Apple Splashes Cold Water on Amazon

The iPad’s growth in the tablet market has come at the expense of Amazon’s (NASDAQ:AMZN) Kindle Fire. The Apple (NASDAQ:AAPL) tablet widened its lead to 68 percent of the market in the first quarter, up from 55 percent the quarter before, while the Kindle Fire’s share has dropped to 4 percent from 17 percent. So what can Amazon, which is expected to expand its tablet lineup with a 10-inch model to go along with its 7-inch version, do to overturn the Apple onslaught?

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According to Tom Mainelli, who headed the research at IDC, Apple’s surge holds a lesson. “Apple’s move to position the iPad as an all-purpose tablet, instead of just a content consumption device, is resonating with consumers as well as educational and commercial buyers,” Mainelli wrote. “And its decision to keep a lower-priced iPad 2 in the market after it launched the new iPad in March seems to be paying off as well.”

Amazon’s drop also helped Samsung take the second spot, Lenovo came in at fourth, and Barnes & Noble’s (NYSE:BKS) Nook, set to get an investment from Microsoft (NASDAQ:MSFT), was next. According to IDC, Samsung and Lenovo “are beginning to gain traction in the market” after initially falling way behind the Kindle Fire because of a change in strategy. “It seems some of the mainstream Android vendors are finally beginning to grasp a fact that Amazon, B&N, and Pandigital figured out early on: Namely, to compete in the media tablet market with Apple, they must offer their products at notably lower price points,” Mainelli added.

The research firm is expecting Amazon to launch its new large-screen tablet at a fairly aggressive price point, and adds that Google (NASDAQ:GOOG) is likely to co-brand the new ASUS tablet that will compete with the Kindle Fire on price.

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