Amazon May Be About To Build A True iPad Challenger

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From Seeking Alpha:

Amazon is having shortages throughout its product lineup at present. E-Readers, tablets, streaming boxes, voice assistants and Prime-exclusive phones all have at least one model out of stock for two weeks or more. All but the phones and E-Readers have half or more of their total model variants out of stock.

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It first came to my attention when I did my customary check of Amazon’s tablet devices this weekend and noticed that the Fire HD8 was now being advertised at a $120 price, $30 higher than it was at launch. At first I thought the price had actually been hiked, something almost unheard of for The Everything Store. But no. Actually, the company had just replaced the baseline variant with the 32GB expanded storage variant, which had always been $120. The reason why is simple: the more popular, 16 GB $90 version is out of stock all the way until April 7th. And the shortages are still spreading. Two of the four color variants of the HD8 32GB are also now out of stock, one until early April again and the other for up to six months!

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The shortages are also not limited just to the Fire line. They extend throughout Amazon’s device family. The Echo Black is sold out again until February 25th, just like it was over Christmas when sales rose nine times over year ago levels. The White is still in stock, however. Meanwhile, the Kindle Paperwhite has just the opposite problem: the black option is still in stock but the white is sold out. Echo’s $50 cousin, the Echo Dot, is sold out until the same date for the White color option, the black is sold out until March 2nd.

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The shortages of so many products simultaneously outside the holiday season are somewhat unusual, certainly. Usually, when products go out of stock outside the holiday crunch, it means that the devices are about to be retired and replaced with updated models. But it’s unlikely Amazon is going to literally replace its entire product lineup in the space of a few weeks.

Another explanation is that Amazon devices are just that good, just that in demand. But product shortages have now exceeded those in the heart of the holiday season, which was an unqualified success for Amazon.

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My interpretation of this data is that we are actually seeing a confluence of a couple of different trends in the device market. While a device-wide shortage might seem to imply a device-wide explanation, I think a few different things are going on. The Fire TV and Echo shortages are simply natural shortages of in-demand products in rapidly growing sectors. The HD8 shortage is probably real, but being exaggerated. The other shortages, however, are something else.

The Echo and Fire TV are really Amazon’s two most successful product lines, even above tablets. While Amazon’s tablets sell well, they are still regarded as just “good enough,” things you buy because the value per dollar is so much better even though they are not top of the line.

By contrast, Echo and Fire TV are widely seen as leaders in their field, things you buy because they are the very best money can buy.

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The tablet shortage, however, I believe does portend a pending product refresh and potentially a very significant one.

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I noted before that the HD8, while still not as cheap as its $50 cousin, is actually a pretty incredible engineering feat for Amazon. An HD upgrade used to triple the price of a Fire device. Now, it is only $40 more to get more memory, more processor power, and most importantly to many users, a battery life twice as long at 12 hours or better.

Amazon did a pretty remarkable thing achieving all of that with a 40% price cut in one year. And it has a lot of people telling tablet shoppers that they are really better-advised to spring for the extra $40 for everything they are getting for it.

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The last shortage, however, has a different cause, I think. Of all of these shortages, only one device is listed positively as out of stock indefinitely. That usually means it is never coming back, and that usually means a product refresh. It came as a surprise to more than a few people that Amazon did not update the HD10 prior to the holiday season, including me. If Amazon is now finally ready to do so, it would explain why the current HD10 is not only out of stock, but out of stock with no projected return date.

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HD10 represents Amazon’s last remaining foothold in the higher-priced market, though still nowhere near full-sized iPad prices. But it is the closest thing iPad has to a direct competitor in the Fire lineup, the one variant that almost comes off as “for iPad lovers who don’t want to pay for an iPad.”

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The HD10 upgrade may be more significant. If Amazon can reproduce the battery life gains it made with the Fire HD8 and pair them with some higher-powered processors like what it sold in the old HDX lineups, closer to what iPad and high-powered Androids offer, it will mark a new kind of Fire tablet. Or a return of the old kind, more accurately. If it can do this without any price increase and perhaps even with a price cut below the psychologically important $200 threshold – i.e. $199 – it may create a strong new challenger in a shrinking market.

Link to the rest at Seeking Alpha