iPad feeling some heat from Amazon's Kindle Fire

Amazon's new tablet is outselling the iPad at Best Buy, while a J.P. Morgan analyst has lowered his estimate for iPad sales based partly on momentum from the Fire.

Kindle Fire Amazon

Apple's iPad seems to have run into the one Android tablet that could knock it down a peg or two.

After hitting retailers on November 15 at $199, Amazon's Kindle Fire tablet is already outselling the iPad at Best Buy. Sorting tablets by the top sellers at the Best Buy Web Site shows the Fire in first place followed by the 16GB Wi-Fi-only iPad 2 at $499 coming in second. A range of other iPad flavors from different carriers are scattered throughout the top 40 tablets.

Amazon itself shows the Kindle Fire as the top-selling tablet on its site, with the 16GB iPad further down the list. But that seems a less accurate gauge of popularity since Fire buyers may be more likely to pick up the tablet directly from Amazon.

Even before the Fire launched a little more than two weeks ago, the tablet was proving to be a big seller, racking up a huge number of preorders. Pegging the Fire as one of the hottest consumer devices among holiday buyers, research firm DisplaySearch recently increased its shipment projections for the current quarter.

DisplaySearch analyst Richard Shim now expects Amazon to ship up to 6 million Fire tablets this season, up from 4 million previously.

Another analyst also sees the Fire giving the iPad some competition, but to a lesser degree.

In an investor note out today, J.P. Morgan analyst Mark Moskowitz said he'd trimmed his fourth-quarter sales estimates for Apple's tablet to 13 million from 13.3 million previously. Moskowitz attributed the lower forecast mostly to more limited growth in production but also pointed to the Fire.

"To a lesser extent, the Amazon Kindle Fire's better-than-expected momentum with more price sensitive consumers is a factor, too," the analyst wrote.

Of course, Apple is certainly in no danger of losing its current dominance in the tablet market. Moskowitz believes that over time the iPad will actually gain more traction in the business and educational markets. And despite the hot holiday demand for the Fire, the analyst doesn't see Amazon's current version of its tablet as a strong enough competitor over the long haul.

"We think that for any vendor to wrestle momentum longer-term from Apple, a fully loaded offering is a must, and here, the current revision of the Kindle Fire falls short," Moskowitz wrote. "We think that, over time, consumers may come away disappointed with the Kindle Fire's lack of functionality and smaller screen size. In our view, the Kindle Fire is the current Netbook of the media tablet market. The bigger question is whether the Fire evolves into a bona fide tablet in its next-generation release."

 

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