A $99 Kindle Fire would annihilate the Android tablet competition

A $99 Kindle Fire would annihilate the Android tablet competition

Summary: Could Amazon break the deep-rooted psychological $100 price point with the Kindle Fire HD? And if it can, what effect would this have on the Android tablet market?

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Rumors are abound that Amazon is working on bringing to market a 7-inch Kindle Fire HD tablet with a price tag of only $99. This would be the beginning of the end for the competition.

(Image: Amazon)

Currently, the 7-inch Kindle Fire HD costs $199, so the price drop would be a very significant one, taking it below the price point of $159 that Amazon currently asks for the older Kindle Fire tablet. Earlier this month, Amazon slashed the price of its 8.9-inch Kindle Fire, taking the wi-fi version down from $299 to $269, and the LTE version from $499 to $399.

Amazon is in a unique position to be able to bring cheap, yet high-quality tablets to market because it is not reliant on the hardware itself to turn a profit. The Kindle family of devices are a way of making existing Amazon customers buy more stuff.

According to an IHS iSuppli virtual teardown, the current 16GB 7-inch Kindle Fire HD is estimated to cost Amazon $174 to make, and this was based on November 2012 component costs. Most components have fallen in price during this time, so this will undoubtedly help bring the cost down.

Another factor that may help Amazon bring down the cost — in the short term, at any rate — is the fact that Texas Instruments, the company that manufactures the processor for the Kindle Fire, is looking to get out of the fabrication business. Speculation is that Amazon may have make a deal with TI to buy remaining stock of processors at a cut price.

Another possibility is that Amazon has approached another chipmaker — such as TSMC — to build processors for the Kindle Fire HD.

Another place that Amazon could shave a few dollars off the price of the Kindle Fire HD is with the display and touchscreen, which, based on the IHS numbers, represented the bulk of the component costs, totaling $64.

How disruptive would a $99 Android tablet be? Enormously so, and the biggest thing a mainstream name could do, short of going completely free — which might sound crazy, but could be doable under the right conditions.

Amazon has shown itself to be a company that's not afraid to experiment when it comes to hardware, and it has taken the Kindle brand and shaped it into a set of products that have had a profound impact on the e-reader and tablet markets, essentially shaping it from top to bottom. A $99 tablet would be the next step in that disruptive pattern.

The sub-$100 price point is a deep-rooted psychological one, and if Amazon can break it with the Kindle Fire HD, then not only is the retailer putting pressure on the likes of Apple and Samsung, but also on the myriad of low-quality cheap-and-nasty tablets flooding the market from China. $99 Android-powered tablets already exist, so the question is not whether Amazon can make a sub-$100 tablet — it can — but whether it can make a good one. Given the quality of current hardware, I would say that if Amazon does indeed come out with a $99 tablet, it will be a good product.

Or put it another way, it would have the biggest effect on the tablet market since Apple released the iPad.

UPDATE:

An Amazon spokesperson said in a statement that "it's not happening--we are already at the lowest price points possible for that hardware." What I find interesting about this statement is the reference to "that hardware," which I take to mean the current incarnation of the 7-inch Kindle Fire HD.

Topics: Amazon, Android, Hardware, Tablets

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78 comments
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  • Why couldn't Google do the same?

    Amazon uses the Fire as a razor and their products and services, including ads, as blades.

    Google can go toe-to-toe with Amazon in this game because of its considerable advertising revenue.

    In reality, this will make it even more difficult for Microsoft to get any traction in the 7 to 8-inch form factor tablet market.
    Rabid Howler Monkey
    • With a Prime membership Fire should be free

      If that's not enough for Amazon they could require a 2 year Prime contract for a free Fire. Amazon should think about this. Prime can repay the hardware costs.
      T1Oracle
      • Primed for profit

        There is little doubt the Prime Membership will be a requirement. B&N partnered with the NYT in a promo last year. Free Nook with a 1 year subscription to the paper. Final cost - $249.00 for a $99.00 reader.
        dlangdon01
      • antonygeee@gmail.com

        This is an even better idea. My wife is antsy about getting a notebook but cannot make peace with the price. As a family, we have all the desktops I can build! I don't need another computer as I am not Leo Laporte. Having said that, we cut the cord two years ago and now just stream away every night using the computer I built for the job and two different blu-ray players plugged iinto an HDMI-ready Yamaha receiver. Netflix would quake in its' boots if our world were flooded with 7" Kindles and folks clutching Amazon subscriptions. Bring it on!
        Anthony Genco
    • Google could if...

      they make a huge investment in learning how to retail. Right now they suck at it.

