Amazon announced its new tablet today, the Kindle "Fire" which will cost just $199. The new tablet hopes to compete with the Ipad where others have failed. Amazon's strategy for this, sell it at a loss.
The amazingly low price of the tablet that has much of the same capabilities as the Ipad (no camera or microphone though) is being sold at a loss to try and get them in the hands of the consumer. Amazon hopes to make up for these losses by selling digital content to its users. This seems like a solid strategy, considering a new report came out showing that tablet owners are more likely to pull the trigger on online purchases than others surfing the web. Shareholders also seem to agree, with Amazon's stock up nearly 3%.
Amazon is also offering the kindle touch at a price of $99 and a dirt cheap kindle at a price of $79. While the price drops in tablets and kindles is sure to accelerate the demise of brick and mortar book stores, will this new tablet be able to compete with the Ipad where so many others have failed? What do you guys think?
It also doesn't offer 3G connectivity. I've got an iPad 1 with 3G+WiFi. No possible way I'd want the device without the 3G connection.
I don't think the per unit loss on these will be that large. Do you know how much they are supposedly eating for each Fire they sell? There will most likely be a comprehensive cost breakdown once the device is out but I wasn't sure if you read somewhere that they are losing money on each device or if it stated how much.
Regards
An analyst on CNBC guessed in the $50/unit range (he was bearish on this move for Amazon).
I bet it works. This is the same strategy that video game console makers have used for years. They sell the unit at a loss (like the PS3) and then make the money on the games (or in this case the books)
Very very well priced, although I dont believe it will be a direct competitor to the iPad. Will it take away some potential buyers from Apple? Yes it probably will, but for all intents and purposes this is just a better e-reader. Someone who wants a fully-featured tablet still has to go with the iPad really. This seems like a great thing to buy just for commuting, kids etc.
Interesting. Even though Amazon intends to compete with the ipad, I don't think it will and I could argue that the two devices compete for a different conumer profile.
This device is $300(!) less and unproven. I think consumers who are looking for a high-tech e-reader and casual internet browsing capabilities that wont cost $500 would buy this, but consumers who are looking for for more robust multimedia (watching Netflix and HBOGo on a 7-inch screen doesn't sound appealing), better apps (not just amazon apps), better internet capabilities (3G) and better overall user experience would probably spend more for an ipad.
Comparing the ipad to the Fire is like comparing a PS3/Xbox360 to a Wii. Instead of directly competing for the same consumer (challenging strategy, the ipad is pretty slick), Amazon will expand the tablet market downwards (like the Wii). And there is still plenty of room for expansion in the tablet market.
On top of that, ths will serve as a portal for amazon services, like the ipod was for itunes. Amazon has an intelligent strategy.
Is Amazon gonna be the next Apple or next Wal-Mart, or both?
when I first head this I thought it was amazon doing a fire sale on tablets ...was thinking the fuck are they going bankrupt?
it's fucking amazon! stick with the fucking online retailer business. I can see this failure a mile away.
i was all for it until i saw the dude's shitty plants vs zombies plant placement in the video
"I bet it works. This is the same strategy that video game console makers have used for years. They sell the unit at a loss (like the PS3) and then make the money on the games (or in this case the books)"
Its a little bit different to the traditional captive pricing model though...I mean you buy a ps3 and you practically need video games to use it...you buy a gillette razor and you need blades to use it...Im sure many people (the majority?) will buy this and never buy an online eBook/app for it.
I do agree it will be a success though as I believe at that price a lot of people will take a punt just to have one. For me personally I always find myself sitting in the airport seeing people messing on iPads and I wish I had something in my hands to occupy me...now I am not gonna go out and spend $500 dollars for the handful of times Im sitting in an airport during any one year but at $200 Id defo take a chance if I had some spare cash llying around...I imagine a lot of people are in this boat.
"it's fucking amazon! stick with the fucking online retailer business. I can see this failure a mile away."
The kindle has been a massive success...they have an incredibly platform for promoting products..doesnt matter fi you want a book, a movie, a frying pan or a cd....when you log onto amazons site you see the Kindle being advertised. PLus they might not have the same pull in the electronics world like Samsung or Apple but it is a solid brand with a strong reputation..not like some shoddy startup from Korea.
This is only the first Fire to be released. I am pretty certain there will be more next year. Look at how many types Kindles Amazon now sells.
The world does not stop here! Amazon will catch up with Apple in allllllllllllll the right places. I wouldn't be surprised if Amazon provides wireless services ten years from now.
How is this significantly more than another mediocre Android tablet? Just because Amazon's making it?
I don't get it... its tech specs are awful... even the Kindle has (free!) 3G.
^^Its significant because its $199 and is integrated with Amazon's services.
There are a lot of people out there who can't afford to buy their kids ipads for christmas and will likely snatch up the fire tablet. They will probably like the fire tablet and decide to sign up for the 1 year prime membership to maintain access to the slew of media offered on Amazon.
People who have been pissed off by Netflix might try out Amazon and like it for its cheaper price.
Amazon wins by getting people to sign up for its paid prime membership which I imagine increases people's propensity and frequency of item purchases on Amazon. It's a virtuous circle that pulls people back for more.
Think of the kindle fire as a "fixed cost physical device customer acquisition tool".
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