Amazon today announced its new Kindle fire tablet, a $199 device with a 7″ screen and a thin, light form-factor. The tablet was accompanied by a new $79 Kindle, a $99 Kindle touch and a reduction in the price of its standard Kindle.
These are indisputably aggressive price points. The Kindle fire strips out a lot of the hardware doodads that you will find on many tablets, like 3G connectivity and camera,s but it definitely hits the sweet spot for those that simply want to consume media.
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Driving this point home, Jeff Bezos, CEO of Amazon, has put up a letter introducing the products on Amazon’s home page. The letter leads off with an interesting quote:
There are two types of companies: those that work hard to charge customers more, and those that work hard to charge customers less. Both approaches can work. We are firmly in the second camp.
With the ‘charge customers more’ line, Bezos is clearly referring to its competitor Apple, which has had a reputation for producing products that are delivered at a premium price. We won’t debate whether or not that reputation is justified now, or has ever been, but the statement will most likely resonate with those who are primarily interested in the price of a tablet, rather than its specifications.
In many ways, this is similar to the way that Apple focuses its message for consumers on what you can do with its products, and not its specifications. Instead of appealing to those who want the best design and the most applications though, Amazon is pushing towards those who want to consume their content comfortably.
Some reports have begun surfacing that Amazon is losing up to $50 on every Kindle fire sold. This would fit in well with this aggressive strategy, where Amazon hopes to have it pay off with the purchase of things to watch, read and listen to on its tablet.
Bezos sums up the letter by saying that “We are building premium products and offering them at non-premium prices,” once again pushing the message that, ‘if you just want a tablet to look at stuff, get ours, it’s cheaper.’