With Labor Day ushering in the unofficial end to summer, tech companies are planning for big fall releases and the coming holiday shopping season. For Amazon, that appears to include the launch of a low-end, $50 tablet to compete with other much pricier devices on the market.
Citing "people familiar with the matter," the Wall Street Journal yesterday reported that the giant online retailer plans to come out with the inexpensive tablet ahead of the holidays. The device would not only be one of the cheapest tablets currently available -- and "effectively disposable" -- but it would cost half as much as Amazon's own Fire HD tablet (shown), according to the report.
Amazon's move toward the lower end of the consumer tech market signals a possible shift in the company's approach toward its in-house device development efforts. It comes on the heels of the apparent end of its Fire Phone experiment and recent reports of downsizing in Amazon's Lab126 product innovation facility.
Fire Phone Fizzle
The bargain tablet, with a six-inch screen and a mono -- rather than stereo -- speaker is one of several planned for launch by the company this year, the Journal reported. Other models are expected to include 8-inch and 10-inch tablets.
Amazon's new direction stands opposite that of Apple, which is planning its own product announcement in San Francisco tomorrow. At the event, Apple is expected to unveil the new iPhone 6S and also reveal the release date for the latest update to its mobile operating system, iOS 9.
While Apple has long succeeded with its focus on high-end -- and high-priced -- design, Amazon couldn't do the same when it launched the Fire Phone with a $449 price-tag last year. The device drew criticism for its proprietary, Amazon-centric apps, and was marked down a few months later. Amazon's third-quarter 2014 earnings included a $437 million net revenue loss with a $170 million write-down related to Fire expenses.
Rising Pressure on Tablets
Another potential challenge for Amazon is the overall decline in the tablet market. The worldwide tablet market declined 7 percent in the second quarter of this year, compared to the previous year, according to recent figures from the analyst firm IDC.
Several factors are believed to be contributing to the decline in tablet sales, including the expanding screen size of smartphones, longer device life cycles, and growing competition from tablet companies other than Apple and Samsung.
Despite these challenges, Amazon enjoys healthy sales and revenues overall and continues to be a dominant player in the cloud services market through its Amazon Web Services brand. The company in July reported Q2 sales of $23.18 billion, a 20 percent increase over the same period in 2014.