A $99 Kindle Fire would annihilate the Android tablet competition


Staff member
Mar 24, 2011
Summary: Could Amazon break the deep-rooted psychological $100 price point with the Kindle Fire HD? And if it can, what effect would this have on the Android tablet market?

By Adrian Kingsley-Hughes for Hardware 2.0 |March 20, 2013 -- 16:15 GMT (09:15 PDT)

Rumors are abound that Amazon is working on bringing to market a 7-inch Kindle Fire HD tablet with a price tag of only $99. This would be the beginning of the end for the competition.

(Image: Amazon) Currently, the 7-inch Kindle Fire HD costs $199, so the price drop would be a very significant one, taking it below the price point of $159 that Amazon currently asks for the older Kindle Fire tablet. Earlier this month, Amazon slashed the price of its 8.9-inch Kindle Fire, taking the wi-fi version down from $299 to $269, and the LTE version from $499 to $399.

Amazon is in a unique position to be able to bring cheap, yet high-quality tablets to market because it is not reliant on the hardware itself to turn a profit. The Kindle family of devices are a way of making existing Amazon customers buy more stuff.

Read this

Why Amazon Kindle Fire HD will burn Google's Android tablet strategy

According to an IHS iSuppli virtual teardown, the current 16GB 7-inch Kindle Fire HD is estimated to cost Amazon $174 to make, and this was based on November 2012 component costs. Most components have fallen in price during this time, so this will undoubtedly help bring the cost down.

Another factor that may help Amazon bring down the cost — in the short term, at any rate — is the fact that Texas Instruments, the company that manufactures the processor for the Kindle Fire, is looking to get out of the fabrication business. Speculation is that Amazon may have make a deal with TI to buy remaining stock of processors at a cut price.

Another possibility is that Amazon has approached another chipmaker — such as TSMC — to build processors for the Kindle Fire HD.

Another place that Amazon could shave a few dollars off the price of the Kindle Fire HD is with the display and touchscreen, which, based on the IHS numbers, represented the bulk of the component costs, totaling $64.

How disruptive would a $99 Android tablet be? Enormously so, and the biggest thing a mainstream name could do, short of going completely free — which might sound crazy, but could be doable under the right conditions.

Amazon has shown itself to be a company that's not afraid to experiment when it comes to hardware, and it has taken the Kindle brand and shaped it into a set of products that have had a profound impact on the e-reader and tablet markets, essentially shaping it from top to bottom. A $99 tablet would be the next step in that disruptive pattern.

The sub-$100 price point is a deep-rooted psychological one, and if Amazon can break it with the Kindle Fire HD, then not only is the retailer putting pressure on the likes of Apple and Samsung, but also on the myriad of low-quality cheap-and-nasty tablets flooding the market from China. $99 Android-powered tablets already exist, so the question is not whether Amazon can make a sub-$100 tablet — it can — but whether it can make a good one. Given the quality of current hardware, I would say that if Amazon does indeed come out with a $99 tablet, it will be a good product.

Or put it another way, it would have the biggest effect on the tablet market since Apple released the iPad.

An Amazon spokesperson said in a statement that "it's not happening--we are already at the lowest price points possible for that hardware." What I find interesting about this statement is the reference to "that hardware," which I take to mean the current incarnation of the 7-inch Kindle Fire HD.
Price is only one way to compete. Even if Amazon could do this and make money on the content it isn't clear that they would want to. Why give up margins unnecessarily? They seem to be doing pretty well at the price points they are at. Additionally their profit on devices may even outweigh the boost in content sales if lower price point does not generate sufficient volume. There are many considerations and lower does not always mean better for the company.
Why should Amazon want to annihilate all the competitors and in doing so loose money?This is not how companies make business , interesting article! :D
In a recent interview, after another posted loss by Amazon, Bezos was quoted as saying he intends to continue to spend. I kind of take this to mean that Amazon would likely do whatever it takes to secure, in the long run, any advantage. A little red ink now is a small price to pay when your ultimate goal is to become the single online (and with overnight delivery who needs brick and mortar?) retailer on the planet. No doubt Google is aware of the threat to Android posed by Amazon, and I imagine they will not sit by and let their creation be used to their disadvantage. A $100 Kindle Fire? Count on it, but there are a few companies that aren't going to let Amazon, or Google for that matter, determine the future of mobile devices. Apple certainly is one of them, but Samsung may well be the 600 lb Gorilla in the retail arena.

Sent from my Galaxy Note 10.1