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Pundits of all types have been predicting the end of the iPad’s dominance since it was launched in April of 2010. Fortunately for Apple, and Apple investors, the enemy hasn’t been able to muster a proper offensive yet. Will Amazon’s Kindle Tablet finally end the iPad’s dominance over the burgeoning tablet computing market?

The tablet computing market is worth a lot, and it’s growing fast. In Q2 2011 15.1 million tablets were shipped, that’s a 300% increase over what was shipped in Q2 2010. Units shipped were up 88.9% from Q1 to Q2. IDC is now expecting shipments of nearly 65 million units in 2011.

Apple holds the majority of the market at 68.3%, up from 65.7% in Q1 2011 according to research firm IDC. As of June, Apple had already shipped 28.73 million iPads. Apple is expected to sell nearly 55 million iPads in 2011, and that number is expected to more than double in 2012. Their Q2 2011 market share is down from from the 87.4% they commanded in Q3 2010, but they were pretty much the only game in town in 2010. Android based tablets, RIM’s PlayBook, and Hewlett Packard’s TouchPad are duking it out for what’s left of the market. Amazon’s Kindle, and other e-readers, aren’t considered to be true tablets, so they aren’t included. However, Amazon’s readying their own horse for the tablet race that’s likely going to give Apple a run for their money.

We started hearing rumors of an Amazon Kindle Tablet back in September of last year, around about the time Amazon was getting ready to launch the Amazon Appstore for Android. Then in September, TechCrunch published a story that included a rundown of the hardware and software feature set. Apparently, they got their hands on a DVT (Design Verification Testing) unit. None of this was confirmed by Amazon, so it’s all rumor at this point - though the source is apparently strong. Below, I’ve included some of the specific hardware and software features that were revealed in the story.

Amazon Kindle Tablet DVT

Hardware

• think BlackBerry Playbook
• 7-inch display
• single-core processor
• minimal storage, it relies heavily on the Amazon cloud for media storage
• no camera
• wi-fi only
• rubberized back

Software

• based on a forked version of Android OS, apparently a version older than 2.2
• you won’t see any of Google’s Apps, or the Android Market here, it’s all Amazon
• The music player is Amazon’s Cloud Player. The movie player is Amazon’s Instant Video player. The app store is Amazon’s Android Appstore.
• the user interface is Apple Cover Flow-like
• apparently the user interface is “very responsive”
• in portrait mode, it has a dock where users can add their favorites
• the reader app is a lot like iBooks and the Android Kindle app

There isn’t anything impressive, or innovative about the Kindle Tablet from a hardware point of view. It doesn’t compare to an iPad 2, it isn’t even a fair race.  It is however a lot more interesting from a software point of view. The Kindle Tablet, or more importantly Kindle OS, is optimized for people that subscribe to the Amazon experience. Storage on the device is rumored to be minimal, so you’ll have to rely on Amazon’s Cloud for storage. Other media interfaces, books and movies for example, will also be optimized for Amazon services. It’s even rumored that the device will come with a free membership to Amazon Prime - a members only service that includes free 2-day shipping on eligible items and access to a growing library streaming video content.

The fact that all of these services are integrated into the experience is great if you’ve bought into the Amazon ecosystem, but it might come off as restrictive to someone that pulls media from a diversified set of services. Will tightly coupling the Kindle Tablet user interface with Amazon’s services infrastructure handicap the tablet out of the gate? We’ll see. You could argue that their approach isn’t all that different from Apple’s. The iPad after all partially owes it’s success to the curated experience provided by the iTunes ecosystem. Apple’s iTunes success is definitely tied to the fact that iTunes is tightly coupled with Apple’s hardware line. This tight coupling between hardware, software, and services is part of the motivation behind Google’s acquisition of Motorolla Mobility for $12.5 billion dollars - they want to have more control over the whole experience. It’s starting to look less like a device vs. device battle, and more like an ecosystem vs. ecosystem battle.

The iPad vs. Kindle Tablet decision for a lot of people will come down to price. The thing that caught my attention in the TechCruch article was the price-point for the Kindle Tablet - $250. A sweet-spot, I think, at half the price of the low-end iPad 2 and RIMM’s PlayBook. The delta in price is definitely enough to make most consumers think twice about iPad vs. Kindle Tablet. And… Amazon has the marketing muscle to make sure everyone knows they have other options. Price, is the Kindle Tablet’s real competitive advantage. Apple is strong on all the other fronts.

It’s really premature to predict whether or not the Kindle Tablet has a chance at ending the iPad’s dominance over the tablet computing market. The price difference is going to be a big factor for a lot of consumers. You can get get two Kindle Tablets for the price of a single iPad. I also think we’re headed towards a future where the software, and services ecosystem supported by the device is more important than the device itself. More than ever, it’s less about the hardware and more about the software, and access to services that in can provide.

– Cale Bruckner