet to get customers to buy more of its other products.

“At the margin, maybe they can make some money selling a tablet. But Amazon is really doing it to support their core business,” said Bill Smead, chief investment officer of Seattle-based investment firm Smead Capital Management. “If you sell a new bong once in a while and keep the water clean, people will keep smoking more pot.”

The strategy of having a device that encourages more buying is something that Amazon has already pulled off successfully, according to Anthony DiClemente, an analyst at Barclays Capital.

Amazon announced earlier this year that it is now selling more digital books than physical books, and Barclays’ DiClemente said the company’s Kindle reading device was the catalyst for that shift.

Amazon’s tablet has the potential to do the same for other products the company sells, he added.

“It will strengthen Amazon’s strong hold on e-commerce activity and provide a way to move more into video and other digital content,” the analyst said.

Gartner’s Alvarez reckons Amazon is launching a tablet to tap into the growth of mobile commerce.

The total value of mobile payments may reach $670 billion by 2015, from $240 billion this year, according to a recent Juniper Research forecast.Kin

“Mobility combined with online sales capability enables Amazon to be with the consumer at the time they want to purchase,” Alvarez said. “Prior to mobile commerce, Amazon had to wait until you got in front of a computer.”

Kindle

The Seattle-based company will also release two updated versions of its popular Kindle electronic reader in the third quarter of the year. One will be a touch-screen device. The other won’t have a touch screen, but will be an improved and cheaper adaptation of the current Kindle, said people who have seen the device.

The two new black-and-white Kindle electronic readers will use the same technology as in the previous Kindles, in which the screens mimic the appearance of ink on paper. The touch-screen version will compete against similar devices that two other e-reader makers, Barnes & Noble Inc. and Kobo Inc., released in May.

Amazon on Wednesday also lowered the price of its current Kindle. The version with 3G Internet access now costs $139, down from $164, but it comes with ads sponsored by AT&T Inc. The cost of the ad-free version remains at $189.

Amazon has said the Kindle is its best-selling product of all time, but it hasn’t released sales figures. Forrester Research analyst James McQuivey said there are about 7.5 million Kindles in the U.S., which gives Amazon a two-thirds share of the $1 billion digital-book market.

Source: Wall Street Journal, Reuters, Tech Trend

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