Amazon Unveils Kindle Fire

Amazon launched its much anticipated tablet last week, dubbed the Kindle Fire. The new slogan says it all: “All the content. Ultra-fast web browsing.”

The 7-inch tablet provides a direct portal into the online retailer’s digital properties: Amazon Web Services, Instant Video, Kindle Books, Amazon’s MP3 music store and its Android app store. The Kindle Fire even comes equipped with free trials to its most popular digital content services, such as the Amazon Prime streaming video service. (Video after the jump.)

The Kindle Fire is not 3G enabled; instead, it uses WiFi. All the   media is backed-up and synced wirelessly in the Amazon cloud. The Fire also comes equipped with 8 GB of internal memory, so the user can download and save files directly to the device.

In regard to browsing, the Fire boats a brand new mobile browser called Amazon Silk, which reportedly will enable Adobe Flash browsing on the Web, a key feature which the Apple iPad lacks. Finally and perhaps most importantly, at $199, the Kindle is positioned at a very attractive price point — undercutting the lowest priced iPad which retails for $499.

The iPad is clearly the dominant force in the tablet space, and so it’s easy to make comparisons and prophecies about the competitive implications of this new market entrant. However, with the Kindle Fire, Amazon has positioned its tablet as an alternative to the iPad rather than direct competitor. As John Gruber over at Daring Fireball puts it, Amazon and Apple are essentially targeting two different market segments:

“Apple’s primary business is selling devices for a healthy profit, and they back that up with a side business of selling digital content for those devices. Amazon’s primary business is as a retailer, including as a retailer of digital content. They back that up with a side business of low-cost digital devices that are optimized for on-the-fly purchasing of anything and everything Amazon sells. The Kindles are to Amazon what the printed catalog was to Sears a century ago.”

In essence, Amazon is subsidizing the cost of the device in exchange for future digital media revenue. Analysts have suggested that Amazon is taking a loss of around $50 per device in order to offer the Kindle Fire at such a low price point. But it’s a small price to pay if it enables and encourages users to purchase from their more profitable market offerings.

The Kindle Fire is available for U.S. pre-orders now, with a ship date of November 15. So, have you ordered one yet?

Leave a comment and let me know your thoughts on Amazon’s strategy.

 

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