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iPad Killer: Amazon Goes Razor Blades On Tablet Landscape

Gabe Habash -- August 18th, 2011

This October is likely going to be a defining moment for tablets. That’s if, as expected, Amazon drops its tablet into the increasingly crowded fray, which at the moment is only slightly more organized than the Wild West. Many are expecting Amazon to set things straight, eliminating the pretenders and giving us a better idea of what exactly buyers want out of a tablet. But before we get to what might happen, let’s get caught up on what already has happened.

The iPad is the undisputed king of the tablets right now–anyone can tell you that. Most recently, the iPad 2 sold 9.25 million units in the June quarter, a 183% increase from its 2010 June quarter. Those are some impressive numbers, but what’s more significant is the stranglehold Apple currently has on the tablet market: the company is projected to end 2011 with a 61% market share, which translates to 40 million units sold this year.

But, earlier this week, some interesting news surfaced: Android tablets are eating into Apple’s majority share, now taking up 20% of the market. Complicating matters, projections for Apple’s future market share are all over the place. Some experts are saying the iPad will lose some of the market yet remain strong with a 47% share in 2015 (and Android growing to a 39% share). Others are way more optimistic about Apple’s future, going as high as a 60% share in 2020.

What all this means is that no one knows what’s going to happen with the tablet market. But here are two ideas:

1. The “magic number” for tablets seems to be $300. Over the coming months, the closer tablets get to $300, the more clear-cut the field will become as weaker ones will be weeded out, much like what happened with e-readers at the $150 price point (covered here and here). According to a Zogby International poll, customers are decided on what they want out of a tablet: a 10-inch screen (like the iPad’s), a catalogue of readily-available apps, and a cost less than $300 after carrier contracts.

2. The ASUS Eee Pad Transformer is the closest thing to a consensus “Best Android Tablet.” It’s currently listed on Amazon as the #1 bestselling tablet, and much has already been made of  how well it’s doing. It has 16 hours of battery life, a much-touted keyboard dock option, the all-important 10-inch display (which also happens to be gorgeous), and can connect to Playstation and Xbox controllers. But most importantly: it costs less than $400. The only knock on the tablet so far has been its lack of 3G, but that’s not going to be a problem for much longer.

However, back to where we started: Amazon’s highly anticipated tablet, which is projected for an October launch.

The “Coyote” tablet is expected to use a Honeycomb OS, a 9″ screen, and run on the NVIDIA Tegra 2 processor (Amazon’s other, beefier tablet, “Hollywood,” is expected to run on the upcoming Ice Cream Sandwich OS and release later). But the big news is that people are expecting Amazon to get all razor bladey and sell Coyote for $249, with the expectation being that they can sell the tablet for a loss because they’ll easily recoup it (and way, way more) through sales of music, movies, books and cloud storage.

Amazon was positioning its tablet for a monumental clash with the iPad 3 this October–but that all changed this week when news broke that the iPad 3′s fall launch is being derailed until 2012 because of retina display issues. Much has been made about Apple’s efforts to push its display to the cutting edge, and the news of the iPad 3′s delay indicates that when we finally get the iPad 3, it’s probably going to be downright beautiful.

But 2012 is a long way away, and it certainly doesn’t help clear up the muddy picture that is the current tablet marketplace. That’s why it all begins and ends with Amazon. The troops are being readied, and once October rolls around, the market for tablets will probably be a very different place.