Print 105 comment(s) - last by TakinYourPoint.. on Sep 30 at 6:54 PM

Amazon Kindle Fire   (Source: Bloomberg)
Amazon's tablet undercuts the 16GB iPad 2 Wi-Fi by $300

Amazon's entry into the growing tablet sector has been one of the worst kept secrets in the tablet industry. Amazon has already stormed the e-reader market with its line of Kindle devices, so delivering the company's expansive multimedia platform to a more versatile platform seemed like a given.

After a pretty expansive leak earlier this month, Amazon is officially taking the wraps of its Android-based Kindle Fire today. Fortunately, Bloomberg jumped the gun a bit early and revealed that the Kindle Fire indeed will feature a 7" IPS display (1024 x 600), and it checks in at a low $199 (you can pre-order today, but your Kindle won't ship until November 15), which undercuts Apple's entry-level iPad by $300. 

To reach that price point, the Kindle Fire forgoes 3G access, a microphone, and the usual bevy of cameras that come on today's tablets. However, the Kindle Fire does include Wi-Fi (802.11n) and a free 30-day trial of Amazon Prime (an Amazon Prime membership normally runs $79/year). 

The Kindle Fire weighs 14.6 ounces and features a dual-core processor. Amazon says that the Kindle Fire provides up to 8 hours of continuous reading or 7.5 hours of video playback (Wi-Fi disabled). The devices fully recharges within 4 hours via its USB 2.0 port.

While the Kindle Fire has 8GB of internal storage, apps from the Amazon Appstore, music, magazines, and Kindle Books will all be stored on Amazon's Cloud Drive service which makes having a large amount of onboard storage unnecessary.

"Kindle Fire brings together all of the things we've been working on at Amazon for over 15 years into a single, fully-integrated service for customers," said Amazon CEO Jeff Bezos. "With Kindle Fire, you have instant access to all the content, free storage in the Amazon Cloud, the convenience of Amazon Whispersync, our revolutionary cloud-accelerated web browser, the speed and power of a state-of-the-art dual-core processor, a vibrant touch display with 16 million colors in high resolution, and a light 14.6 ounce design that's easy to hold with one hand - all for only $199. We're offering premium products, and we're doing it at non-premium prices."

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By TakinYourPoints on 9/30/2011 6:54:06 PM , Rating: 2
This goes back to reading comprehension. Please follow and you'll understand the differences.

I already addressed game consoles several posts ago, well before you brought it up, and the fact that that particular model is what you are thinking of when making your argument. Clearly everything else is either being ignored or has flown right over your head. Let me spell everything out for you.

Game consoles are sold at a loss, but they manage this because they collect licenses from every game sold, and thos licenses carry higher profit margins than other forms of digital media. This eventually offsets the loss on the game console.

Now let us look at something with completely different profit margins, movies, music, books, applications.

The situation there is completely the opposite since most of the profit there doesn't go to the hardware manufacturer like it does with with game consoles. The bulk of that profit goes to RIAA, movie studios, developers, etc etc.

The profit margins and licensing terms between games on consoles and movies/music/books/apps are completely different.

The proof is in the hard numbers. iTunes, the most profitable digital distribution service in the world, has had a consistent 10% profit since its inception, even with the addition of movies, apps, and books. This is below the average 25% profit margins Apple makes overall, and well below the 30%-40% Apple makes on iPads.

I don't understand why you are being so thick headed and ignoring reality. These are two completely different business models. BTW, PS3 and XBox also makes the same profit margins selling movies and music on the consoles. The profit for movies and music on consoles isn't there, its in the games that you buy at Gamestop or Best Buy or wherever.

Media like this again serves to hook people into a hardware ecosystem, whether it is iOS, Android, whatever, but it is far from a large source of income compared to the hardware itself.

If you think Apple or Amazon is making a mint on movies or music, you are mistaken. Quarterly financial statements have proven otherwise for almost a decade.

One last thing that is slightly unrelated but needs to be addressed. The XBox hasn't been making money "hand over fist". Billions have been invested in it and after six years it is in the black by hundreds of millions in net profit. This isn't runaway profit. Compare it to the iPad that made tens of billions within a year, and it wasn't on the back of software, it was hardware.

Anyway, recognize that movies, music, books, and apps don't make profit the that hardware does unless the hardware is also sold for 10% or less. There is a hard ceiling in place due to the numerous payouts to content creators and licensees.

This is a completely different situation from game consoles where the hardware makers are the licensees that get a substantially larger cut from game publishers.

Hope this clears everything up for you.

"It looks like the iPhone 4 might be their Vista, and I'm okay with that." -- Microsoft COO Kevin Turner

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