It seems that Amazon is really having some trouble with its consumer devices. While relatively more stable than, say, the Fire Phone, Amazon’s Android-based Fire tablets (formerly called “Kindle Fire“) aren’t exactly the gold mines that its Kindle e-readers are. So what is Amazon’s solution? To offer such a tablet at a terribly low price of $50. This would definitely be a cause for concern from some vendors selling devices in that same price range. Ironically, it could also undercut Amazon’s own Kindle line, whose cheapest model goes for $79.
How is it possible that a simpler e-ink device would sell higher than a regular colored tablet? Apparently, according to sources, the technology ended up being more expensive, which didn’t let Amazon easily push prices down. On the other hand, by outsourcing production to overseas companies and partly in its own Lab126, the retailer is able to achieve that sweet $50 price tag for this rumored tablet.
Amazon, particularly CEO Jeff Bezos, isn’t that worried about selling hardware at a loss. In fact, that could very well be its strategy. Making and selling devices isn’t really where the bulk of Amazon’s come from. It’s from content and retail. To put it another way, these devices, whether they be Kindle or Fire or Echo, are just windows into Amazon’s real business, and Amazon wants to make those windows as cheap as possible to lure in more customers.
Of course, it probably wouldn’t be able to stand up to other tablets, even against its own existing Fire line. Lower price, lower specs, unless Amazon is able to pull off a miracle. Its cheapest Kindle tablet is the Kindle HD 6 which costs $99 with ads, $114 without. This one already has pretty bare specs, like a 1280×800 HD screen, 1.5 GHz quad-core processor, and 8 or 16 GB of storage. Whether the $50 Fire tablet will be able to match that remains to be seen. It is definitely a delicate balancing act considering it will be those specs that will make or break that Amazon content experience that the company is banking on.
Amazon is also tipped to be working on 8 and 10 inch tablets, also selling cheaper than existing product lines. The 10-inch tablet would be Amazon’s largest tablet, if it comes to pass.
In the context of Amazon’s recent actions, this new information would almost reek of desperation of a company struggling to regain its footing in a device market. The Fire Phone flop really hurt it bad and Amazon was recently reported to have laid off most of the engineers involved in the product. With this $50 Fire tablet, the question becomes whether people will be willing to put up with lower specs in exchange for a cheap branded device and whether those lower specs will actually hamper access to Amazon’s prized content.
SOURCE: Wall Street Journal