Kindle Fire Might Ignite iPad Sales

Amazon s (NASDAQ: AMZN ) Kindle Fire is appropriately named. The device is as
hot as an open flame with consumers this holiday season. The tablet PC successor
to the companys successful line of Kindle e-readers is the first tablet using
Google s (NASDAQ: GOOG ) Android operating system to capture consumer attention
and dollars. Wall Street predicts the company will sell 5 million Kindle Fires
by the end of the year. Good for Amazon, but not so good for Apple (NASDAQ: AAPL
), a company whose iPad has enjoyed 18 months of uncontested dominance in the
tablet PC space. However, at least one research group says Apple has nothing to
fear in the Kindle Fire, though in fact, it thinks the Kindle Fire will
actually spur iPad sales. As reported Monday by PC World , JPMorgan analysts
Mark Moskowitz, Anthony Luscri and Mike Kim said in a note to investors that
Amazons early success with Kindle Fire is likely to dwindle in the coming
months. The thinking is that consumers drawn in by the Kindle Fires $199 price
tag will ultimately find the device underpowered and lacking in more complex
features. (Low-priced), reduced feature-set entrants, such as the Kindle Fire,
are soap box derby devices stuck between a tablet and e-reader, the analysts
wrote. Dissatisfaction then will drive consumers to gravitate to more
feature-rich experiences like Apples iPad. After meeting with Apple CEO Tim
Cook, the analysts said the Cupertino, Calif.-based company is not too concerned
about the low-priced tablet. JPMorgans assessment is overly harsh, to say the
least. While a segment of Kindle Fire users undoubtedly will want a more
powerful and versatile computing device, many more will be satisfied with
Amazons machine. Consider how people actually use tablets. A Business Insider
survey on how consumers use the iPad conducted during the first six months of
2011 found that just about 40% use their tablet as their primary computer , with
the remaining 60% preferring desktop and laptop devices for more serious
computing. Most consumers use their tablet first and foremost for web browsing
(34.7% of user time on iPad), followed by communication via email and social
networks like Facebook (21.7% of user time on iPad). Considering Amazons Kindle
Fire has a web browser and an email app and can access Facebook, it seems
doubtful new purchasers will be so quick to buy another, more expensive tablet
when they have one that fits their habits. Amazon does have work to do to keep
consumers happy, however. A survey conducted by usability commentator Jakob
Nielsen published on Monday (via Apple Insider ) found that users are unhappy
with the devices web browser . In particular, users complain that its difficult
to enter text (i.e. when logging into Facebook, etc.) on websites because
everything appears so small. Amazon can fix these problems through software
updates, but it will need to act fast or risk its positive hype turning sour. As
of this writing, Anthony John Agnello did not own a position in any of the
stocks named here. Follow him on Twitter at