Amazon Kindle Fire: More Trouble for Google Android



You know those four to six million Amazon Kindle Fires folks bought in 4Q 2012?

That redrew the map of Android tablet marketplace. Amazon’s success is enough to put Google’s plans for the future of the Android platform at risk.

I recently wrote a piece about the fragmentation in Android that Amazon’s Kindle Fire is causing and why Google should worry.

Kindle Fire’s success is Google Android’s real fragmentation problem — and I predict it will soon own lion’s share of the tablet market. It already ties Samsung.

A recent Flurry Analytics report provides the hard facts to back up that assertion. The Amazon Kindle Fire already is taking over the Android tablet space.

Based on Android app usage and sales research from Strategy Analytics, the report shows that in just two months (November 2011 to January 2012), the Kindle Fire’s share of the Android tablet market grew from 3 percent to a 36 percent share among Android tablets.

It now ties the Samsung Galaxy Tab, which saw its share drop from 63 percent to 36 percent in the same two month period. Clearly the momentum is on Amazon’s side.

The Kindle Fire’s market share alone wouldn’t be enough to threaten Google’s plan for a future in which every up-to-date Android phone and tablet is running on the Android 4.x (Ice Cream Sandwich) platform.

The real battleground, as I’ve suggested, is for the hearts and minds of Android app developers, who now face hard questions: Should developers follow Google into Google-standard Android 4.X Ice Cream Sandwich–and give up on getting into the Amazon app store, missing a change to reach millions of new Fire customers? Or do they tailor their apps for the Kindle Fire, and render themselves irrelevant in the standard Android 4.X ics world?

The hard numbers about app sales may make that decision a lot simpler than anyone supposed. According to the Flurry Analytics report, Kindle Fire owners bought an average of 2.53 paid apps for every 1 bought by Samsung Galaxy Tab owners. That disparity could very well drive many developers into the Amazon/Kindle camp.

Even though Android has taken the lead over Apple iOS in device activations, developers who market apps for both platforms generate more than four times the sales revenue from iOS than Android versions of the same apps, according to another Flurry Analytics report.

If developers can even out that disparity by selling their apps through the Amazon Appstore and targeting Amazon’s variant of Android, many are bound to question the appeal of Google’s vision of the future.

Nobody expects Google to accept Amazon’s disruption of its plans quietly.

Rumors about the impending release of a low-cost Google-branded table, priced even cheaper than Kindle’s $199, are circulating. And that move makes sense, though the rumor mill is a bit out of control. I expect Google to do something on the hardware side to make full-fledged Android tablets more affordable, but as I’ve noted in other pieces here at aNewDomain, it’s unlikely to be a $159 Google tablet.

I think it’ll deliver a stunning product — rather than undercut the camera-less, low-priced Kindle Fire. Google could over deliver at a $300 to $350 price point.It might still lose $50 or more unit, but that’s a small price to pay for a move that would lock Amazon into a low-end island.

And it would give other Android tablet makers a reasonable price point to aim for.

The numbers coming out now show that challenging the Kindle Fire on the hardware front won’t be enough. If Google wants to regain control of Android’s future, it must make selling applications on the Android Market a more profitable exercise for developers.

Otherwise, it could easily find its own Android 4.X Ice Cream Sandwich a distant third — behind both iOS and Amazon’s variant of Android — on developer’s priority lists.

While Android users are certain to object to a future in which free applications are deemphasized in favor of paid on the Android Market, the alternative might be one in which no significant new applications appear there.

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  • http://antpruitt.wordpress.com Ant Pruitt

    does ebooks count as an for the analyst?

    my vision of Kindle Fire owners is a bunch of ereader consumers with occasional angry birds.

    my two pennies

    -RAP, II

    • Paul Bonner

      I think it’s a reasonable bet that a large part of the gap between the number of apps purchased by a user with Android Market access compared to a Kindle Fire user has to do with the relative paucity of free apps in the Amazon app store. I don’t think I’ve encountered a paid app yet in the Android Market for which there weren’t numerous free (e.g., ad-supported) alternatives, something that’s not nearly as true in the Amazon universe. That’s not especially consumer friendly. But if I was an Android developer trying to make a living on license revenues, I’d probably find the Amazon model a whole lot more compelling. And that’s why the Kindle Fire’s success is a real problem for Google.

  • http://aNewDomain.net Gina Smith

    +Ant i think you just uncovered a bug on the site! Thank you. There is no such article as one above, clicking on the graphic — well, we’ll fix it.
    gs

  • http://aNewDomain.net Gina Smith

    BTW, I’m with +Paul Bonner. I think Amazon Kindle Fire is well on its way to low-end city. Google obviously will have to ghettoize it as such. Otherwise, the company is at huge risk.
    gs

  • Mike Bauer

    Good analysis.

    In the short term, the kind of app sales/usage the Fire gets isn’t important, it is the momentum it gets. The Fire has set a price point for the more casual user/reader that will set the level for a certain demographic. The developers will go to the market where they can make a few bucks.

    The App development space may not make you rich but it can provide a nice income stream

  • http://www.fourlakes.co.uk Colman Carpenter

    What this doesn’t show, though, is what the overall growth of the Android tablet market is? If the tablet market has double in 2 months then I think Google will be less worried than if it has been stagnant.

    • Paul Bonner

      Depends how you count Android tablets. Google doesn’t count Kindle Fires, since they don’t get activate through Google or make use of Google services. So from their perspective, every Kindle Fire sold is a Android tablet that didn’t sell.

      That’s not a distinction that the buying audience should care much about in general — although I’ve been clear here before that I think Amazon’s decision to lock out of Google services is a disservice to their customers. I think in general, a battle between Google and Amazon over control of Android benefits a lot of consumers by driving down prices, and a lot of app developers by increasing app sales revenue. But it spells trouble for high end tablet vendors if they’re not able to get their costs down, and it makes the future of Android — starting with Ice Cream Sandwich–pretty murky.

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