Amazon's Kindle Fire may have scorched the market initially, but the tablet's limitations could be causing consumers to lose interest, claims ad network Chitika.
Launched on November 14, the Fire was eyed by many as a potential "iPad killer," or at least the first Android tablet that could take a bite out of Apple's dominance. And though several reports have pegged the Fire as outselling its rivals, possibly even the iPad, Chitika sees a different picture unfolding.
To see whether the Fire was actually living up to its initial hype, Chitika analyzed the ad impressions captured on its network by mobile devices from November 14 through November 30, covering more than two weeks and over 1 billion impressions in total. Such impressions are one way of measuring the online activity of mobile devices and can provide some gauge as to which devices are most heavily used.
The Fire enjoyed modest growth in impressions during its first week and then shot up on November 26. But that sharp ascent quickly took a nosedive as the tablet's online activity subsquently dropped more than 85 percent over the following few days.
Chitika believes the Fire lit up the market initially thanks to its $199 price tag. But once the allure of the device fell, so did the amount of user activity.
So is the Fire actually seeing a drop in demand? Other reports differ.
A recent report from market reseacher eDataSource also showed a surge in activity for the Fire on November 27 but didn't track it any further. IHS iSuppli, meanwhile, believes the Fire will prove to be the second-most popular tablet in the world, trailing only the iPad. DisplaySearch also recently boosted its forecast for Kindle Fire shipments this quarter.
However, J.P. Morgan analyst Mark Moskowitz doesn't see Amazon's current flavor of the Fire as a strong-enough competitor over the long haul, despite the hot holiday demand so far.
Certainly, Chitika's ad impressions are only one way to determine demand for a device and don't tell the whole picture. But assuming Chitika's data is accurate in revealing a downswing for the Fire, then why is the tablet's appeal already waning? Chitika pointed to three potential reasons.
Amazon tried to grace the Fire with a unique OS and user experience compared with other Android tablets. But in so doing, the retailer failed to make it accessible for all users, says Chitika, citing drawbacks with the user interface, a heavily managed selection of apps, and security issues with the Silk browser.
In comparison with other tablets, the Fire's hardware is limited. Online storage is small at only 8 gigabytes, though Amazon does offer free cloud storage. The device lacks a camera and physical volume controls. And there's no support for 3G.
Finally, the $199 price undercuts the iPad by half. But the limited set of features may not offer enough bang for the buck.
Hitting a highly competitive market still led by the iPad, Amazon may yet face an uphill battle despite other reports that show the Fire gaining traction.
Chitika asks the question whether the decline in activity at the end of November was just a temporary blip or the sign of a more permanent drop. But it does believe that for Amazon to succeed in the tablet market, it will need to compete on more than just price.
"The Kindle Fire certainly is a step in the right direction for Amazon and one of their most impressive tablets to date," Chitika said. "It offers significant benefit at a relatively low cost, and if you're willing to pay the extra mile, you can gain access to services such as Amazon's Digital Content platform. However, if you are expecting a full-fledged tablet, you may be disappointed with functionality, given the Kindle Fire is more of an e-reader+."