$99 Kindle Fire HD Could Decimate Amazon.com, Inc. (AMZN)’s Competitors

Page 1 of 2

TechCrunch reported Wednesday that Amazon.com, Inc. (NASDAQ:AMZN) was planning to sell a 7-inch Kindle Fire HD for $99 sometime this year. With Amazon taking such an aggressive stance on tablet pricing, what does it mean for the online retailer and its competitors?

Amazon.com Inc. (AMZN)Amazon’s tablet strategy has been built around offering hardware at-cost

Since Amazon.com, Inc. (NASDAQ:AMZN) rolled out the original Kindle Fire back in 2011, the company has pursued a strategy of offering its hardware at-cost. Amazon never gave the official figures for how much it spends on building the Kindle Fire, but third-party teardowns have put the cost of parts right around the price Amazon ultimately charges.

Inline with that sort of strategy, Amazon has consistently lowered the price it charges for its hardware over time. Last fall, when the company debuted the Kindle Fire HD, it lowered the price of the original Kindle Fire by $40. And earlier in March, Amazon cut the price of its 8.9-inch Kindle fire by $30-100 depending on the model.

A $99 Kindle Fire would be the most aggressive price cut yet. In fact, Amazon.com, Inc. (NASDAQ:AMZN) still charges $120 for its Kindle Paperwhite — a pure e-reader that lacks the app capabilities of the Kindle Fire.

Amazon has been able to sell its Kindles at-cost because the company follows a razorblade pricing model. Amazon.com, Inc. (NASDAQ:AMZN) believes that customers who purchase its Kindle Fires will be more likely to buy the company’s digital content: its ebooks, movies, and music. The profit from the sale of this media more than make up for selling the devices at-cost.

Such a cheap Kindle Fire could pressure other Android makers

Despite introducing a $330 iPad Mini, Apple Inc. (NASDAQ:AAPL) continues to charge significantly higher prices for its tablets when compared to Amazon’s offerings. And despite these higher price points, Apple continues to maintain a dominant market position in the tablet space, with over 40% market share.

Instead of challenging Apple, a cheaper Kindle Fire seems more likely to put pressure on makers of cheap Android tablets.

A new entrant into the space is Hewlett-Packard Company (NYSE:HPQ). HP is set to ship a 7-inch Android tablet called the Slate 7 in April. At $169, the Slate 7 will be one of the cheapest Android tablets on the market — $30 less than Asus’ flagship Nexus 7.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!