Quite. Don't underestimate this point, people. A LOT of tablets have sold because of the implied vague promise that they're a full-blown PC for $100-250, cheap enough for a small enough package that they will in fact go "meh, it's a couple hundred bucks, why not". Many will blow a day's pay on some toy with little thought; when the price eats into the better part of a week's pay, not so much impulse ... and a lot more devotion if they do buy.
Apple could do a little better in getting the notion across that "if you buy a cheaper tablet, you'll end up buying another cheaper tablet, so just get an iPad to start." A lot of people will blow $200 2-3 times only to find the products are inadequate, losing enough that they could have bought something that "just works" after all if they'd thought it thru in the first place.
My take is this, apple will indeed lose its premium status in the tablet and phone market (its already happening in the phone market).. but the tablet its a bit further out yet.. but the premium mark up will deminish and become more commodity priced basically based on market pressure.
For now, Apple has no real competition in the Tablet market.. Android Honeycomb wasn’t remotely a competitor no matter what hardware you put on it. Ice Cream might be, don’t know haven’t played with it, but eventually android OS will have a table offering that makes the deltas small enough that the premium price point will decline.. right now though there is NOTHING out there.
You can sell a $200 tablet, and the Fire is the first in that price range with Honeycomb on it, so its in the marketplace a relative bargain, its priced where current tablets are that were runnign Android 2.2 or older, which wasn’t even a tablet version of the OS. So Fire has proven something already known, there is more demand for a tablet at $200 than there is for one at $500... no brainer. However this isn’t remotely a case where people are looking at a Fire and an iPad and selecting the Fire out of superiority... folks who can afford an iPad are still buying the iPad, and I don’t see that changing for a while yet.
It will change, don’t get me wrong, but Apple’s probably got about a 1 year to 18 month spread, maybe more, before that can happen. WHEN a comparable android tablet arrives with a price point of $200-$300 you will see a true threat to the iPad, but right now, comparable Android Tablets, all are priced within $100 of the iPad or just as much, and that’s NOT going to motivate sales, when other variable are considered.
When a $300 or less Android Tablet running Ice Cream or better shows up, you will see iPad face a real threat.. Fire isn’t goign to take away iPad’s dominance, but it will move software development to Droid Tablets, which in turn will make that $300 Android tablet with a similar form factor that will eventually show up, have an even lower delta vs the iPad than it does today.
Apple knows this is coming, and I am sure they are hard at work at coming up with even more and better differenciators... also on the horizon is the Windows 8(?) tablets.. That’s currently an unknown, but a tablet that runs all your existing windows stuff at or below the price point of the iPad is going to be another risk/threat to apple, and probably a bigger one.. because Windows will have defacto in with business... if it runs all the same stuff they already run, making the windows platform your tablet platform becomes a no brainer solution. We’ll see how it all plays out.. but of the existing threats to iPad’s dominance, Fire aint it.
Certainly true, and most of them have been borderline-unusable crap. But I wouldn't lump the Kindle Fire in with those. The Fire has a specific set of functions, and an interface optimized for them; it's more limited than the iPad (or the Galaxy Tab or Motorola Xoom or other general-purpose tablets), and both its price tag and its marketing reflect that. By all accounts, like the e-ink based Kindles before it, it focuses on its limited number of functions and does those very well.
A lot of analysis focuses solely on market share and thus misses the point. I don't think the Kindle Fire will take many sales away from the iPad; what they will do is expand the tablet market as a whole, bringing in folks who have $200 but not $500 worth of movie-watching and Web-surfing they want to do (my solution was a $300 used iPad). Apple will continue to have a smaller slice of a rapidly-growing pile, and for at least a couple more years will continue to sell as many iPads as they can make.