Earlier this week, Amazon.com Inc. (NASDAQ: AMZN) announced the launch of its new high-end Fire HD 10 tablet. Priced at $149.99, it comes with more memory and a bigger battery, plus hands-free access to the Alexa voice-control software. For $100 less, the seventh-generation Fire 7 tablet was also launched, but no press release was forthcoming.
Besides screen size — the HD 10 includes a 10.1-inch screen versus a 7-inch screen on the Fire 7 — and several other top-of-the-line features, the warranty period is longer on the HD 10 — one year compared to 90 days on the Fire 7 — and the screen resolution is higher, 1,920 × 1,200 (224 pixels per inch) versus 1,024 × 600 (171 pixels per inch).
What sets the Fire 7 apart is its price. The list price for the iPad mini 4 (Wi-Fi only) from Apple Inc. (NASDAQ: AAPL) is $399 while the basic Fire 7 goes for $49.99. The mini 4’s screen resolution is 2,048 × 1,536 (326 pixels per inch), higher even than the Fire HD 10, but look at the price difference for a 10-inch screen compared to the 7-inch iPad mini 4 screen. The 10.5-inch iPad Pro starts at $649, with 64 gigabytes (GB) of memory compared to $149.99 for the HD 10 with 32 GB of memory.
Amazon implicitly acknowledges that Apple owns the high-end of the mobile device market. Rather than fight it out on Apple’s turf, Amazon has taken a flanking approach. This is not particularly news, but the Fire 7 continues to focus on the entry-level market by offering a “good-enough” device at a rock-bottom price.
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The market for tablets has been shrinking, and getting consumers to replace their current tablets with an even pricier version may work for Apple but it doesn’t work for every tablet maker. In addition, the Fire 7 is another way for Amazon to get a toehold with new customers and encourage them to sign up for the $99 annual subscription for Amazon Prime.
Amazon has data on its side once a consumer becomes a Prime subscriber: these customers spend more time shopping online, they have higher incomes and they spend more money.
While this may be an overstatement, it’s not an over-the-top statement: Amazon is all about getting consumers to sign up for Prime. A really cheap tablet with what many would consider “just okay” specifications is yet another way to do that.
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