According to Piper Jaffray analyst, Gene Munster, Amazon will likely lose $50 for each Kindle Fire tablet that it sells. Amazon had just announced its much anticipated 7-inch tablet this morning, pricing it at a surprisingly low $199. Munster believes that while the Kindle Fire isn’t a true competitor to Apple’s iPad it is “more competitive than expected.”
Munster points out that the Kindle Fire with its 7-inch screen is a big difference from the iPad’s 10-inch screen, at only 45 percent as large as the iPad. The Kindle Fire also has less storage, no cameras, and no 3G mobile data option. However, he believes that the tablet has turned out to be a lot more competitive than anticipated by offering a very complete ecosystem of services, apps, and content, which all other Android competitors have lacked thus far.
Amazon likely intends to make up for the $50 loss per Kindle Fire through content delivery. The company has been quietly ramping up a wide range of content assets over the last several months, including music, movies, and TV shows. It’s also been building up its cloud services for better delivery of that content and even unleashed a new Silk web browser for its tablet that takes advantage of its cloud infrastructure and a predictive technology for a fast and optimized web browsing experience.