Amazon's new Kindle Fire is hoping to raise the temperature in the tablet category in large part by lowering the price. Announced at a press event in New York on Wednesday, the new 7-inch tablet will sell for $199, compared with $499 as the starting price of Apple's 9.7-inch iPad.
To date, no competing tablet has yet attracted enough attention and sales that it can definitively claim to be the iPad's major competitor. But Amazon's enormously powerful ecosystem, which combines its giant online retailing operation with access to large libraries of e-books, movies, and music, along with the substantially lower price, could make a difference.
No Camera or Microphone
In fact, Amazon's ability to make its money on content sales rather than hardware is what distinguishes it from tablet attempts by Research In Motion, HP, Samsung and others.
This initial Fire model has Wi-Fi but no 3G, no camera, no microphone and only 8 GB of memory. It comes with a 30-day free trial of Amazon Prime, the membership service that includes streaming video and free two-day shipping. The company has developed a customized interface for Android, which some observers have described as relatively easy to use.
There are reports that, within a few months, Amazon will also release a larger tablet, possibly with a 9-inch display. A common reaction among analysts is that a 7-inch display is an awkward form factor, being larger than a smartphone and harder to fit in a pocket, but not large enough for useful interaction. Some have suggested that, at $199, this Fire might be used as a second tablet for some tablet-lovers, or even as a fancier e-book reader.
In fact, it appears that Amazon's strategy is not exactly a head-to-head confrontation with the iPad, but more of a sideways move that builds on its content strengths. In an interview with Bloomberg News Service, Amazon founder and head Jeff Bezos said that his company doesn't "think of the Kindle Fire as a tablet. We think of it as a service."
A shopping application, optimized for the tablet, is included with the device, and there are apps from the Pandora music service, Twitter, Facebook and Netflix. Owners can store an unlimited amount of documents on Amazon's cloud servers, for free.
Avi Greengart, an analyst with Current Analysis, said the Fire was more than a grown-up Kindle, whose prices now start at $79.99 for an e-reader. The new tablet, he said, is "a consumption-oriented tablet for all of Amazon's content," adding that the company's cloud-based web services will be used to speed up web browsing.
The business model, he said, "is not to make money on the device, but to sell you" content from Amazon.
Greengart noted that the 7-inch form factor is "quite nice if what you're looking to do is read books or watch movies," although he pointed out that web browsing requires more scrolling than with a larger tablet, and the device may not be the best for some kinds of apps.
Given their different approaches, he predicted, "the iPad will not be dramatically affected by the Kindle Fire."