Although Amazon has yet to officially announce a tablet -- and although the market has no clear indication of what an Amazon-branded tablet would look like -- Forrester is predicting a smash hit in a tablet market where others have made headlines with miserable failures.
"If Amazon launches a tablet at a sub-$300 price point -- assuming it has enough supply to meet demand -- we see Amazon selling 3-5 million tablets in Q4 alone," Sarah Rotman Epps, an analyst at Forrester, wrote in a blog post.
Disrupting Status Quo
There are a lot of ifs in Epps' equation. But she and her Forrester colleague James McQuivey are bullish. In fact, the duo has been beating the Amazon tablet drum since April 2010. Both suggested early on that Amazon should pursue a tablet strategy.
Some believe Amazon will roll out a tablet as early as October. The imminent release has prompted Forrester to explore the possibilities a little more closely.
As Epps sees it, Amazon's quick ascension in the tablet market will disrupt the status quo. Apple will retain dominant market share, but Amazon will cause product strategists at Apple to prepare for war, Android OEMs to seek Amazon as a platform partner, and software, media, retail, banks and others to scramble to build Android tablets.
"Apple sells software and services, but the lion's share of Apple's revenue still comes from hardware, which makes it vulnerable to a company, such as Amazon, that isn't seeking profit from hardware sales," Epps says. "Amazon and Apple's relationship, already fraught with Apple's policy changes on content sales, will become even more strained."
Amazon Equals Android?
On the Android front, Forrester sees potential for Amazon not only to launch its own hardware as an "Amazon tablet" but also to be a platform for other OEMs, layering Amazon's software and services over Android to provide a richer customer experience. In a year from now, Epps suggested, the market could see a range of "Amazon tablets" made by different hardware manufacturers.
"The bottom line: A year from now, "Amazon" will be synonymous with "Android" on tablets, a strong second to Apple's iPad," Epps predicted. "If you haven't yet contemplated how Apple-Amazon tablet domination will change your product strategy, now is the time to plan and act."
Phil Leigh, a senior analyst at Inside Digital Media, largely agrees with Forrester's analysis and highlighted the sub-$300 price point as a key to Amazon's success.
"Amazon needs to develop an independent strategy. When they do so, they can focus on their strength, which is software, and use the hardware as a loss leader," Leigh said.
"Amazon makes its money primarily by selling software, whether it's books or music, or letting other people sell goods through its platform. Amazon has established an unchallenged reputation for customer satisfaction."
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