Rumoured Amazon Kindle Fire HD 7" Tablet in The Works Priced at $99

How low will Amazon’s tablets go? We’re now hearing that a $99 Kindle Fire 7″ tablet is in production, and will be shipping this year. At a price that low, the Kindle Fire would be able to more easily compete at the tail end of the Android-based tablet market – an area which is today dominated by low-cost tablets out of China, often sold at the sub-$100 price point.

According to what we’ve heard, the $99 Kindle Fire HD will also still sport a TI processor like the rest of the lineup, and will have a 1280×800 resolution, like today’s Kindle Fire HD 7″ does.

This report follows an announcement Amazon made earlier this month about reduced prices on its Kindle Fire HD 8.9″ devices. The Wi-Fi-only version will now cost $269, down from $299, while the LTE version dropped from $499 to $399. It also follows news of a forthcoming carrier billing deal that’s about to go live  - something which hints that Amazon is now scaling up and becoming more aggressive with its product line up.

Typically, a price drop signals one of two things – that the manufacturer or retailer is attempting to clear out inventory ahead of a new model, or that it just wants to sell more of the item, at a faster pace. According to other industry experts with visibility into tablet usage trends we’ve spoken with, the Kindle Fire HD 8.9″ is not Amazon’s most popular model – the 7″ HD tablet is.

Today, that tablet is priced at areasonable $199, while the older (non-HD, 2nd gen.) Kindle Fire is an even lower $159.

While a $99 price may seem extraordinary, IDC Research Director on tablets, Tom Mainelli, says that such a thing actually sounds reasonable. His firm just put out an updated tablet marketshare forecast this week, stating that this year tablets running Google’s Android operating system would overtake the iPad for the first time. The Amazon Kindle Fire, of course, uses its own forked version of Android.

Mainelli explains that Amazon’s competition isn’t just the iPad, it’s all these low-cost tablets running Android. Over Black Friday and the holidays in particular, you could get a $199 HD tablet from Amazon, the slightly cheaper non-HD version, or you could buy a $99 (or even in some cases $79) Android tablet from relatively unknown manufacturers in places like Walgreens, CVS, Bed, Bath & Beyond, and elsewhere.

“The infrastructure is definitely in place for Amazon to go even lower,” Mainelli says. “If they can sell the product at roughly what it costs to build, that fits their long-term vision to make money selling you content on that device. It’s entirely possible – physically possible – to create a device that costs $99, particularly at the scale that Amazon would do it,” he adds.

Android tablets prices across the board are coming down, too, which also lends credence to this possibility. For example, even HP recently announced a $169 Android device. Everyone in this space is beginning to attack the sub-$199 price point, given that Apple has staked out the high-end of the market at $329 and up.

So if the game is becoming “how low can you go?”, Amazon is in a good position to compete here, as it’s historically been a low-margin business. It doesn’t care what it makes from tablets right now – it’s about getting consumers a device which connects them back to the Amazon ecosystem, where they will spend on other Amazon products and services.

Mainelli also points out that the TI – the processor brand that Amazon uses in its current Kindle Fire devices – has been getting out of the chip business. It was even rumored last fall that Amazon was in advanced talks to buy TI. That never ended up happening, but what that story points to is that Amazon has deep ties with the chip maker, and could have easily cut a deal where it agreed to buy up TI’s remaining remaining stock for cheap. That could help Amazon now deeply discount its tablets retail prices.

Amazon sold 4.8 million Kindle Fires in 2011 (shipping only in the fourth quarter), and in 2012, it shipped 10.4 million units worldwide, according to IDC’s estimates. It has been widely reported that these tablets are sold at a loss, though Amazon CEOJeff Bezos told the BBC in October that’s not quite true.

“We sell the hardware at our cost, so it is break-even on the hardware,” Bezos said at the time.

Amazon could break even at the $99 price point, and get its tablet into more people’s hands by doing so, pulling them in to its ecosystem.

