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Halftime: Apple Should Take ‘This’ Challenger Seriously

Is Apple's iPad is the undisputed king of the tablet market? There's a new challenger entering the race that could give it a run for its money.

Amazon is set to introduce its Android tablet later this year. And we're hearing if the company plays its cards right, it could sell as many as five million tablets in the fourth quarter.

Amazon "could be a strong number two," according to Sarah Rotman Epps, an analyst at Forrester Research.

However, Rotman Epps said Amazon needs to play it just right with two key criteria:

1. Price

Most important, the new device should come in at the right price—which should be significantly lower than the iPad, Rotman Epps said.

“Amazon in the past has shown its willingness to sell hardware below cost,” she said, “which is what they‘ve done with the Kindle.”

2. The Package

She also thinks Amazon has to get the right content and services that really show consumers what they can do with the device.

While Rotman Epps thinks Amazon may eventually cut into Apple’s business, right now the introduction of its tablet mostly means reinvigorating the Android market. And its other competitors should take heed, she said, because Amazon has more assets than Samsung, H-P and Research in Motion .

“They have as much content as Apple does in terms of music, videos, and games, and they now sell Android aps,” she said. “So they’d be piggybacking on the Android ecosystem but taking it to the next level.”

So what’s the trade?

Fast trader Patty Edwards agrees that Amazon could take a bite out of Apple. She would also play the tablet trade with component suppliers like NVIDIA , which has a chip that’s expected to go into the new device.


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Trader disclosure: On August 30, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Najarian owns (AAPL); Najarian owns (C); Najarian owns (MS); Najarian owns (MSFT); Najarian owns (MCP) calls; Najarian owns (CLF) calls; Najarian owns (UNP) calls; Najarian owns (DLTR) calls; Najarian owns (MCD) calls; Najarian owns (NTAP) calls; Cortes is long Gold; Cortes is long (WMT); Cortes is long (SO); Cortes is short the Euro; Cortes is short (BAC); Edwards owns (PM); Edwards own (APA); Edwards owns (XLK)

Brian Sozzi
**No Disclosures

Sarah Rotman
**No Disclosures

For Patty Edwards
Trutina Financial owns (AMZN) For Clients
Trutina Financial owns (AAPL) For Clients
Trutina Financial owns (CBI) For Clients
Trutina Financial owns (C) For Clients
Trutina Financial owns (GOOG) For Clients
Trutina Financial owns (MCD) For Clients
Trutina Financial owns (MSFT) For Clients
Trutina Financial owns Gold for Clients
Trutina Financial owns Silver for Clients

For Brian Kelly
Accounts managed by Brian Kelly Capital own the Euro
Accounts managed by Brian Kelly Capital own (MON) calls spreads
Accounts managed by Brian Kelly Capital own (JJG)
Accounts managed by Brian Kelly Capital own (MCP)
Accounts managed by Brian Kelly Capital own (SPY) options
Accounts managed by Brian Kelly Capital are short (SLV) options
Accounts managed by Brian Kelly Capital are short (JJC) options

CNBC.com with wires.