The Kindle and the Low End

kindle-fire-hd21Amazon has been showing off the new Kindle Fire recently, but the world is a bit different from when they launched the first version. Initially, the same concerns – processing power and  app capability – that had arisen with the first generation device resurfaced in the second generation Kindle Fire, but now they are much more in the spotlight.

The tablet world was different back when the first Fire came out. The only close competition was the Nook and no tablets ventured below the $300 mark – well, except for the off-brand clones (not that I’m knocking them, I have three that I couldn’t be happier with), so swinging in around $200 seemed to have been a great plan.

It was actually a genius plan because they got to sell in the tablet market but be excused for lack of features and power as the Kindle was billed as an e-reader. The features it did have were the ones that would be needed for casual tablet use. For that use, all that was really necessary was to get to the web in a timely manner. Shoppers could go to the store and see the $600 iPad,and maybe a few $400 Android tablets, but if these were too much they could still come home with the Fire and feel pretty good about themselves. This was probably why Walmart took them in to begin with. They know their customers and their price points very well.

Fast forward to today, we find that Kindles aren’t really in Walmart anymore and what’s taken it’s place are a few tablets under $250, with a few slightly above that (While I’m not one to use Walmart as an economic barometer, they do capture 80% of the market that would find iPads too expensive). I’d think that this is really the sort of competition that Amazon now faces with the Fire.

What I’m getting at here is that the competition the Fire is up against has changed drastically since it’s introduction. Today there are actually full-featured tablets under the price of the Kindle. This must certainly be an awkward position for Amazon to be in.

Since you can get the Kindle app on anything with iOS or Android, the Fire uses a regular screen which zapps power like any other tablet and  the Kindle uses a more-or-less proprietary operating system basically forcing it to make proprietary apps, it begs the question of why pay more for less? This comes into greater question when you have tablets like the Hisense Sero 7 Pro out there that has all the same specs and more for $10 less. It also has a vanilla Android OS that will run all your favourite apps, including the Kindle app. Even more of a question is why would someone buy the paperwhite Kindle over spending just $10 more and getting the low-end Sero. The extra cash gets you essentially a full-featured tablet for the price of an e-reader.

I don’t envy Amazon’s position. Either they will have to drop the price of the Kindle, as well as all of the paperwhites, or drop making hardware. Competition is always fiercest on the margin.


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