For what it’s worth, Amazon denies that such a price drop will be happening. “We are already at the lowest price points possible for that hardware,” a company representative told us.

For that hardware, maybe. [Source]

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Amazon Drops The Price of The Kindle Fire HD 8.9" to $269

Amazon announced today in a press release that it is lowering the price of its the largest tablet in the U.S., the Kindle Fire HD 8.9″.  The price of the entry level WiFi only model drops from $299 to $269, while the 4G variant will now sell for $399 (down from $499 previously). In addition, the company is also rolling out the device to a handful of new countries including: the UK, France, Germany, Japan, Spain, and Italy.

The 8.9-inch tablet  includes a1920x1200, 254 ppi display, TI OMAP4470 processor, 1GB of RAM, Custom Dolby audio and dual stereo speakers, 10 hours of battery life, and of course access to Amazon’s ecosystem of content.

You can already find the updated pricing for the both the entry level $269 model and the $399 4G model on Amazon.

 “We’re thrilled with customer reaction to Kindle Fire HD 8.9”. Customers tell us they love our large-screen version of Kindle Fire HD for web browsing, email, gaming, watching TV shows, reading magazines, and more,” said Dave Limp, Vice President, Amazon Kindle. “As we expand Kindle Fire HD 8.9” to Europe and Japan, we’ve been able to increase our production volumes and decrease our costs. Across our business at Amazon, whenever we are able to create cost efficiencies like this, we want to pass the savings along to our customers.” [9to5Google]

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Apple's record profits contrasted with Amazon's hopes to turn a profit

Apple's profits for fiscal 2012 reached above $40 billion, making it the only tech company to ever reach that benchmark. In fact, it's a feat only ever matched by oil giant Exxon Mobil.

Apple's financial performance invites comparisons with other companies such as Amazon, which has taunted the iPad maker with a rival business plan oriented around ad and content sales, rather than seeking to earn profits primarily on hardware.

A report by Bloomberg writer Mark Gimein contrasted the two companies, noting that while Apple reported quarterly earnings of $13.5 billion this winter, Amazon has only reported a total of $5 billion in earnings spanning from 2003, the first year it turned a profit, through the end of 2011, the full last year it has reported earnings.

In the previous quarter, Amazon actually lost $274 million, but Gimein states the company is "expected to turn a profit" for 2012.

"By conventional metrics," Gimein writes, "Amazon’s earning are so low that it’s almost senseless to talk about them."

He added, "Apple makes so much money that investors are leery of whether it can continue growing. In stark contrast, Amazon has made so little that, paradoxically, it continues to hold out the prospect of limitless growth."

Amazon has been around since 1997. Its Kindle-branded tablet efforts long predated the iPad, having been introduced in late 2007. But its two year lead in tablet-sized mobile devices, followed by three years of direct competition with the iPad, haven't come anywhere close to matching Apple's performance in mobile hardware. Amazon won't report how many Kindles have sold, but its tablet business isn't resulting in Apple-style profits.

Money from content?

Amazon embarked upon an effort to undercut Apple's iTunes song sales with its own discounted MP3 store in late 2007. Five years later, Amazon still has a relatively small music business limited to nine countries, compared to Apple's world leading online music store now available in 119 countries.

Two years ago, Amazon fractured Google's Amazon tablet platform to introduce a rival to Apple's iOS App Store with the same branding, in order to sell software content to a series of Android-based devices. However, it has not been able to consistently turn a profit doing so. Amazon operates in six countries; Apple's App Store is available in 155.

Apple reported $2.1 billion in revenues from iTunes in the winter quarter, but the company has regularly described its iTunes-related online services as designed to operate as an enhancement to its hardware business, without needing to turning a significant profit. Amazon isn't turning a significant profit on content sales either, but it's also not profiting from hardware.

That calls into question the widely held hope that advertising and content sales will be able to fund competitive efforts to develop mobile products to rival the iPod, iPhone and iPad, whether those efforts involve Android or not.

Amazon is scheduled to report its winter quarter results Tuesday January 29. [AppleInsider]

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