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February 16, 2012

Apple to enter Kindle market segment

Apple has sold 15 million iPad in the last quarter of 2011, well ahead of expected 13 million that happened Kindle Fire went on market. Kindle Fire sold between 4 and 5 million. During the earnings call Tim Cook said this concerning the rival Kindle Fire: “I looked at the data – particularly in the US – on a weekly basis after Amazon launched the Kindle Fire, and in my view there wasn’t an obvious effect on the [iPad sales] numbers”. No wonder. Products address drastically different market segments. This case is similar to MySQL and Oracle database. Users of each would never be using the other produce for obvious reasons. Jeff Bezos said when Kindle Fire went on market there are two strategies: charge more and charge less. Amazon is in the second category and both companies are successful in selling tablets. There is no need for Tim Cook to bash Kindle Fire.

On the other hand if we look at sales per week in the Q4 of 2011 Amazon and Apple has sold about the same number of devices: aprox. 1 million. That may make Apple worry. LA Times wrote that iPad market share of tablets has reduced from 64% to 57%.

There are no indicators that Amazon is trying to move to premium market segment space ($500-$800). Apple on the other hand is reported by Wall Street Journal to be building smaller iPad which will cost less and have smaller screen (the biggest cost in the device).

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