Kindle Fire Will "Vaporize" Android Tablets, But Be Gateway Drug To iPad

Amazon's Kindle Fire could be the gateway drug for iPad users. That's the belief of one analyst who sees the $199 7-inch device as a way for consumers to get a taste for tablets and want more — like the iPad.

"If anything, we think Apple views the Kindle Fire as a device that stands to bring incremental consumers to the tablet market," J.P. Morgan analyst Mark Moskowitz writes. Although reviewers have panned the Kindle Fire as being underpowered and not up to the iPad's performance, that very lack could consumers to "gravitate to more feature-rich experiences," Moskowitz adds. In other words, the Kindle Fire could be used as an iPad with training wheels.

Despite all the talk that the Kindle Fire could become the No. 2 tablet, not many people are worried in Cupertino. There's "not much concern in tablet town," the analyst says.

Echoing that opinion, Evercore Partners' Robert Cihra writes today Amazon will "vaporize" all Android tablets that are selling for a profit. Although the Kindle Fire is a credible challenge to the iPad, its success comes from selling the tablet at cost. Cihra estimates Amazon will have 50 percent of the Android tablet market in 2012.

Meanwhile, Apple continues flattening the competition, skimming the cream from each. First, Apple decimated the PC business, sending rivals into a tailspin of cheap computers while selling boatloads of iMacs and MacBooks. Then the iPhone turned the smartphone market upside down, derailing longtime leaders. The iPad is just the latest example.