Amazon’s Bold Strategy With The Kindle Fire

The Kindle Fire was announced on September 28, 2011 and has been the buzz on the internet ever since. With some incredibly unique tablet features, this new e-reader not only combines innovative features that other competitive tablets offer, but it offers them at a significantly reduced price. Released on November 14, 2011 to eagerly awaiting fans, it quickly sky rocketed to the top of charts.

The Kindle Fire sells for $199 however many people have long since suspected that it cost more for Amazon to make the Kindle Fire than it actually cost consumers. After much speculation on this rumor it was finally confirmed by an analyst who completely dissected all of the parts of the Kindle Fire. The total cost of the Kindle Fire for Amazon was found to be $201.70.

So what is Amazon’s plan with the Kindle Fire?

It is expected that several million Kindle Fire units will be sold in the year 2011 alone so how does loosing almost three dollars on each unit benefit Amazon? Well, their intention is not to make a profit on the Kindle Fire, they plan on making a profit through all of the extras for the Kindle. With millions of customers using the device they will be exposed to new apps and other paid services for the Kindle Fire that should help Amazon recoup their losses.

This tactic is vastly different than Apple, Barnes & Noble, and many other tablet and e-reader device companies. Where other companies charge significantly more for each device and make their profit that way, Amazon is hoping to undermine its competition by trying a brilliant, albeit risky, new strategy.

What areas has Amazon cut costs on the Kindle Fire?

RAM – where many  tablets have 8GB of RAM, Amazon cut costs by reducing theirs to only 4GB.

Memory – here the Kindle Fire has only 8GB of memory, pitiful compared to the iPad which starts at 16GB and can go clear up to 64GB.

Additional features – to minimize costs Amazon didn’t include any of the features that other competitor tablets had such as Bluetooth, expensive wireless chips, and a camera.

Shipping – Last but not least is shipping. Usually companies will ship their devices in fancy boxes with tons of stuff inside however Amazon did its best to minimize this completely. With a simple wall charger and cord, the Kindle Fire only costs about $2-$3 each to ship.

So has Amazon’s new strategy paid off?

Amazon has not released any statistics or information on the sales of the Kindle Fire nor any information on their subsequent earnings through other accessories and apps for the Fire. This information will hopefully be released sometime in the future so it can be seen whether or not Amazon’s strategy was worth the risk or if it simply hurt the company.

The Kindle Fire Lights Up The Competition

The competition for tablets has been fairly one sided so far, with Apple dominating the competition with its famous (yet expensive) iPad devices. Their cheapest iPads cost around $300-400 and from there the prices skyrocket. Thankfully the monopoly has been broken and Apple has some real competition in the tablet world now.

In a stunning move, Amazon announced that the new Kindle, named the Kindle Fire, will be out on the market on November 15 (you’ll find the specs of Kindle Fire)and has a staggeringly low price tag of only $199.

The new Kindle Fire isn’t just heating up the competition with Apple, but it has also crushed the competition between the Kindle e-readers and the Barnes & Noble’s version of the e-reader known as the Nook.

Right after the press release of the Kindle Fire, Barnes & Noble stock dropped 9% in just one day! This is a true testimate of the effects of this brand new e-reader, and unfortunately for Barnes & Noble the new Kindle hasn’t even hit the shelves yet so it can expect its stocks to continue dropping.

So lets look at some of the sleek new features of this new Kindle. We know that the price tag is incredibly amazing, but will its other features live up to expectations?

– Gorilla Glass coating (chemically strengthen display glass that resists wear and is highly durable)
-Weight is only 14.6 oz.
– Android based operating system with a 7in. color touch screen display
– 8GB of storage
– 1GHz TI OMAP dual-core CPU
– 512MB of RAM

It still is capable of installing all of your favorite apps, while maintaining that e-reading function that most people love. Unfortunately the iPad’s have cameras with FaceTime (You can see and talk to friends and family on Ipad, very similar to video conferencing / web chat), but is a camera function really worth several hundred dollars?

With the Kindle Fire hitting the market in a little over a month, it will be interesting to see how its competition will respond to this bold move.