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The Kindle Fire: Will It Burn Apple or Google?

Wednesday, 28 Sep 2011 | 3:04 PM ET
Amazon’s Kindle Fire
Amazon’s Kindle Fire

Now that we've seen the Kindle Fire, the big question: Is it an iPad killer?

The simple answer is no.

If you're in the market for an iPad 2, looking to tap into apps or play games, you're not necessarily going to grab a Fire instead. That's because the new high-end Kindle has a screen that's small for video, Amazon's Android marketplace is nascent, and the Fire doesn't have a built-in microphone or camera for capturing video or audio.

This isn't to say the Fire won't have any impact on Apple or the iPad. It will. Consumers who are looking for a media consumption device will now have a low-cost option from a trusted brand. The question is whether a significant percentage of people who were planning to buy an iPad will go for a Kindle Fire instead.

Probably not.

But this could doom the field of tablet also-rans like the BlackBerry PlayBook, Motorola Xoom and Samsung Galaxy Tab. They were already struggling; while Apple shipped 9.25 million iPads last quarter, RIM shipped just 200,000 PlayBooks and Motorola shipped about a half million Xooms. (Samsung is doing a bit better with the Galaxy.) If you're not going to get a $500 iPad 2, why would you buy an Android competitor that costs just as much ... when you can get one that costs less than half?

You know who needs to really worry about the Kindle Fire, though?

Google . That's because Amazon has taken Google's Android operating system and co-opted it for its own purposes. Up to this point, Google has maintained control over the Android ecosystem through apps like Google Maps, mail and Google's Android app store, the latest versions of which are available only to licensees who play by the rules. What Amazon has done, though, is use its own resources to build up a version of Android that doesn't rely on Google's support.

Why is this dangerous for Google? Right now it seems likely that at year's end, Amazon will have the most popular Android tablet on the market. That means developers who are targeting Android tablets probably will start developing for Amazon's Android app store, not Google's. Why is that a problem? Google's entire business premise behind Android is giving away the software to get people hooked on Google services (and viewing Google ads).

The Kindle Fire potentially breaks that model.

Questions? Comments? TechCheck@cnbc.comAnd you can follow Jon Fortt on Twitter @jonfortt

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