Amazon introduces new fire TV 4K, creating competitive challenges for Google, Roku, Apple

New video device features HDR, new form factor, Echo bundle

London, United Kingdom - September 27, 2017: Amazon recently announced the latest revision to its Fire TV streaming video device, the new $69 Fire TV which replaces the former product in the company’s two-product spread encompassing Fire TV at the high end, and Fire TV Stick at the low end.

Alongside its new Echo product line, the new Fire TV model is smaller and lighter than the previous version, and is now in a dongle form factor, according to IHS Markit (Nasdaq: INFO) a world leader in critical information, analytics and solutions. The product is powered over Micro-USB and incorporates 2GB of RAM, 8GB of storage, dual-band 802.11ac Wi-Fi connectivity, and an Amlogic S905Z SoC with four 1.5 Ghz ARM Cortex A53 cores and Mali 450 MP3 GPU. It will ship with Fire OS 6, based on Android 7.1 Nougat.

In terms of new capabilities, the new Fire TV supports 4K, 60 fps video with HDR (HDR10 but not Dolby Vision), and Dolby Atmos audio output. As with the previous model, a mic-equipped Bluetooth voice remote for search and Alexa input is also included.

The new Fire TV is available October 25^th for $69, or bundled with Echo Dot for $79.

Our Analysis

The new Fire TV’s hardware specification, a 2GB RAM-equipped Amlogic S905-based platform, is roughly the same as what is currently within some Android TV STBs such as the Xiaomi Mi Box 4K, Telebee’s Mi Box by KT SkyLife in South Korea, and Foxconn’s Bandott STB in Taiwan. Amlogic’s S905 and S912 platforms are popular in low-cost, moderate-performance use cases, and are particularly prominent within China’s low-cost gray-market Android STB sector.

“In terms of performance, the new Fire TV device is notably slower in graphics/gaming performance than the PowerVR GPU-equipped 2^nd -gen Fire TV that it replaces, falling in between the aforementioned and the current Fire TV Stick in GPU capabilities,” said Paul Erickson, senior research analyst for service provider technology at IHS Markit.

Amazon opted for the quad-core S905 instead of Amlogic’s octa-core S912 that primarily delivers better gaming performance over the S905. The implications are dual, the first being that Amazon’s focus was in delivering core capabilities while reducing cost substantially at the expense of gaming performance. This seems driven by increasing competition at sub-$99 in the OTT device market from both Google and Roku.

“The second implication is that gaming performance and, by extension, gaming itself did not prove enough of a collective demand driver to warrant priority in this new third-generation Fire TV,” continued Erickson. “If true, it is a troubling market dynamic for the new Apple TV 4K to face, given that high-quality gaming is one of the product’s value-added propositions justifying its price premium.”

Amazon’s updated Fire TV brings needed upgrades in capability as Roku and Google have upped the competitive velocity for streaming devices at the sub-$100 and sub-$80 price bands. 4K with HDR support is now considered baseline for anything not considered an entry-level budget device. Dolby Atmos support is not a strong demand driver as a competitive differentiator yet, but may be over time as content providers roll out premium content over the next two years.

For Google, the new Fire TV further underscores price-related positioning issues with Chromecast Ultra, a dongle incapable of standalone operation priced at parity with fully-standalone 4K products from Amazon and Roku, according to Erickson. Similar positioning issues exist for the entry-level Chromecast.

For Roku, Amazon’s offering sits squarely between its Premiere and Premiere+ offerings in price, and offers HDR with the addition of Atmos and the Alexa virtual assistant for $20 less than the Premiere+. It is anticipated that the new Fire TV will be a substantive competitive threat to both of Roku’s sub-$100 4K SKUs due to Alexa’s current momentum, despite Roku’s advantages in both content availability and cross-source universal content search. The addition of Echo Dot within a $79 bundle will be a difficult proposition for Roku to compellingly counter with the $89 Premiere+ and $99 Ultra.

“More significantly, it creates a particularly large competitive chasm for the new Apple TV 4K to cross in markets where the two products will compete head-to-head,” said Erickson. With Siri and HomeKit capabilities notably behind Alexa in both smart home functionality as well as marketing/awareness momentum, and the new Apple TV offering HDR and 4K capability at over 2.5 times the cost of Fire TV, Apple is anticipated to face considerable difficulties in growing the Apple TV available market beyond the core iOS userbase.”