Amazon has just announced their expected range of new goodies. The existing Fire tablet was cleared out last week and now we know the replacements. Jeff Bezos told us that customers are smart "Why? Because they're (other tablets) gadgets, and people don't want gadgets anymore. They want services that improve over time. They want services that improve every day, every week, and every month. Kindle Fire is a service."
Now, when you are a company with an ecosystem as big as Amazon, you can afford to say that, we all know that the Fire tablet is a vessel to deliver Amazon video, music and shopping services and that's where they make their money. "We want to make money when people use our devices, not when they buy our devices." Bezos noted during the event.
This is very different from Apple; their pricing policy is not designed to maximize the average sales price of a particular product, but to maximize the enterprise earnings of Apple as a firm.
Interestingly, in the latest financial reports, Amazon forecast a third-quarter operating loss, albeit on massive revenue. They're going to spend to build the infrastructure and capacity to deliver the products and services that they feel the consumer wants, let's just hope for them that consumers buy their Fires in great quantities and drive those new services revenue, which is much more profitable than their traditional online retail business. Otherwise, the plan will backfire horribly.
So, what is the new tablet proposition?
A Kindle Fire HD, 16GB 7 inches. $199. £159.
A Kindle Fire HD, 16GB 8.9-inch model $299.
A Kindle Fire HD with 4G LTE wireless , 32GB 8.9-inch model $499
The LTE version comes with a very attractive new data plan for the US. 250MB a month, 20GBof cloud storage, $10 Amazon credit, all for $49.99 per year.
Limited amount of data at 250MB but great price.
So, this is the next stage in connected devices, hardware prices that most OEMs can only dream of, but revenue streams driven by a content ecosystem that is second to none.
Now we know the products, we know the launch dates, which is November 20th for the 8.9 inch models, and next week for the 7 inch version. What we don't know, is the other 'E'. In our TTS Service, we have spent the last two years talking about the 2 'E's; one is the ecosystem and Amazon passes that test easily, the second 'E' is the experience - how does the consumer feel when they pick up the Fire and start to use it. The first Fire failed the 'Experience' test; in the coming days and weeks, we hope to get our hands on the new Fires and see if they have overcome their shortcomings last time; if they have, then they will be a force to be reckoned with, but only of course in the regions that have rolled out the Amazon Appstore which is now available in the U.K., Germany, France, Italy and Spain as well of course, the USA.
Early reports suggest this generation of Kindle is much improved on the first gen, but one unannounced piece of news may concern some potential buyers - all new versions of the Kindle Fire and Kindle Fire HD will have ads and sponsored screensavers built into them as now is noted on the Amazon website and there is no option to opt out of them. For some, it's not a huge deal but for others it could cause them to look for another device.
At the same event, Amazon also launched three new Kindle reader models - $179 for 3G, $119 for Wi-Fi, and old Kindle gets a slight upgrade and a $69 price. The key standout here is a new Paperwhite display, offering a much enhanced reading experience. They are natural progressions and definite improvements. The key question is 'is Amazon cannibalizing its own reader market with Tablets, consigning e-readers to the niche market?'
There are lots of changes ahead in the tablet market starting with growth in 7 inch displays, stronger penetration on mid and low-tier pricing and rejuvenated OS competition with Windows 8 soon to be on deck. All these point to great choice for the consumer but intense competition for the vendors and service providers.
Finally, we have to wonder if a price war is on the verge of breaking out among major tablet vendors in the US. A price war is going to put pressure on Apple's juicy hardware margins and make it harder for Amazon and others to derive profits from Android tablets. We don't have long to wait to see how Apple react and how they position their new sub-8 inch tablets in the coming weeks. Watch this space.