Many have tried, many have failed. According to DigiTimes, Amazon has made the bold move of ordering between 1.5 and two million touch panels for its upcoming tablet line. Allegedly, the company plans to ship four million tablets by the end of 2011. While ambitious plans are commendable, we’d be remiss if we didn’t question whether Amazon was overestimating demand?
As Edmund Burke once said, “those that don’t know history are destined to repeat it”. The first Google certified Android tablet to compete with the Apple iPad was the Honeycomb-powered Motorola Xoom. Despite better features and launching a month in advance of the iPad 2, Motorola only shipped 250,000 tablets during its first two months of availability. In contrast, the seven inch Samsung Galaxy Tab shipped a reported one million units during a similar time frame.
In the BlackBerry world, the PlayBook enjoyed between 450,000 and 500,000 shipments in its first quarter. Of those shipments between 250,000 and 300,000 units were actually sold to consumers. As the only BlackBerry tablet on the market, the PlayBook enjoyed a strong reception much like the Galaxy Tab.
Unlike the original Samsung Galaxy Tab, the Amazon tablet line will enter a crowded Android market. Gone are the days of being able to slap on any old build of Android and consider a device safe. In the case of the BlackBerry PlayBook, even as the only tablet available running the OS, future quarterly shipments will struggle to match the 500,000 mark.
Expecting to match Apple’s target of 10 to 12 million quarterly iPad 2 shipments is a lofty goal — in fact, we’d say it’s impossible. For an inaugural tablet, or in the case of Amazon — a tablet line, shipping millions of units out of the gate is unlikely. If history is any indication, Amazon’s tablets will be deemed a success if shipments reach two million units in the first year. By ordering up to two million touch panels, Amazon may have secured enough inventory to cover production for the first year.
There is one other possibility for Amazon’s purchase. Apple has a stronghold on many supply channels due to the iPad 2’s overwhelming demand. Amazon may have made the touch panel purchase as a means of securing inventory for yearly production. So which is it? Has Amazon overestimated the demand for its tablet line or is the company just protecting itself from Apple-imposed supply constraints down the road?
