New Amazon Kindle Fire tablet will be priced at $199
Amazon.com Inc. on Wednesday unveiled the Kindle Fire tablet computer, the latest—and possibly biggest—challenger to Apple's dominant iPad.
Priced at $199, the Fire tablet has a 7-inch screen and can access Amazon's app store, streaming movies and TV shows, the company said. By comparison, the lowest price for a new iPad is $499. The Kindle doesn't offer a cellular connection, working only with Wi-Fi. It also doesn't have a camera or microphone.
Amazon Chief Executive Jeff Bezos said at the company's launch event in New York City.
"We asked ourselves, 'Is there some way we can bring all of these things together [Web, movies, apps, books and games] into a remarkable product offering customers would love?' Yes, the answer is Amazon Kindle Fire."
Mr. Bezos noted that all the content on the Fire will be backed up remotely on Amazon's servers at no cost to the consumer.
Mr. Bezos said.
"This is unbelievable value. I really want to stress this point: These are premium products at nonpremium prices."
The Fire will be available Nov. 15, with pre-orders started Wednesday.
Amazon shares recently rose 3.7% to $232.60.
Questions, though, remain about the device's technical limitations and lackluster selection of apps, especially in comparison to the iPad.
Nonetheless, Janney Capital Markets analyst Shawn Milne expects between 2 million and 3 million tablets will be shipped in the fourth quarter before the analyst expects a beefed-up version, possibly with a 10-inch screen and dual processor, to become available early next year.
Amazon, though, appears to be following the same formula that has helped to make its Kindle the de facto standard for dedicated e-readers and the bestselling product in Amazon's history. Specifically, with the new tablet, Amazon is offering an attractively priced device with basic, easy-to-use features, and accompanied by an intense promotion campaign on the company's heavily visited website.
Ken Sena, an analyst who covers Amazon for Evercore Partners said.
"Amazon has an advantage that other tablet manufacturers don't in that millions of people already visit its site on a regular basis."
He added that those consumers will be regularly exposed to advertisements for the device.
Mr. Sena said.
"It certainly creates a competitor to the iPad."
Apple's iPad, credited with kicking off the consumer tablet computer market, has won plaudits for its ease of use, elegant design and selection of over 90,000 apps that transform it into everything from a video player to a DJ turntable. The iPad remains the most popular tablet by far, having sold 29 million versions since its introduction and owning more than two-thirds of the market.
So far, iPad rivals have struggled to compete with the device's price, functionality and popularity. As a result, competitors like Research In Motion Ltd.'s PlayBook, Hewlett-Packard Co.'s TouchPad, Samsung Electronics Co. Ltd.'s Galaxy Tab and Motorola Mobility Holdings Inc.'s Xoom have failed to attract mass audiences.
Apple shares rose $1.98 to $401.24.
In addition to the Fire, Amazon also introduced on Wednesday a touch-screen e-reader called Kindle Touch. The device, a black-and-white product that doesn't have a keyboard found on previous Kindles, will cost $99 for the Wi-Fi only version and $149 with 3G cellular connectivity. Both will start shipping Nov. 21.
Mr. Bezos saidl.
"We're going to sell millions."
He also unveiled a non-touch-screen Kindle for $79 that's shipping starting today. Previously, the cheapest Kindle was a $114 ad-displaying version. The new Kindles will compete against Barnes & Noble Inc.'s Nook, an e-reader that starts at $139 and has a $249 version with a color screen.
Amazon's Fire tablet, meanwhile, is seen benefiting from the company's relationships with various content providers. The tablet will have access to:
- 100,000+ movies and TV shows.
- 17 million songs.
- 1 million books.
- Hundreds of newspapers and magazines.
Another advantage is Amazon's long-standing relationships with consumers, who give the company sensitive information, including email addresses and credit card information. That will make it easy for Amazon to market additional products for its tablet, as well as charge for them.
In addition, by linking Amazon's Prime membership with the tablet, the company could help its core retail business. Prime members, who receive free shipping on products purchase, spend four times the amount of the typical Amazon customer, Janney's Mr. Milne said.
COMMENTARY: I love the price, I love the features: WIFI-capable, access to all that content that I can save in-the-cloud, 7-inch touch screen, and Android OS. I love Jeff Bezos for finally stepping up to the plate and coming out with a tablet that could become the "iPad-Killer" that I have been praying for like the Jews did for the Messiah during Biblical times.
The Amazon Kindle Fire won't literally "kill" the iPad, but it will go after the low hanging fruit, or segment of the market that consists of:
- Appeals to consumers seeking a smaller screen size, the Kindle Fire fills the space between a 10" tablet and 3.5" iPhone.
- Appeals to late adopters of tablet computers.
- Appeals to less affluent consumers who have been looking for an alternative to a $499 iPad.
- Appeals to frugal consumers who been economically squeezed and traded down due to the Great Recession. The Kindle Fire will definitely appeal to that segment of the market.
For a second there, I thought I saw Jeff Bezos trying to do a Steve Jobs-like new product launch presentation. Get this straight. Nobody can do presentations like Steve Jobs, especially when it comes to new product launches. Steve Jobs did a masterful job of convincing millions of Apple evangelists to buy an over-priced, crummy imitation of a computer, that doesn't come with a keyboard, and doesn't even support Adobe Flash for cying out loud.
Admittedly, I have not demo'd the new Kindle Fire, but since it runs a customized version of Android, it can't be that bad. There now approximately 10,000 Android tablet apps, but how many apps does one need. The average tablet owner uses only about 40. End of discussion.
For a long time consumers were hesistant to buy a competing tablet brand priced similarly to the iPad and offering about the same features because it lacked the huge library of apps of the iPad. The $199 price overcomes that problem, because many consumers will overlook the Kindle Fire's lack of apps, but broad choice of video and TV programs, millions of books, WIFI access to the internet and ability to save your content in-the-cloud.
In conclusion, I agree with the prediction that Amazon will sell at least 3 million Kindle Fire tablets. Jeff Bezos is adopting an increasing returns business similar to what Gillette has done by giving away the razor, but charging premium prices for the blades. He's betting that Kindle Fire customers will buy apps, music and videos and books, and as I have demonstrated before, that's where the money and profits are.
Courtesy of an article dated September 28, 2011 appearing in The Wall Street Journal Technology
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