New Fire in the Battle of the Tablets

POSTED BY Global Administrator
Hot on the heels of the announcement that the Kindle Fire is completely sold out, Amazon announced a new set of Kindles, revamping the entire Kindle and Kindle Fire line ups. The Kindle Fire range now consists of four devices ranging from the Kindle Fire (an updated version of the ‘sold out’ Kindle Fire launched last year) to the $500, 8.9” high-def 4G version.

The basic Kindle Fire now has 1GB of RAM rather than 512MB, and a 1.2GHz processor, boosted from 1GHz and comes in at $159. The new HD versions of the Fire come in two screen sizes, a 7” and an 8.9”. The 7” HD model is priced at $199 for a 16GB model and $249 for the 32 GB. This pricing is clearly designed to compete directly with the Google Nexus 7 which also has price points at $199 and $249, albeit for 8GB and 16GB models respectively.

The 8.9” Kindle Fire goes up against the iPad with Amazon making a point of comparing WiFi download speeds of the dual antenna Kindle Fire against the iPad 3. Amazon also point out the cost savings of owning the 4G Kindle Fire when compared to the cellular-enabled iPad 3, telling customers that they could save over $400 on the device cost and the cost of a data plan.

This data plan saving comes from the fact that Amazon is offering 4G data for the device for a one-time payment with no monthly fee. For $50, users can purchase 250MB a month of cellular data and 20GB of Cloud Driver storage. Larger data bundles are available; also on a one-time payment basis. Amazon compares this to a possible cost of over $200 for a cellular data plan for the iPad 3.

Amazon’s strategy here is simple: take all but the premium market. The Kindle Fire and the 7” Kindle Fire HD are aimed at those looking for a low-cost tablet with prices set almost at the bottom of the market and competing directly with Google. The 8.9” Kindle Fire HD, while firing a shot across the bow of the iPad, is priced firmly at the middle of the market and marketed decisively at those for whom an iPad is too expensive. The sales of the iPad have been such that it does not make strategic sense to aim for the premium market: anyone who can afford an iPad is likely to purchase one.

With the new Kindle Fire launches, Amazon has once against promoted its ecosystem to users, emphasising the wide range of content that can be purchased using the device. Indeed, as Amazon has no doubt learnt with the Kindle itself, devices can be sold with a low margin or even at a loss if you sell content enough for those devices.

So while Amazon won’t be taking Apple’s King of Tablets crown any time soon, it might very well take the middle ground in the battle of the tablets.