Apple (s aapl) may have reason to welcome, not fear, the growing popularity of the Amazon Kindle Fire, (s amzn) which is on track to become the No. 2 best-selling tablet. According to J.P. Morgan analyst Mark Moskowitz in a note sent late last week, the Kindle could encourage, not take away from, Apple’s own iPad sales. But in order for that to be true, there are certain conditions that have to be met.
Moskowitz is mostly reiterating what he heard from Apple CEO Tim Cook and CFO Peter Oppenheimer in a recent sit-down with them, during which they discussed the Kindle Fire’s role in relation to the iPad. Moskowitz came away with the clear impression that “Apple is not seeing much pressure from lower-priced tablets” and that current Kindle Fire buyers “could gravitate to more feature-rich experiences” down the road based on their initial use of the cheaper Amazon device.
J.P. Morgan and Apple execs apparently aren’t all that concerned over Amazon’s new Android (s goog) tablet, which is already projected to beat the sales of all other tablets based on the Google mobile platform by the end of this quarter. And it’s true that the Kindle Fire could act as a sort of gateway drug, turning users on to the tablet experience but leaving them craving features missing from the Amazon device, like a full-fledged market of applications targeted to large-screen devices, a larger screen itself and cellular data access.
It’s an admittedly rosy outlook from a source with a vested interest in seeing this outcome come to pass, however. There is another obvious possibility to contend with too: Users could find that the Kindle Fire provides everything they really need in a tablet experience (web browsing, media playback) for an acceptable price and might not look further. Whether or not those users would have looked at iPads otherwise or whether another, significant portion of Fire owners might not find themselves wanting more is another question.
I think Apple’s optimistic outlook should pan out, however, as long as one thing remains true: tablets continue to encroach upon and replace PCs as primary computing devices for general users. In that case, the Kindle Fire and the iPad likely will enter into a mutually beneficial orbit, with the cheaper device’s drawing in first-time tablet users and the iPad’s acting as a sort of graduation gift for when they opt to use tablets as their main computers.