Why Amazon's tablet will succeed

Tablet makers are having a rough time competing with Apple's hugely successful iPad and some are suffering from poor sales, some are suffering from legal action from Apple, and others have abandoned the market altogether. On the face of it, it doesn't seem like a good time to launch a new tablet. Will Amazon succeed where everyone else has failed?

The thing about an iPad is that it isn't just  hardware. Apple could sell the ipad at cost price and still make a healthy profit from the tablet market. Most other tablet manufacturers simply build and sell the hardware and they must generate a profit from the sales.

Apple has an app store and takes a large cut of every sale that is made. The only place you can get apps for the iPad is at Apple's app store. Most other manufacturers don't have this, but Amazon does. It launched its own app store. Although it is based on Google's Android and has the same sort of apps that are in the Android market, Amazon could tie its tablet to its own store and generate income from every sale.

Apple sells music for the iPad and takes a cut of every sale of every music track. Other tablet manufacturers don't make any money at all from the music downloaded to their tablets. Amazon sells music, has online storage for music and can stream music. It also makes money from every sale of every music track. It's another source of income for Amazon.

Apple sells movies for the iPad through the app store and as with all the other media, it makes money from it. Other manufacturers do not have this source of income, they only sell the hardware. Amazon, however, does sell movies and it generates income from the sales. Movies could be accessed and played by the Amazon tablet.

Apple sells books for the iPad too and this also generates income for the company. It's another thing that other tablet manufacturers do not have, but Amazon does. It has an excellent range of ebooks.

Amazon is basically emulating Apple and its tablet will no doubt be closely tied to Amazon's music, movie, ebook, and app stores. The company does not need to make a huge profit from sales of the hardware because of the income each one will generate from media consumption. Amazon is also well known for cutting costs to the minimum, so it is likely that the tablet will be cheap too and rumours of $250 are floating around.

So Amazon has multiple sources of income all generated by the tablet and users get all the media they need from Amazon. It's very similar to Apple's setup and it is hard to imagine how it could fail if Amazon's tablet is anywhere half way decent.