Amazon’s Kindle Fire to play the price game  – will it work?

Tom Dougherty, CEO – Stealing Share

30 September 2011

This will hurt the Nook more than the iPad

Amazon has just made things interesting. Today, in my daily quest to find new electronic gadgets, I stumbled across the news that Amazon has boldly announced their new line of Kindle devices — including the Kindle Fire.

Posted on Amazon are the upcoming $79 Kindle, the Kindle Touch Wi-Fi and 3G, as well as its most interesting product of all, the Kindle Fire. The Kindle Fire is Amazon’s response (albeit a rather late one) to both the iPad and, more directly, the Nook Color.

This all made me wonder, wouldn’t these devices really have been something two years ago? You know, before they were essentially created by Apple and Barnes & Noble?

“In order to gain market share in this already dominated market, Bezos wants to play the game of price and essentially own the position of having the most affordable and well built e-reader and tablet on the market.”

Instead, Amazon is now trying to make waves by promoting products that can be, at best, second place in their respective categories. And I believe Amazon realizes this too.

Why?

Posted on the lead page of Amazon’s website is a letter scribed by its billionaire CEO, Jeff Bezos. The opening of Bezos’ letter reads:

There are two types of companies: those that work hard to charge customers more, and those that work hard to charge customers less. Both approaches can work. We are firmly in the second camp.

Interestingly, in order to gain market share in this already dominated market, Bezos wants to play the game of price and essentially own the position of having the most affordable and well built e-reader and tablet on the market. That’s something no one really is doing right now. This is also, in my estimation, the only shot Amazon has to gain market share.

BGR-Amazon-Kindle-FireJust think about it: the Kindle Fire will always be a second-class citizen to the iPad. Take a look at the specifics — it is built to be a multi-purpose touchpad (which certainly is far from unique these days) and its screen shots show similar layouts to that of iBooks and iTunes apps. You can watch movies, listen to music, read PDF’s and check your e-mail on it too. Basically, Amazon has created the iPad for those people who can’t afford an iPad. And they’ve acknowledged this by letting customers know that their product is affordable.

Also, should you visit the purchase link for the Kindle Fire, Amazon has written: “Pre-order now to reserve your place in line.” Suggesting to customers that the Fire will be a big-time seller in the market place.

A microcosm of this scenario can also be seen with Amazon’s release of the $79 Kindle. Here, Amazon, through price alone, is now contending for the second place position behind the Nook’s second generation E-Ink reader. Its hope is to increase market-share by selling more of a product that is very similar to the Nook, and for just a little cheaper price.

Truthfully, what else should Amazon do? In this overrun of an e-reader and tablet marketplace, it has no alternative but to play the price game. What helps is that these new e-readers and tablets are being made by Amazon — one of the most powerful and most recognizable brands today.

It will be interesting to see how much demand these will be upon their release. And, for a gadget geek like me, a whole lot of fun too.

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