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Kindle Fire will be No. 2 tablet after iPad

The Kindle Fire, just out since Nov. 15, is destined to become the second-best selling tablet worldwide this quarter, according to one research firm.

"Just two weeks after its introduction, Amazon’s Kindle Fire already is shaking up the market, with the device expected to surpass all other iPad rivals to take second place in the global media tablet business in the fourth quarter," says analysis provider IHS.

What's also interesting is that there will be a huge gap between second and third place. By the end of the year, 3.9 million of Amazon's flagship Kindle will ship, garnering a 13.8 percent share of global media tablet shipments, "exceeding the 4.8 percent held by No. 3 Samsung, and second only to Apple’s commanding 65.6 percent portion of the market," IHS says.

“Nearly two years after Apple Inc. rolled out the iPad, a competitor has finally developed an alternative which looks like it might have enough of Apple’s secret sauce to succeed,” said Rhoda Alexander, senior manager, tablet and monitor research for IHS, in a release.

Amazon's secret sauce is what's helping it to such quick stardom: First, the tablet priced at $199, a bargain compared to most other tablets, including Apple's, that start at $499. Second is Amazon's huge content library and built-in base of customers.

“At a rock bottom price of $199 — which is less than the $201.70 it now costs to make the device — the Kindle Fire has created chaos in the Android tablet market,” Alexander said. “Most other Android tablet makers must earn a profit based on hardware sales alone. In contrast, Amazon plans to use the Kindle Fire to drive sales of physical goods that comprise the majority of the company’s business. As long as this strategy is successful, the company can afford to take a loss on the hardware—while its Android competitors cannot.”

Some believe — or at least hope — that Amazon's pricing strategy will force Apple to lower the price of the iPad. IHS doesn't see it quite that way.

"A far more likely scenario is that Apple also may reduce the pricing on the iPad 2 when the company introduces the iPad 3," the research firm said. "This will provide a value alternative for entry-level users in the same way that the company continued to offer the iPhone 3GS when it rolled out the iPhone 4. This approach would allow Apple to maintain its target profit margins on both the iPad 3 and the iPad 2, while offering end-users an ever-expanding family of products."

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