Oyster Bay, New York - 14 Mar 2016

When Amazon recently launched its Fire Tablet at $50, ABI Research, the leader in transformative technology innovation market intelligence, identified that there was set to be a significant change in the tablet industry’s competitive landscape. The Fire’s price is significantly lower than the average vendor selling price of $323. It is a calculated risk that Amazon can afford to take as the company shifts its revenue focus away from solely hardware and toward recurring digital content sales.

“Unlike other tablet manufacturers, Amazon views hardware as a commodity and emphasizes focus on its recurring digital content revenue stream, generated from selling digital books, music, TV, and video programming to owners of its devices,” says Jeff Orr, Research Director at ABI Research. “The incredibly low pricing of the Fire Tablet is a smart and strategic move, as few others can afford to accept a lower margin on their tablet devices in favor of driving a surplus of content-related revenues.”

2015 Top 5 Branded Tablet Vendor Shipments

ABI Research estimates that the company sold five million of its various tablet models during the final three months of 2015. At this figure, Amazon ranks #3 overall for branded tablet shipments for that quarter and #5 for the full 2015 calendar year.

“Most tablet vendors continue to take a wait-and-see approach to Amazon’s Fire Tablet release,” continues Orr. “It’s a path only few can follow, as vendors without content distribution rights and value-added services can only rely on the transaction price of their hardware to stay in business. For instance, LeEco, formerly LeTV, in China is attempting a similar model. Conversely, content owners may find value in broadening their ecosystems by striking relationships with tablet vendors to get their programming in front of more users.”

These findings are part of ABI Research’s Tablets and Pervasive Computing Service, which includes research reports, market data, insights, and competitive assessments.