Tablet Wars: As Apple Goes Small, Amazon Goes Big?

NEW YORK ( TheStreet) -- E-commerce king Amazon ( AMZN) has always been a name that I've wanted to fall in love with but just couldn't. The stock has always been too expensive for my taste. But that's as far as the negativity goes.

Whenever I look at Amazon, I appreciate how hard it is for any company to maintain its bellwether status in one sector -- let alone two. I suppose one can say it is getting its deserved respect since its valuation is already high.

Be that as it may, Amazon seems to get moved to the backburner when discussing rivals such as Apple ( AAPL) and Google ( GOOG). At one point, this wasn't so bad except now it appears that it has fallen to fourth on the depth chart when the technology discussions also involve Facebook ( FB). But as it stands, that may only be temporary.

On the heels of increased speculation surrounding Apple and the possibility of an 7-inch iPad that might be released this fall, there are now rumors that Amazon may opt to go in the opposite direction by producing a larger version of its popular Kindle Fire tablet.

A recent story posted on CNET suggested Amazon is considering releasing two separate versions -- a 7-inch, which according to reports is to be ready for a July 31 launch, and a 10-inch rumored to be announced late next month.

Amazon has yet to confirm either of these reports, but if true, it seems the company is not only intent on fighting back, but in the process it wants to steal some of the limelight off its rivals -- especially Google who's Nexus 7 tablet is said to be a direct competitor to the Kindle Fire.

Amazon's current Kindle Fire version is one of the top-selling tablets on the market. It serves as one of the only legitimate threats to Apple's top-selling iPad, along with Samsung's Galaxy tablet. Now, in addition to Google, Microsoft ( MSFT) has recently announced tablet plans of its own called Surface.


While the current Kindle Fire is priced attractively at $199 -- making it appealing for those outside of the iPad market -- I am curious to see how it chooses to price both sizes of its new iterations. Google clearly sees the advantage in staying out of the Apple market as it has also priced its Nexus 7 at $199 while Microsoft has not yet announced either the Surface price or the date of the launch.

Will Microsoft feel some pressure now? If Apple's mini-iPad was not enough to do the job, perhaps Amazon's news may add some urgency.

It is known that Amazon takes a loss on each sale of the current Kindle Fire -- not a huge deal since it serves merely as a storefront for selling its content such as books, movies and music.

However, I don't envision the two new versions following the same model. It goes without saying that the company needs to make money, the question is will it do so at the expense of sacrificing market share?

Apple is not going to lose no matter what. If it is smart, Amazon needs to focus its targets where they should rightfully be -- on Google and Microsoft.

For that matter, it should also be smart enough and price each of its tablets accordingly. The iPads currently range from $399 to as high as a little over $800. Since it knows that the Nexus 7 will be at $199, this may leave it with enough room to undercut both Apple and Microsoft while offering more for less against the Nexus 7.

According to reports, both versions will prove a considerable upgrade over the current Kindle Fire. Amazon is said to have adopted a metal casing while moving away from the plastic body -- offering a sleeker more stylish look and feel.

Bottom Line

Amazon is without question one of the best tech stories today. Not only is it a wonderful company, but in my opinion it has one of the top three visionary CEOs in Jeff Bezos. This is why doubted and concerns about its growing expenses continue to amaze me.


The company has always demonstrated a commitment to tackle new markets and to seek growth opportunities. To that end, it had taken on facilities expansion in an effort to provide broader ranges of entertainment delivered over its tablet as well as the launching of its movie-streaming Prime service to compete with the likes of traditional retailers such as Walmart ( WMT) and online movie streaming services from Netflix ( NFLX).

This time it has just tapped on the shoulders of three tech giants in Apple, Google and Microsoft and whispered to them "Let's play!"

At the time of publication, the author was long AAPL.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.