Tablet Market Finally Has 2 Horses

With the recent launch of Amazon.com’s (NASDAQ:AMZN) Kindle Fire, Apple Inc. (NASDAQ:AAPL) may finally have some competition in the tablet market.

Apple’s iPad currently represents a 65 percent share for customer demand of tablets, according to a ChangeWave survey; however, the Kindle Fire is nipping at Apple’s heels with its 22 percent market demand. Coming in third is Samsung’s Galaxy Tab at four percent. The survey also noted that consumer’s overall tablet interest has increased 130 percent.

The Kindle Fire’s access to apps through the vast Amazon collection; it’s $199 price tag and the Android-operating system (NASDAQ:GOOG) make it highly appealing to consumers but Apple is unlikely to give up its 65 percent market share easily.

Apple Can Regain Its Dominance

Apple can regain its dominance with a lower-priced 7″ quality tablet. Amazon has stepped out into the great unknown with the Kindle Fire while Apple has an advantage from parts-ordering volumes that could help it produce a profitable 7″ device.

According to a Bloomberg article, Apple (NASDAQ:AAPL) has seen big price breaks by utilizing older hardware such as its free 3GS while under contract. It could also produce a smaller iPad, saving display costs and using an older A4 processor or an possibly A5 should it launch a new A6 iPad.

Apple’s basic iPod touch at $199 and its larger touch with a $249 price tag, is similar to Barnes&Noble’s (NYSE:BKS) NookTablet. The company is known for its forward-thinking products and it won’t be shy to produce a new one at this price point.

Content

Another way Apple can compete is with content. It can go head-to-head with Amazon, especially in international markets where a lot of the company’s content is unavailable. Apple’s iCloud and access to previous iTune purchases could minimize differences; however, Amazon does have a big advantage with books; Apple has the advantage with digital movies and music.

A smaller, cheaper iPad with access to Amazon-like content, could enable Apple (NASDAQ:AAPL) to make a competitive product. They still have an advantage with their apps and with other features such as AirPlay, and iMessage. With its iPod touch, older technology, supply chain success with the iPad and song content library, look for Apple to find another success in the increasingly competitive tablet market.