SEPT. 7, 2012 • While the spotlight has been on Samsung’s Android tablets and smartphones this summer thanks to ongoing patent litigation with Apple, Amazon.com finalized a direct assault on Apple’s iPad business with a whole new series of high definition Kindle Fire tablets. The original Kindle Fire has sold well since its introduction last year. How well Amazon is averse to saying, but well enough to drop the upgraded entry-level Kindle Fire (7-inch screen, WiFi, 16GB storage) to $159 from last year’s $199. New are three HD models that boost screen resolution to 1280×800 from 1024×600. The HD line starts out at $199 and features a 7-inch screen, WiFi, and 16GB storage. At $299 consumers get an 8.9-inch screen WiFi-only device with 16GB of storage. The high-end Kindle Fire HD is priced at $499 and comes with an 8.9-inch screen, 4G LTE, WiFi, and 32MB storage. This model also includes two Wi-Fi channels matched with two internal antennas for swifter data transfers – crucial for trouble-free viewing of high-definition movies, Amazon claims. What’s more, the online retailer announced a $49.99 annual data plan for the 4G model that guarantees 250MB for downloads, plus 20GB of cloud storage, per month.
Impact: The Amazon Kindle Fire is a reasonably priced alternative to the iPad. The new models are a very aggressive challenge to the iPad. However there is a question about the appeal of the $499 model. The iPad 3 is priced at $599 for the 32 GB model and $499 for the 16 GB model. So arguably the Kindle Fire is $100 cheaper than an iPad. However, consumers have shown that when you are talking a price range of $500 to $600 they will tend to go for features versus value. In other words if you spend that much you want the best. There is also the simple compromise of just getting a iPad with lower storage capacity. A major difference between the iPad and the Kindle Fire is the big focus on games for the iPad and a relative lack of products for the Kindle Fire. That alone could be a deciding factor for many users. We see the Kindle Fire as a strong alternative to the iPad mainly for 1) non-gamers and 2) for children that want an iPad-like device without an iPad price tag. For those consumers the new $199 and $299 models seem like a great deal.
