Next for Amazon -- big Kindle Fire or refresh existing model?

Next for Amazon -- big Kindle Fire or refresh existing model?

Summary: Rumors are flying that Amazon is preparing a 10-inch tablet for market. Maybe a solid refresh of the Kindle Fire would make more business sense.

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Sales numbers are elusive but indications are the big tablet competition for the iPad is Amazon's Kindle Fire. Sales of several million have been thrown about, and if accurate makes the Kindle Fire the top tablet without iOS.

I hesitate referring to the Kindle Fire as an Android tablet because it is marketed and supported totally outside the Android ecosystem. Most buyers see it as a purely Amazon creation and know nothing about Android. However the Kindle Fire is perceived, it is time to start wondering what is next for Amazon with the product line?

See also: Kindle Fire: Blurring the tablet and ereader markets

Rumors have been floating around that a 10-inch Kindle Fire is on the way to compete with larger tablets from Apple and Android tablet makers. If Amazon chooses to produce a second model in its tablet line it won't be without a fair amount of risk.

Amazon is selling the small Kindle Fire at a loss in order to sell more content from its store. A larger tablet would be more expensive to produce, and Amazon may have to take more of a loss on each unit to sell it.

I believe the Kindle Fire has been so successful due to the $199 price point. This puts it just under the impulse price point where folks who find the tablet interesting are willing to give it a try. Amazon is savvy about retail and no doubt why the Kindle Fire is priced the way it is.

See also: Forget the iPad: Android tablet makers better fear the Kindle Fire

I don't see how a larger tablet could be sold as cheaply without damaging the existing tablet's market. Priced higher than $200 and a larger tablet would not fall in that impulse buy category. That may find prospective buyers unwilling to give the new device a try without a lot more thought. Amazon may have to give some additional incentives to get them over that hump.

If those incentives push buyers to the larger tablet, that could harm sales of the Kindle Fire. Amazon certainly doesn't want to compete with itself, but it may end up doing so with a larger model. Plus, the Kindle Fire is being sold as a Kindle with benefits. Amazon doesn't have to market it as competition for other products. It would be hard to sell a larger tablet that way, it would likely be viewed by prospective buyers as competition with the iPad and other tablets.

Amazon may have something up its sleeve with a larger tablet, aimed at selling video content. That could work if it uses its video on demand service as an incentive to keep the selling price down as low as possible without intruding on the Kindle Fire market. Position the Kindle Fire as the ereader that does other stuff, and the larger tablet as a video device that does also does Kindle books. Maybe offer the larger tablet with an exclusive video deal that can't be found anywhere else, like Game of Thrones.

It might be better business to stick with the Kindle Fire, but add capability with a product refresh while keeping the existing price. It could add a camera and better components, and stay with a single product in the tablet line. Amazon is entering an important phase this year with the Kindle Fire, and it doesn't want to upset the good thing it has going.

What do you think? Should Amazon introduce a second, larger tablet or improve the Kindle Fire in the next go-round? Share your thoughts in the comments.

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Topics: Amazon, Hardware, Laptops, Mobility, Tablets

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19 comments
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  • Definitely a refresh

    I'm with you on this one James, a refresh to the existing Fire makes better business sense.
    argenis_a_z@...
    • How about both?

      I don't see any real problem having the existing range - with upgraded capacity and specs, as well as a 10" screen version of the Fire.

      I'm going to recommend that Amazon add these features:

      * HDMI slot
      * Camera (10-15 Mp)
      * Support for external, mass storage devices.
      * Sync ability to PC for transfer of files.

      I don't see why any of these are an issue (esp. for the last two, as USB is already included) - now if that means $25-50 added to the cost of the device, than so be it. I think that just adds the attraction to potential tablet buyers, and makes it that much more competitive versus the competition.
      thx-1138_
      • Price over features

        Amazon is cornering the low end market. Increasing the price hurts that. Not to mention they're already not making money off base sales.

        And you really don't need a camera on tablets. Seriously. It's just dumb.

        I'll agree to the other three things though. The last two especially, as they're only a software issue.
        Aerowind
      • Amazon's business model is to push the cloud

        The Kindle Fire already has the ability to transfer files via USB. Are you suggesting Amazon should build a sync tool or something? Seems like that would be a bit of a backtrack in a time when even Apple is shifting toward cloud sync.

        I also am a bit doubtful that Amazon is going to be too anxious to add external storage since a big part of the goal of the device is to drive users towards Amazon's cloud services.

        I do think we will probably see a refresh of the 7" Kindle Fire this year, regardless of whether they also introduce a larger model. I expect the new model will still be $199 and I wouldn't be too surprised if they knocked the current model down to $150. I suspect that these are the most likely changes:

        1. Bump the internal memory from 8GB to 16GB
        2. Add external volume control buttons.
        3. Form factor improvements (thinner and/or lighter)
        4. Somewhat faster processor and/or improved video.
        5. Possible addition of Bluetooth, GPS, and/or camera.

        If they do come out with a larger model, I suspect the feature set will be nearly identical except for the size of the screen. I also would be very surprised to see Amazon price it any higher than $299.
        JeffGr
  • How about both?

