With a £129 Kindle Fire coming to the UK next month, do any other Android tablets stand a chance?
Amazon announced last night at its Kindle press conference, that it was not a gadget company. Amazon's founder and CEO, Jeff Bezos proudly proclaimed on stage:
"We want to make money when people USE our devices, not when they BUY our devices." This was a direct dig at Apple, who make over 50 percent profit from its hardware sales.
Amazon has always had this attitude. Ever since launching its first consumer product in 2007 - the original Kindle ereader - it has sold its hardware at cost price or below. Customers however were then tied into buying ebooks from the Kindle ebook store and no where else.
It repeated the trick with the launch of the Kindle Fire at the end of last year. While it nominally ran on the Android platform, it had been so heavily skinned to be almost unrecognisable as Google's software. Users are tied into buying movies, music, books and apps from Amazon in the same way as on the ereader.
And it's been a success. Although Amazon won't reveal exact sales figures for the Android tablet, all indications point to it taking a decent slice of the market. Amazon recently said it had 22 percent of the US tablet market, but didn't indicate if that was overall or just for one quarter. Either way, it was a good start.
The Kindle Fire will have taken the market share from the likes of Samsung and Motorola, who also produce Android tablets, and not from the dominant iPad. Apple created the current tablet craze and it's using its position to dominate it.
In the second quarter of this year Apple returned to a 70 percent share of the tablet market having briefly dipped to below 60 percent at the turn of the year. It has the premium end of the market well and truly sown-up, with all other manufacturers left to fight over the scraps, differentiating themselve with various form factors, screen sizes, and a panoply "unique features" from digital styluses to keyboard docks.
Amazon's unique feature? Price.
It is targeting the low end of the market aggressively and at £129 for a 7in tablet, it will blow away the competition, from low-end Chinese manufacturers to the likes of Google which has recently launched the Nexus 7 - which it must have thought at the time was pretty aggressively priced at £159.
Amazon's Kindle Fire has so far only been on sale in the US, but by offering it now in the UK, France, Germany and Italy it will almost double its potential customer base. Apple makes three-quarters of its iPad profit from outside north America, and Amazon obviously realises this is a huge potential market.
At £129 the 2012 version of the original Kindle Fire is very close to being an impulse buy. Add in decent specs (boosted performance, better battery and double RAM compared to the 2011 model) as well as the recognisable Kindle brand, and I expect customers to buy this tablet in huge volumes.
For those looking for something a little bit better, Amazon is also offering the 7in Kindle Fire HD, which will go on sale in the UK at £159, adding an improved screen, better Wi-Fi connectivity and double the storage.
This will go head-to-head with the Nexus 7 from Google, who was hoping to take a big slice of the lower-end of the market, and may still do so. What the Kindle Fire has going for it, is again the Kindle branding, which will help win over loyal Kindle ereader customers, while Amazon is matching Google's Play store with its content offering which give users access to content including films, music and unique apps.
Looking at higher-up the tablet food chain, Amazon is also targeting the area where currently Samsung dominates. The 8.9in Kindle Fire HD may not be coming to the UK yet, but will ship in the US in October costing just $299 (£190).
The tablet has a very high resolution screen (1920 x 1200) which is only bettered by the Retina Display on the iPad - but remember, Amazon is not trying to take on Apple.
Who it is taking on are the dozens of Android tablet makers who have been unable to produce a tablet of this size and feature set, which could get anywhere near the quality of Apple's tablet, while still charing the same price.
Amazon's aggressive pricing combined with good features, original content and services should see this tablet dominate. It will come to the UK and elsewhere eventually, once Amazon sorts out its display supply line I imagine.
Priced at £200-£220 it will be a no-brainer purchase for anyone unwilling to pay £400 for an iPad. No other mainstream manufacturer has been able to produce a tablet of this quality for this price, because they cannot sell the product for cost price, as they don't have the content from which to make their profit.
Amazon won't be worrying Apple too much just yet in terms of eating into the iPad market share, but Amazon's announcements this week could have effectively killed the chances of all other Android tablet manufacturers ever succeeding.
Then again, let's not forget about the iPad mini.......