The Kindle Fire HDX.

SEPT. 26, 2013 • Amazon.com is taking pre-orders on two new Kindle Fire devices. The 7-inch Kindle Fire HDX is equipped with a 1920×1200 screen, while the 8.9-inch model comes with a 2560×1600 display. Both units are faster than previous models as they are powered by 2.2GHz Snapdragon 800 processors and include 2GB of RAM. Both models are equipped with front-facing cameras, and the 8.9-inch unit also has a rear-facing camera. The new Kindle Fires have also lost girth and weight in their latest iterations. Where the 7-inch model used to be 0.41 inches deep and weigh 13.9 ounces, it is now 0.35 inches 10.7 ounces. The 8.9-inch model dropped from 0.35 inches and 19.2 ounces to 0.31 inches and 13.2 ounces. Storage options are 16GB, 32GB, and 64GB. The new feature that Amazon is promoting the most is called Mayday. Owners of either of these Kindle Fires can press a button and immediately be connected with a live customer support representative 24 hours a day and seven days a week. What’s more, the service call is handled via live video similar to a Skype call. Amazon says it is hiring thousands of new employees to handle the calls when the new units ship to consumers. The 7-inch model starts at $229 and is expected to ship in October 18, with the 8.9-inch unit starting at $379 and scheduled for November 2. Amazon is only taking pre-orders on WiFi models as versions with 4G connectivity won’t appear until later in the year for $100 more. Both devices run on the Mojito version of the Amazon’s proprietary Fire OS, which is based on Android.

In related news, Tesco, the U.K.-based retail chain has taken it first step into marketing its own tablet. Called the Hudl, the £119 ($191) Android device is equipped with a 7-inch high-definition screen and is manufactured in Wuxi, China for Tesco. The Hudl comes with 16GB of storage that can be upgraded to 48GB. WiFi and Bluetooth connectivity are supported, but not 3G or 4G mobile wireless. Customers possessing the supermarket’s Clubcard vouchers can purchase the unit for under £100 ($160). Unlike Amazon, the Hudl does not restrict access to Google services like Google Play. The Hudl is pre-loaded with a selection of apps that speed access to Tesco’s online shopping options, as well as digital services including music downloads and video streaming. With the rollout of Tesco’s Blinkbox ebook service during the holidays, up to 600,000 book titles will become available through the Hudl.

Impact: For many mainstream consumers Amazon’s Kindle Fire tablets have become the main alternative to Apple’s iPad. True, offerings from Samsung and Google’s Nexus line are selling very well, but for less-savvy people for whom Google’s suite of services are not a major concern, the Kindle Fire is an in-expensive route to a high quality tablet. Neither does it hurt that Amazon prices its tablets as near cost. The Kindle Fire is very strong in English-speaking markets and Japan where it has really carved out its own niche.  In those markets, the Kindle Fire is the number two tablet system.

However, as DFC Intelligence discussed in the report The Market for Games and Entertainment Applications on Smartphones and Tablets, Android based devices like the Kindle Fire are somewhat problematic for developers.  For one the focus is on delivery via the Amazon App Store and development for the Kindle Fire (like many Android devices) can take some specific tweaking.  Given that the Kindle Fire has a significantly smaller audience than the Apple iPad and is targeted to a more specific audience it is simply not worth it for many developers to put a major focus on the system.

Still, Amazon is a player to watch and they seem to be slowly realizing the potential for more high-end entertainment features that can go beyond a simple e-reader.  Amazon chief executive Jeff Bezos told the Bloomberg News service that the major surprise experienced with the first generation of Kindle Fires was how substantially families and children were using the tablets. That led to new features that helped parents control how much time their kids could access the devices, as well as the new Mayday video call support. After the second Kindle Fire generation Bezos said Amazon discovered that a significant number of corporations and enterprises were purchasing Kindle Fires. That realization resulted in the addition of productivity features including connectivity to Microsoft Exchange services, as well as implementing virtual private networks to access corporate intranets, and the encryption of data. Amazon has become such a huge player in retail market share worldwide that it can nip at Samsung’s heels despite keeping tablet users behind its own walled garden. Yet we suspect there is plenty of cloud-based entertainment media on tap to keep most Kindle Fire users happy – enough to make these low-cost, high-end tablets attractive to a growing number of consumers who are viewing these devices as more than shopping enablers. In addition to Amazon’s apps, major services like Hulu Plus, Dropbox, Netflix, Tublr and Twitter are available. That’s why we look at Amazon as Apple’s biggest threat in the tablet market.

Tesco’s Hudl tablet.

For its part, Tesco says its main goal is to get tablets into the hands of people who normally cannot afford them. The retailer will be very happy to sell these consumers digital content too, naturally, but the Hudl is a wide-open Android device with powerful components that does not restrict access to content beyond what Tesco will be highlighting. The biggest challenge facing the retailer is building confidence in potential tablet owners with questions like: How long will Tesco stay in the tablet business, what level of support can they expect from Tesco, how reliable will the Hudl be, etc.? We doubt Tesco will be able to manage anything like the comfortable environment that Amazon has achieved, especially with the addition of the Mayday customer support feature. The Hudl does come at a low price, but Amazon has Kindle Fire models starting at £99, which will complicate Tesco’s tablet fortunes. We think the Hudl’s main focus is consumers who cannot afford a Samsung Galaxy Tab or a Google Nexus 7. Against those tablets there is definitely a price advantage – enough to entice sales we are sure. Yet this is still a new venture for the retailer, and what those Hudl purchasers say six months from now about Tesco’s tablet will determine whether the device will gain traction or disappear.