Amazon is reportedly placing orders for as many as 1 million to 1.2 million tablets in the third quarter. How can Amazon be so sure that it will have a tablet hit? The e-commerce company will use price as a weapon.
A DigiTimes report details how shipments of iPad and non-iPad tablets are expected to top 21 million to 22 million units in the third quarter. The usual suspects---RIM, Motorola, Acer, Lenovo, Samsung and HP---will be ordering tablets in the Asia supply chain. The interesting part is that Amazon is No. 2 in tablet orders behind Apple.
As noted repeatedly, Amazon's entry to the tablet market is a foregone conclusion. The company has already cobbled together many software components needed---streaming video, music, an app market for Android and e-commerce capabilities. The missing link in all of these iPad competitors, however, has been price.
Welcome to the subsidized tablet. Amazon can offer cheap Kindles because it can make up sales on e-book sales. The Kindle with Special Offers has ads and can go even lower on price. An Amazon tablet will use the same playbook. Forrester Research reckons Amazon may be the only company to give Apple a tablet run. Jason Perlow predicted the Amazon tablet move last year.
The big question is how low can Amazon go on a tablet? It's a safe bet that Amazon won't be playing the $499 and pray for demand game.