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Apple iPad Sales Face Kindle Fire Squeeze

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Sales of the Apple iPad will be squeezed by the arrival of the Kindle Fire and a lowered inventory

Sales of the all conquering Apple iPad will be slightly reduced in December, partly because of Amazon’s Kindle Fire, says a new analyst report.

“With our expectations for a new iPad launch during the March quarter leading to potentially lower inventory levels combined with increased competition from the $200 Kindle Fire,” T. Michael Walkley, an analyst with Canaccord Genuity, wrote in a 5 December research note, “we have slightly lowered our December quarter iPad estimates from 14M to 13M units.”

Apple Domination

Despite that pressure from the Kindle Fire, he added, “we believe the iPad will continue to dominate both market share and value share of the growing tablet market.” Increased iPhone estimates offset that decrease in the firm’s iPad estimates.

Amazon claims the Kindle Fire is already its bestselling product at $199 (£128). The device offers a heavily modified Android interface, which facilitates purchasing streaming content and e-books from Amazon’s online storefront. That tight integration, along with a “virtual bookshelf” user interface that deviates from other tablets’ grid-like screens of individual apps, makes the Kindle Fire an altogether different animal from the Apple’s iPad. Customers evidently find it appealing.

Nonetheless, some analysts believe that the Fire won’t burn the iPad anytime soon.

“If anything, we believe that Apple is not too concerned about the low-priced entrants,” Mark Moskowitz, an analyst with J.P. Morgan, wrote in a 2 December research note. “Recall, it has been our view that low-priced, reduced feature-set entrants, such as the Kindle Fire, are soap box derby devices stuck between a tablet and an e-reader.”

In other words, he concluded, “we are not concerned much about competitive pressures until the second or third generations.”

If Apple holds to its previous release pattern for the iPad, the new device will debut early next year. Current rumours suggest this “iPad 3” could offer a higher-resolution display than previous versions.

High Satisfaction

Meanwhile, Apple’s iPhone 4S continues to draw strong sales and high customer satisfaction ratings. According to a November survey from ChangeWave Research, a division of analyst firm The 451 Group, some 77 percent of respondents were “very satisfied” with the device, followed by 19 percent “somewhat satisfied” and 1 percent, each, for “somewhat unsatisfied” and “very unsatisfied.”

Despite reports of some battery issues with the iPhone 4S, the device managed to sell some 4 million units by the end of its first weekend of release in October.

According to recent data from Nielsen, iOS accounts for some 28 percent of the US smartphone market, behind Android at 43 percent but ahead of Research In Motion’s BlackBerry franchise at 17.8 percent and Microsoft’s smartphone franchises at just over 7 percent.