Will tablets soon be free? Let's start with the Kindle Fire

By this time next year, even Wi-Fi enabled non-Amazon tablets will be severely subsidized so that users are sucked in and hooked to cloud-based services
Written by Joel Evans, Contributor

Amazon finally unveiled its tablet offering: the Kindle Fire. The Fire is selling for $199 and comes with access to over 18 million movies, TV shows, songs, apps, games, books, magazines, and the web. Also, if you're an Amazon Prime member, you can enjoy over 100,000 movies and TV shows instantly.

The above reads like a great services offering, and the services themselves are nothing new to Amazon. So, why is the Kindle Fire a possible iPad killer, and why could tablets be free?

I'll answer the iPad killer one first. Let me start by saying I don't think it will kill the iPad. Instead, it will give it some healthy competition. Case in point, I have an iPad 2. My children (7 and 3) love to take it any chance they get.

I was recently sent a Pandigital Nova, which is a 7" color Android tablet. The screen isn't the best tech in the world, but once I flashed it to the latest firmware, I was downloading apps off GetJar.com and moments later was playing Angry Birds and a number of others. To my surprise, my children attacked and said, "can I play a game on your iPad?" This demonstrated to me that for most tasks, if you can get "close enough" to the iPad / tablet experience, then a standard Android tablet will do just fine. Incidentally, the Nova is about $180 and connects to Barnes and Noble, instead of Amazon. So, far cry from the $499 of an iPad 2, and the kids don't know the difference.

Because of the Nova's price point and functionality, it was in the running for the best holiday gift, since it was providing most of the iPad functionality at a fraction of the price, and was most likely to be closer to $150 by holiday time.

Now enter the Kindle Fire. It's also running Android, has a 7" screen, but has a far better screen and UI. Its biggest differentiator, though, is the tremendous services available behind it. I won't go into them again, since I covered them at the beginning of this article, but it's clear that if you deliver solid hardware, that will offer seamless integration to a solid software / services offering, you have a winner.

As for tablets being free eventually, I don't see Apple giving the iPad away, but I do see Amazon significantly reducing the price of the Fire, if not giving it away for free completely. Look at it this way, to get the full features of the Fire you really should be a Prime member. To be a Prime member costs $79 a year. So, if you take that $79 and subtract it from the $199 price of the Fire, you're already at $120. So, Amazon is already losing money so it's now a question of how much the company is willing to lose, to gain a true customer, who will continue to consume.

I had heard a long time ago that Amazon was playing around with the idea of giving its Prime members a free Kindle. At the time Kindle was just catching on so to me the logic made a lot of sense. After all, here Amazon has a customer willing to pay money for free 2-day shipping. So, why not give them a device that encourages even more buying behavior since the customer obviously already enjoys the ease-of-use of the Amazon buying experience. In the end, Amazon didn't give the Kindle away for free, but most of the Prime members that I knew bought a Kindle anyway, since they already trusted Amazon.

With the above in mind it's easy to see that the $199 for the Fire is the starting point. Soon Amazon will probably offer a discount to Prime members, and then it wouldn't surprise me if by this time next year, even Wi-Fi enabled non-Amazon tablets are severely subsidized so that users are sucked in and hooked to a cloud-based service. As for the iPad, expect the premium pricing to remain, but Apple will also soon be pushing its cloud services front and center, especially with the iPhone 5 being announced next week.

So, should you buy an iPad 2 or a Kindle Fire? I'd say that if you are going for entertainment then the Fire is just as good, if not better than the iPad 2. I prefer the 7" form factor, and being tied to Amazon's services and being able to stream is going to be a key differentiator. With the iPad only coming in 10", it makes the Fire more preferable for me as a consumer. I also think that Amazon has the streaming down, whereas streaming to my iPad is not quite where it needs to be. As a business user, though, the iPad wins hands down. This is mainly because iOS is more accepted by the enterprise and Android is still being considered more of a consumer play.

Of course, I haven't had any hands-on time with the Fire yet. Given that, the above is all assumptions, but from my experience with a number of Android tablets out there, and from what I've seen on videos and pictures of the Fire, there's nothing so far that would lead me to think that the Fire won't deliver on its promise.

By the way, I pre-ordered two Kindle Fire devices seconds after the announcement--did you?

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