Why Amazon Kindle Fire HD will burn Google's Android tablet strategy

Andy Rubin has departed the Android team, and the first Latin American has been elected Pope. Good things come in threes. What's the next bombshell thing of biblical proportions to happen this week?

Boom.

I suppose it is fitting that with the Passover coming upon us at the end of the month, we are yet again reminded of the miracles of antiquity.

And in true Old Testament fashion, like something out of a Cecil B. DeMille Hollywood classic, Amazon exercises its deific might as a content consumption powerhouse by lowering the price of its 16GB 8.9" Kindle Fire HD tablet to $269.00.

If I may paraphrase Chuckie Heston as Moses, when the Lord smites the Pharoah's army with a giant tower of fire that stops them from giving chase to the Hebrews in their exodus of Egypt, 

"Who shall withstand the power of Kirkland?"

I suspect that quite a few Nexus 7's and Nexus 10's are going to drown in the Red Sea because of this. 

At $269.00, the Kindle Fire HD 8.9" is a whole lot of HD tablet for not a whole lot of money.

At $299.00, the Kindle Fire HD had some difficulty distinguishing itself from most of the competiton, but as Amazon continues to apply pressure on the high-volume Android OEMs like Samsung, ASUS and even Google itself, the value of Amazon's ecosystem along their their low-priced but very well-designed tablet becomes readily apparent.

Indeed, the Nexus 7 costs less than the Kindle Fire HD 8.9", at $199 for the basic 16GB model. However, the Nexus 7 lacks a full 1080p display, a front-facing HD camera, a dual-band high-speed Wi-Fi transciever, and high-quality stereo audio.

And as I have recently discovered, it also has a crappy, fragile glass panel, rather than the strong Corning Gorilla Glass used in Amazon's device.

One could say I am making an unfair comparison because Amazon also has the regular 7" Kindle Fire HD, which is closer in configuration to the Nexus 7 and costs the same, at $199. Like its bigger brother, it has a high fidelity audio system, dual-antenna high-speed wireless, and the Gorilla Glass.

But AMEX has recently been their offering this tablet to their Awards members for $149.00 and I suspect that with this price drop on the 8.9" model, we are likely to see a drop on the regular Kindle Fire HD price as well, along with a blowout of inventory.

The closest product Google has to offer to the Kindle Fire HD 8.9" is the Nexus 10, which is their premium 10" tablet, made by Samsung, and is positioned as more of an iPad 4 competitor at $399.

Samsung has the Galaxy Tab 7.7", which has higher build quality than the Nexus 7, and only costs about $20 more, but is technologically inferior to the Kindle Fire HD 8.9". 

In this space, Amazon is essentially running unchallenged. They have the right size device, with the right set of features, for the right price.

Amazon also has a rich a content consumption ecosystem, a customer loyalty program that gives any Prime member access to free premium content, and superior customer service that cannot be matched by Google or any of its OEM partners. And they are willing to lose money on that device to onboard the customer and keep them hooked onto their content.

You could argue that the iPad mini is a direct competitor to the Kindle Fire, but the difference in price between the two devices is significant.

Additionally, the nature of the customers that Amazon is addressing is very different and is also fiercely loyal to Amazon's brand. They are a value-oriented and content consumption-focused customer versus a premium, high-end customer that is willing to pay Apple's prices and who may already have familiarity and affinity with that company's product and application ecosystem.

As a result, what we have here is Amazon and Apple giving Google and its Android partners the squeeze.

Egyptians, meet the Pillar of Fire and the Red Sea. 

So what does that mean for Google and the OEMs like Samsung and Asus? It means the prices of all of their tablets need to come down and the build quality of their mid-size devices needs to improve and achieve feature parity with what Amazon is doing for less money.

Google also needs to figure out how to create customer loyalty, particularly as it relates to content on Google Books, Google Video and Google Music on the Play store, as well as with e-tailing in general, which the company has never been very good at.

For a company that has no experience in customer relationship building after the purchases of their products are completed, this will be a hard territory for Google to invade, particularly against such a savvy and entrenched competitor like Amazon, who knows this space better than anyone. 

Google does have some advantages in the sense that Google Play has more apps, and their own version of Android has native versions of Chrome, YouTube, GMail and a number of other programs that makes their experience unique, so this will help them retain their existing customer base, especially for folks that are tied to their cloud services.

But the Kindle Fire's apps for email and web browsing are more than "Good Enough" and they will continue to get better. Google's secret sauce is not going to be sufficient to compensate for the rush of new customers to Amazon's tablet platform.

Has Amazon lowering of the price of the Kindle Fire HD 8.9" put Google and its Android tablet OEM army into a crunch between a pillar of fire with Apple on the other side of the Red Sea waiting to drown them? Talk Back and Let Me Know.