    How about both a refresh to the existing model and a larger 10" model? I think that would be keeping with the strategy Amazon set for itself? Get a cheap "point-of-entry" eReader/tablet out the door, get consumers into your Amazon ecosystem, then follow with a larger slightly more expensive true tablet model later. We keep forgetting that there's a huge difference in experience between the two sizes. Those just looking for a cheap consumption eReader/tablet will continue to purchase the 7" model. Those looking for more a true tablet experience will buy the larger 10".

    $199 - 7"
    $299 - 10"
    dave95.
    • Darn it all

      Obviously thinking the exact same thing .. or near as d@mn it. ;)

      EDIT: We'd differ on this though:

      The 7" has all the added features i listed and retails at $US225 -250 while the (suggested) 10" Kindle Fire has the same specs but retailing for between $US299 - 320.
      thx-1138_
      • That's funny...

        :-)
        dave95.
    • Absotively what I'm thinking as well.

      <nt>
      admiraljkb
  • The proper choice is both and more

    The Fire is an established winner at its subsidized price point. No need to mess with that. There are thre obvious things for Amazon to do:
    1. As the cost drops, introduce a new model with more features at the same price point, within the limited range of things Amazon wants a Kindle to do.
    2. Keep the current model at a lower price point until it can be sold break even for $100, an even larger impulse buy threshold.
    3. Test the market for a larger more powerful model now that the market for an 'Amazon conduit' product is established. This just needs a larger screen with a minor resolution bump, and a minor bump in processing power to drive the additional pixels and enable better versions of what the current Fire already does.

    Amazon is not going to compete head to head on tablet features. They aren't in that business. The whole point of this is as a distribution channel for Amazon digital products and services. So don't expect substantial increases in storage or lots of increased capabilities in areas that don't offer Amazon a chance to sell something. Other companies make those products and Amazon will happily sell you one.
    epobirs
  • New screen tech

    Amazon, more than most tablet makers except B&N, has a big interest in the reading comfort of a device carrying the Kindle name. A new more expensive model may be among the first Mirasol products to be heavily promoted in the US. Largely the same machine as the Fire but with a reflective screen readable in sunlight and with far lower eye strain for prolonged usage.

    The question remains how well the Mirasol tech can driven to produce a screen without severe compromises or too high a cost.
    epobirs
  • Amazon's tablets are shopping carts, not profit centers

    A 10-inch form-factor tablet would be ideal for eTextbooks. I can't imagine Amazon watching Apple from the sidelines.

    P.S. I believe that HP should have also lead with a 7-inch form-factor WebOS-based tablet.
    Rabid Howler Monkey
  • kindle fire

    just make improvments ti the fire..you will sell a lot more to the public with less money to spend and get them interested in the new technologys. there are a lot of people who cannot afford over 500.00 for a tablet... you lose a whole market, by going more expensive....
    jaki1928
  • Are they losing money?

    I keep seeing this comment, that Amazon is selling the Fire below cost, yet have seen nothing to back it up. One estimate of the cost of the unit put it at about $197 each, which would be selling it at cost, not below. I do remember reading a comment from Amazon stating that they were not selling below cost. Considering that the Fire is mostly left over Playbook components, I expect that they got a bargain at the volume they have purchased.

    What I expect to see is a new model at some point with more or better features, but sold at the same $199 price while the current model drops to a lower price. That is the same sales model that we have seen from Amazon in the past. If they can sell the current Fire at $149 without a loss, a newer model at $199, and perhaps a 10" model for $299, Amazon has a chance to lock up the "not iPad" market completely.
    itpro_z
  • If it's weight proportional with the existing Fire it won't sell just because

    no one will be able to lift one. The Fires an underpowered brick. Much more value in refreshing the current one to give it a decent screen that can be used outside, decent perf so you don't have to go run errands while it boots or loads the appstore, decent battery life so it lasts past lunch, and decent weight so it can be comfortably held for long enough to read more than a short chapter.
    Johnny Vegas
    • I take it you haven't used one?

      None of those are major issues with the Fire, other than the fact that it doesn't work well outside, just like every other LCD based tablet out there including the iPad.
      JeffGr
  • Plan A

    Reports 6 months ago stated Amazon had 2 so called tablets planned with Hollywood the code name for the larger more capable model. Given the success of the Fire, Amazon has a business case for a larger model but only as a larger platform to sell digital content.

    I know many want to make everything about the I-pad but Amazon very clearly is interested in selling content first with other functions second. If I were Amazon I would have a product for sale by graduation season, a nice gift priced so that it does not kill your wallet.
    oldgeek143
  • Refresh and Improve

    give it a sd slot, make it faster and improve video and reduce weight... doesn't need cameras, would be great to access external devices but even that not an absolute. LOVE my kindle fire so I am rooting for the underdog, it isn't an ipad and shouldn't even try that route. do what they do best and make a great product that works at a price most can afford. improve their android apps capabilities that would be a HUGE help.
    sleasum
  • It neeeds to become...

    ...a 7" Toshiba Thrive at $200-$250. In other words, add all the usual ports you find on any laptop, an SD card port (full size), and Android 3.1 or better. That's it...it would be perfect. OK, maybe pay-as-you-go 3G or 4G as a $50 option.
    nopcbs
  • Use web OS

    Use web OS and add a camera (front & rear). Even if its sold at 300, it will sell like hot cake
    krishnansriram