Amazon ignites tablet war with Kindle Fire

2011-09-29 07:35

New York – took the wraps off its long-awaited “Kindle Fire”, tacking on a mass market-friendly $199 (R1 569) price tag that poses a serious threat to the dominance of Apple Inc’s two-year-old iPad.

The eagerly anticipated gadget, while lacking many of the hi-tech bells and whistles common on tablets from cameras to 3G wireless connection, may sound the death knell for a raft of devices based on Google Inc’s Android.

The software powers tablets made by Samsung, Motorola, Asustek, HTC and LG Electronics.

Dotcom entrepreneur and billionaire CEO Jeff Bezos unveiled to a packed audience the gadget he hopes will wed Amazon’s books, movies, music and other content with cloud or internet-based storage and Web browsing.

“People have been waiting for a tablet for 200 bucks for a long time and this is the best one I’ve seen so far,” said Tim Stevens, editor-in-chief of gadget review website Engadget.

The Kindle Fire tablet has a 7-inch screen, free data storage over the internet and a new browser called Amazon Silk.

Amazon expects shipments to start on November 15 – hitting store shelves at Best Buy and other chains just in time for the peak holiday shopping season.

By pricing the Fire at less than half the iPad – yet stripping out costlier components and features – the internet retailer hopes to get the device into millions of consumers’ hands, who in turn will buy Amazon content.

One key differentiator that might help the Fire stand out during the cut-throat holidays is Amazon’s “EC2” cloud computing service, which supports internet browsing and helps speed loading of websites. That was not available on rival tablets, Stevens noted.

‘Blood bath’
“Expect a blood bath as pricing will have to get extremely aggressive,” said Mark Gerber, an analyst at Detwiler Fenton.

He expects Amazon to sell at least 3 million Kindle Fires this holiday season, taking the number two spot in the tablet market.

The Fire was unveiled alongside several rock bottom-priced versions of the basic Kindle reader, with the lowest at $79 – a clear challenge to Barnes & Noble’s Nook that will surely force the ailing bookstore chain to try to match.

Amazon shares closed 2.5% higher, while Barnes & Noble dropped 7%. Apple shares dipped 0.6 percent.

“These are premium products at non-premium prices,” said chief executive Jeff Bezos. “We are going to sell millions of these.”

Bezos said Amazon is making “millions” of the tablet, without being more specific. However, he urged customers to preorder the device.

When the original Kindle e-reader came out in 2007, it quickly sold out.

Crowded market
But breaking into a crowded tablet market will be difficult. Companies from Hewlett Packard, Motorola, Samsung and Research in Motion have launched tablets, but none has taken a big bite out of Apple’s lead.

Apple dominates the North American tablet market, with 80% of the 7.5 million units shipped during the second quarter of 2011, according to Strategy Analytics.

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