As Apple released its $329 iPad mini last year to compete with the growing crop of inexpensive seven-inchers, sales overtook that of the full-size model faster than Apple had envisioned. And because of it, the existing Android tablet vendors competing on the low to mid-end have been undoubtedly feeling lots of heat.
Amazon, which first legitimized the category with launch of the $199 Kindle Fire in September 2011, is reportedly about to up the ante with a $99 Kindle Fire version, a potentially disruptive move which will boost sales and popularize smaller, inexpensive tablets, but also put pressure on Apple and other tablet vendors to slash prices of their warez.
UPDATE: Amazon shoots down the rumor, says a $99 Kindle Fire is “not happening”…
UPDATE: an Amazon spokesperson told Business Insider:
It’s not happening – we are already at the lowest price points possible for that hardware.
Still, the prospect of a $99 branded tablet remains tantalizing for reasons more than one.
Here’s the rest of the story, via TechCrunch:
We’re now hearing that a $99 Kindle Fire 7″ tablet is in production, and will be shipping this year. At a price that low, the Kindle Fire would be able to more easily compete at the tail end of the Android-based tablet market – an area which is today dominated by low-cost tablets out of China, often sold at the sub-$100 price point.
You’ll get what you pay for: the rumored gizmo is thought to have a 1,280-by-800 pixel resolution screen measuring seven inches diagonally and run a Texas Instruments chip, like the rest of today’s Kindle Fire lineup. Think of it as a re-tooled version of the existing Kindle Fire, a new SKU (Stock-Keeping Unit) with optimized internals to keep manufacturing costs down.
As Texas Instruments last December shut down its tablet chip making operations amid intensifying competition, Business Insider‘s Jay Yarow speculates that “it’s possible Amazon got a clearance sale price on the chips,” which sounds about right to us.
Amazon was even rumored to buy Texas Instruments to secure its tablet future and get the chips at the lowest possible prices. Be that as it may, a $99 tablet from Amazon sounds enticing.
At that price point, and exploiting Amazon’s brand name and clout, such a device would open up the tablet market to just about anyone.
Amazon’s boss admitted existing Kindles are sold at a loss so a $99 Kindle Fire would put even more pressure on the online retailer’s razor-slim margins. Another reason to take Apple’s iPad mini head on: Amazon in Q3 2012 reported first loss in nine years, specifically mentioning iPad mini release as one of the key culprits.
“Our approach is to work hard to charge less,” the company’s news release quoted CEO Jeff Bezos as saying. “Sell devices near breakeven and you can pack a lot of sophisticated hardware into a very low price point.”
In my view, the $99 Kindle Fire poses a challenge to Apple, but even more so to other device vendors who aren’t as fortunate as Amazon, which taps its vast media ecosystem to recoup hardware losses as people buy Kindle books, movies, TV shows, music and more on their Amazon tablet locked to the Amazon cloud.
As such, a $99 Kindle Fire will not only give Google’s Nexus tablet brand a run for its money (unless Google matches Amazon with a $99 Nexus 7 as the rumor mills speculate), it stands poised Microsoft’s dream of becoming a relevant tablet maker in the foreseeable future – especially should Apple respond by slashing the iPad mini to $249 or even $199.
The online retailer has also done a nice job promoting its Kindle lineup with television commercials that in my opinion are far more sticky than advertisements seen so far from Google, Microsoft and others.
And here’s one highlighting Amazon’s Kindle Paperwhite e-reader.
No matter how you look at it (pun intended), the Paperwhite’s display certainly is better for reading in bright sunlight, without glare.
Amazon wins this one hands down, I’ll give them that.