To date most tablet manufacturers have had two main routes: price it high and take on Apple, or price it low and take on the Android-dominated bargain market. With a flurry of announcements this week, Amazon is clearly going for both.
The existing seven inch Kindle Fire is getting a price cut from $199 to $160. The significance there is that it’s now significantly undercutting Google’s Nexus 7 and is thus the cheapest option for people who want a trusted brand name tablet rather than risk cutting corners on performance of usability.
Meanwhile there’s a new range of “HD” Fires with a bunch of new features beyond higher screen resolution such as a “drastically” improved processor, better wireless reception a camera, Kindle style syncing between e-Books and their audio versions, and an “X-Ray” feature that recognizes actors in a video and provides relevant links to sources such as IMDB. As is often the case with tablets, it may be a very personal decision as to which features really make a difference.
The 7 inch HD is at the familiar $199 price point, with a new 8.9 inch version at an iPad-busting $399, both models having 16GB of storage. There’s also a $499 model that has 32GB and supports LTE 4G speeds.
To top that off, Amazon is offering an LTE data plan for just $50 a year. That led Amazon boss Jeff Bozos to boast that the tablet/data plan combination will save $400 in the first year compared to an iPad.
However, the Amazon data plan is only for 250 MB a month. If you are getting, for example, 10Mbps on LTE you’ll be enjoying those fast speeds for all of three and a half minutes each month. Put another way, you’re effectively paying more than $70 an hour for the high-speed access.
Bezos didn’t directly address whether any of these devices are being sold at break-even or even below cost price. (It’s almost impossible to believe the reduced-price original Fire isn’t a loss-leader.) However, he did hint at such economics by pointing out that “we want to make money when people use our devices, not when they buy are devices.”