      Example: Buy a Google Nexus7 from the Play store. Do you want an extended protection warranty? Do you want peripherals ( such as a keyboard/case)?

      You can't buy the warranty (though you can get it if you buy the N7 at WalMart), and if you want the case, you will probably go to Amazon to buy it (as I did).

      That's inexcusable...Amazon is a one stop shopping experience - Google has to build their retail infrastructure from the ground up. They've begun, but poorly.
      louishelps
      • Why buy your Nexus from the PlayStore???

        OK, so I get the point about Google not offering the extended warranty and needed accessories... inexcuseable, and needs to change!

        But having purchased 2 Nexi 7's (that is the plural of Nexus, isn't it?)... I kind of wish I had bought them directly from Google. Turns out, when you need help, you just enter your name and phone number and Google calls you (almost instantly), and a tech comes online shortly thereafter.

        Unfortunately, if you bought your tablet from a retail partner, they won't support the hardware. So I had to labor (stumble) through the Asus web site (it really sucks) and send the device to them to have it serviced. No updates along the way and no real info about what was done, just a repaired device shipped back to me. If I had purchased the hardware from Google, I believe it would have gone much better and easier.

        Now they are a little quick on the "restore to factory default" "last option" "solution". But I pretty much always assume there is a better answer than that!
        mlwinnig@...
    • At $199, $99. or Free, it's not going to matter.

      Amazon is really just giving people a vehicle to order their online products. If I have $199 or $99 free cash to throw around, how is that really different than it being free?
      Joe.Smetona
  • sub $100

    At sub $100 prices a tablet could be a toy worth playing with, at current prices, I see no real utility for me.

    I played with some of the el cheapo under $100 tablets at Fry's and while they were under powered, missing features like Bluetooth, and had pretty lame displays, I actually found the resistive touch screen was actually better for my fingers than the capacitive ones on phones.

    I'm sure I'm in the minority, but I just don't know why most touch screens and pads don't work worth a crap with my fingers.
    wally_333
    • wash your hands.

      Cheetos dust doesn't work well with touch screens. :)
      anonymous
      • LOL

        I like it, and your totally right, they don't work well with anything on your fingers. I hate it when I get smears and crap all over the screen.
        Sean Buckman
      • komplex .. LOL, yes siree!

        ... there's also naked, eating Cheetos and sitting in a bean-bag - while surfing cable.

        (DISCLAIMER: this is NOT based on personal experience, just a thought (brought to mind) based on Ron White's "testimony" on the Blue Collar Comedy Tour @ 2000 through 2006 ;P )
        thx-1138_
    • Strange

      I once talked with a lady in customer support who mentioned that her phones and other devices would always give out after a few months no matter what she did. The "explanation" she gave me was that she has excessive amounts of static electricity in her body that constantly discharges in her devices and eventually kills them. She said that she got this info from a doctor after a tech mentioned it to her. Since the touchscreens work because they pick up a small electrical charge from your fingers, there could be something blocking it, like cheeto dust....LOL I had to go there, but seriously it could just be your fingertips don't create a big enough charge to be detected.
      Sean Buckman
  • You have no clue

    You guys just write this stuff and you have no clue what you're saying!

    Anyone who has used a Kindle Fire knows the limitations and the flaws of the device.

    A $99 Nexus 7 in 16 Gig variety would easily throw Amazon off its game.
    slickjim
    • To each his own

      I bought a Kindle because Amazon provides a decent ecosystem to back it up and specifically stripped out all of the Google spyware. I wouldn't touch a Nexus if it were free.
      itpro_z
      • Right

        Because Amazon has no ad framework of their own...

        Guess what? Apple, MS, Google, and Amazon all have stuff to harvest your information and targeted advertising.
        slickjim
        • So does Microsoft

          Read their Terms of Service for outlook.com
          radleym
          • From Microsoft's Terms of Service for Outlook.com

            I have read Outlook.com's terms of service, and I quote:

            "we will not disclose your personal information outside of Microsoft and its controlled subsidiaries and affiliates without your consent."
            itpro_z
          • Psycho

            Google doesn't disclose your personal information! They do targeted advertising, there is a difference.
            slickjim
          • No .... they just collect the data and sell it to the highest bidder

            And to every developer of the software you download into your Android phone.
            wackoae
          • No they don't Wackoae

            You're hating a company because of your ignorance.

            They do not sell your personal information, they gather logistics and sell targeted advertising.
            slickjim