Amazon’s Stock Can Still Go Up – It’s Now Challenging The IPad In China

Apple’s (AAPL) future iPad sales in China is threatened by another company. Aside from Xiaomi’s sub-$200 Mi Pad 2, Amazon’s (AMZN) Fire 7 Android tablet is now going to challenge the iPad in China. Amazon has partnered up with Baidu (BIDU) to sell the Fire 7 for 499 Yuan ($80) in the Middle Kingdom.

This is not just about hardware or tablet competition. The launch of a sub-$80 tablet will no doubt help Amazon improve its online store’s competitiveness against JD.com and Alibaba (BABA). The budget-friendly price tag of the Fire 7 could help Amazon improve its mediocre e-commerce business in China.

China is the world’s biggest market for online trade of goods. However, Amazon only has 1.5% share in China’s online retail industry. This American firm has fumbled the ball and allowed Alibaba and JD.com to corner almost all of China’s $672 billion/year e-commerce trade.

I therefore have high hopes that Amazon could leverage Baidu’s popularity to sell millions of units of the Fire 7 tablet. Through this way, Amazon gets new potential customers for Amazon China. The $80 Chinese version of the Fire 7 is the same $49.99 Fire 7 tablet being sold in North America.

They are both good quality tablets that are portals to Amazon’s online marketplace. The Fire 7 tablet will likely inspire many Chinese customers to ignore the iPad Mini 4/iPad Air 2. And once these China residents own this Amazon tablet, they become potential customers of Amazon China.

Challenging Apple Is Good Business For Amazon

A little over a year ago, another SA Contributor said Amazon’s biggest mistake was not to beg for a partnership with Apple. I strongly disagree with that contributor’s assumption. I firmly believe that Amazon’s future is actually better if it continues to compete, not partner, up with Apple.

The problem with entrusting iPads and iPhones to become the partner devices to drive Amazon sales is obvious. Apple is unlikely to just sit and let Amazon have a free ticket over online purchases made through its iOS ecosystem. There will be fees or revenue sharing deals to be discussed.