Competing directly with Apple Inc. (NASDAQ:AAPL)'s iPad has always been an uphill proposition. That's why the most successful tablet rivals to date have been ones that target lower price points, most notably Amazon.com, Inc. (NASDAQ:AMZN)'s Kindle Fire, which was launched in 2011 for $199. The e-tail giant's Kindle Fire HD family followed suit late last year, along with the addition of an 8.9-inch model with a starting price of $299.
But it seems that model may not have sold particularly well over the busy holiday shopping season.
Taking turns Amazon is now offering a promotional discount on the 8.9-inch Kindle Fire HD, presumably to help clear out some inventory that it may have left over with holiday shopping now in the rearview mirror. The offer is good through Feb. 8 and buyers can get $30 off the standard Wi-Fi only model and $50 off the 4G LTE model.
When Amazon reported earnings last week, it simply said that the Kindle Fire HD was the top-selling item, characteristically omitting any precise unit data. There was no specific mention of the 8.9-inch Kindle Fire HD, though.
Since its launch, the 8.9-inch Kindle Fire HD has had peculiar positioning, so it's not entirely surprising that it's not selling well. Amazon and Apple target different display sizes and price points.
|Device||Display Size||Entry-Level Price|
|Kindle Fire HD||7-inch||$199|
|8.9-inch Kindle Fire HD||8.9-inch||$299 ($269 with discount)|
|iPad with Retina display||9.7-inch||$499|
Even before the discount, the 8.9-inch Kindle Fire HD is priced lower than the iPad Mini. Apple's smaller tablet is off to a strong start with healthy uptake. The iPad maker was supply constrained on the device during the fourth quarter and expects to reach demand balance this quarter. That shows that consumers are indeed willing to pay a premium for the iPad Mini, even with its relatively lackluster display.
The smaller Kindle Fire HD does not feature 4G LTE connectivity, while one of the more interesting aspects of the 8.9-inch model's LTE is the significantly discounted data plan that it was able to finagle from AT&T Inc. (NYSE:T). Both of Apple's devices offer cellular options.
|Device||Annual Data Cost (250 MB monthly allowance)||Entry-Level Price|
|iPad Mini with LTE||$180||$459|
|8.9-inch Kindle Fire HD with LTE||$50||$499 ($449 with discount)|
|iPad with Retina display with LTE||$180||$629|
Looking just at the numbers, you would think that the 8.9-inch Kindle Fire HD with LTE should be able to hold its own since it's notably cheaper than what Apple has to offer. One weakness is that the 250 MB monthly data allowance is the only option, which may not be sufficient for some road warriors.