Kindle (under)Fire

via Yahoo News and The New York Times:

By DAVID STREITFELD

The Kindle Fire, Amazon’s heavily promoted tablet, is less than a blazing success with many of its early users. The most disgruntled are packing the device up and firing it back to the retailer.

A few of their many complaints: there is no external volume control. The off switch is easy to hit by accident. Web pages take a long time to load. There is no privacy on the device; a spouse or child who picks it up will instantly know everything you have been doing. The touch screen is frequently hesitant and sometimes downright balky.

All the individual grievances — recorded on Amazon’s own Web site — received a measure of confirmation last week when Jakob Nielsen, a usability expert, denounced the Fire, saying it offered “a disappointingly poor” experience. For users whose fingers are not as slender as toothpicks, he warned, the screen could be particularly frustrating to manipulate.

“I feel the Fire is going to be a failure,” Mr. Nielsen, of the Nielsen Norman Group, a Silicon Valley consulting firm, said in an interview. “I can’t recommend buying it.”

All this would be enough to send some products directly to the graveyard where the Apple Newton, the Edsel, New Coke and McDonald’s Arch Deluxe languish. But as a range of retailers and tech firms could tell you, it would be foolish to underestimate Amazon.

Amazon sees the Kindle line of devices as critical for its future as a virtual store, and is willing to lose money on the sale of each one for the sake of market share. Once dominance is achieved, it plans to make money on the movies, books and music that users download directly from Amazon.

First, however, it needs to make the devices ubiquitous. Promoting them every day to its tens of millions of customers at the cheapest possible price will surely help. If Apple brought the notion of the tablet into the mainstream, Amazon is making it affordable.

The retailer says the Kindle Fire is the most successful product it has ever introduced, a measure of enthusiasm that reveals nothing; it has not specified how many Fires it has sold, nor how many Kindles it has ever sold. It also says it is building even more Fires to meet the strong demand. But, at the same time, it acknowledges that it is working on improvements.

“In less than two weeks, we’re rolling out an over-the-air update to Kindle Fire,” said Drew Herdener, a company spokesman.

There will be improvements in performance and multitouch navigation, and customers will have the option of editing the list of items that show what they have recently been doing. No more will wives wonder why their husbands were looking at a dating site when they said they were playing Angry Birds.

Amazon declines to say, but soon — probably in the spring — there will be an improved version of the device itself. One more shot is all the retailer will get, Mr. Nielsen said. “If that’s a failure, then the Fire is doomed to the dust pile of history.”

Despite Amazon’s silence on the matter, analysts have been estimating the company will sell from three to five million Fires this quarter. They are neither raising their estimates nor lowering them.

Amazon’s devotion to this product line is such that it has stripped down the original Kindle e-reader, reduced its price and begun to sell it through other retailers like Best Buy and Wal-Mart for $79, as well as prominently on its Web site. If Amazon had Apple-like margins, analysts estimate that the basic Kindle might cost $180.

According to calculations by the research firm IHS iSuppli, the $79 Kindle costs Amazon $84 to make. That sum does not include research and development, shipping or, with a third-party retailer, the wholesale discount. Add these up, and Amazon might be losing as much as $20 on every $79 Kindle sold at, for example, Best Buy.

For most hardware makers, that would be a recipe for corporate suicide. But once the device is activated in a buyer’s home, the losses stop and the consumption begins.

“What else are you going to do on this Kindle?” asked Andrew Rassweiler, senior director of teardown services at iSuppli. “Nothing. It’s a useless device unless you’re planning on putting books, a lot of books, on it.”

The Fire is trying to do much more than be an e-book reader, a function some say it does not do as well as the original Kindle. Slightly more than a third of the 4,500 reviewers of the Fire on Amazon have given it mixed to negative reviews, three stars or fewer. Of Amazon reviewers of the iPad 2, 22 percent have given three stars or fewer; for the original Kindle, that number is 11 percent. (There are a few caveats. At least some of the iPad reviewers bought not from Apple but from resellers, the real target of their ire. As for the original Kindle, after four years it has both a huge number of reviews — over 34,000 — and the advantage of being a known quantity.)

Many of the initial customers of the Fire seem to have bought it on a mixture of faith and hype. The striking thing even about some of the one-star reviewers is that they are regretful rather than angry. One review, couched as an open letter to Amazon’s chief executive, Jeff Bezos, began: “I have spent thousands on your outstanding site. I own and love the original kindle. When asked about why I would buy a Fire when I had an ipad, I said that half of me wanted to just support your effort and that I believed amazon just did things right.” The reviewer is now recommending that friends skip lunch to buy an iPad.

Gene Munster, an analyst with Piper Jaffray, has been tracking the opinions as more reviews are posted on Amazon. Since Nov. 18, five-star reviews have fallen slightly, to 47 percent from 50 percent, he says. One-star reviews have held relatively steady at about 13 percent.

“I would have expected things to be even worse at this point,” Mr. Munster said, adding that initial buyers were usually the most critical. Pricing will save the Fire, he predicted. At $199 versus $500 for an iPad, “Amazon has a lot of air cover to have a B-level product.”

Mr. Nielsen, the consultant, disagreed.

The 7-inch Fire does a good job displaying sites optimized for smaller mobile devices, he said, but stumbles when it tries to show pages designed for 10-inch tablets. “Like squeezing a size-10 person into a size-7 suit,” Mr. Nielsen wrote in his report. “Not going to look good.” As for displaying desktop sites, forget it.

It is true that the device is only $199, but so what? “Look at your hand. Is it thin or fat?” he asked. “If it’s fat, you just know it’s going to be bad.”

The device does do one thing well, he said. Shopping on Amazon is a breeze. “If I were given to conspiracy theories, I’d say that Amazon deliberately designed a poor Web browsing user experience to keep Fire users from shopping on competing sites,” Mr. Nielsen said.