Jack Chou What happens when the Kindle Fire costs $0?. While it's true that the Kindle Fire has sold well, I don't think it has yet disrupted the iPad market. In Christensen's theory of innovation and disruption, the incumbent product - in this case the iPad - has become a mature product with little room for meaningful updates, other than the sustaining incremental updates that Chou references. The iPad and the tablet market are just in their infancy – it's way too early to consider the Fire as a market disruption.
Jeff Bezos and company have no interest in charging a premium price for a product that they essentially expect to be a virtual USPS mailbox for their growing inventory of digital goods. Amazon worries about the long-term only and, as the NY Times noted, they actually mean it.
So while the question, “What happens when the Kindle Fire costs $0?” may include a bit of hyperbole, it’s not hard to imagine a day when the Kindle Fire: (1) has progressed to being a truly capable tablet that covers 90% of the iPad’s functions capably, and (2) costs a trivial sum, maybe $49 or $79. What happens then?
If we’re to believe Clayton Christensen’s Innovator’s Dilemma and expect this market to follow other technology markets in history, Apple and the iPad will not be able to simply innovate with ‘sustaining’ features that incrementally drive the state of the art forward. Apple will need to continue to introduce disruptive innovation into the tablet market just to compete with their lower-price, down-market competitors.
In other words, a slightly better browser, camera, or email application won’t be enough to fend off the Kindle tidal wave.