Amazon.com, Inc. (NASDAQ:AMZN) Ropes In MediaTek For Fire TV And Cuts Out Qualcomm (QCOM)


Amazon.com, Inc. (NASDAQ:AMZN) has found its new Fire TV chip partner in MediaTek, and you don’t have to guess the loser – it’s Qualcomm, Inc. (NASDAQ:QCOM). The previous generation of Fire TV ran on Qualcomm’s chip, but that has been taken over by MediaTek, and there could be several explanations for that move.

The battle between Qualcomm and MediaTek continues to heat up with the former losing out on Amazon.com, Inc. (NASDAQ:AMZN)’s FireTV. Amazon recently announced the newest version of its Fire TV set-top-box, and it turns out the company has used MediaTek’s multimedia chip in the device. The previous versions of Fire TV were powered by Qualcomm’s multimedia chip.

Battle for the streaming media market

With the smartphone market increasingly becoming saturated, the battle between Qualcomm and MediaTek can be seen taking a new dimension – streaming media devices. Enriched set-top-boxes are on the rise and they provide an opportunity for chipmakers to offset the impact they are having in the cooling smartphone market, and MediaTek is making impressive inroads.

For a long time, pricing is one factor that has clearly differentiated Qualcomm from MediaTek, and that could explain the loss of Fire TV socket by the former. Qualcomm pursues higher margin businesses while MediaTek is always willing to lower prices to win over new customers.

Competitive pricing

Amazon.com, Inc. (NASDAQ:AMZN) needed to price the new Fire TV competitively to counter Apple Inc. (NASDAQ:AAPL) and all other competitors.  The MediaTek chip inside the new Fire TV supports 4K video streaming, is 75% more powerful compared to the previous generation and is also cheaper than what Qualcomm provides. That makes it a perfect fit for the new Fire TV.

Amazon’s Fire TV with 4K support goes for $99. That compares favorably in price with Apple’s new Apple TV devices that cost between $149 and $199. Pricing its set-top-box below rivals should enable Amazon to gain more market share.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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