The Seattle online retailer plans to release a $US50 tablet with a 6-inch screen later this year, according to people familiar with the matter. That would make it one of the least-expensive tablets on the market and half the price of the company’s current Fire HD 6-inch tablet.
The move would potentially attract buyers looking for a simple — and effectively disposable — device for straightforward tasks like streaming video at home and shopping on Amazon.com.
But such inexpensive tablets typically come with compromises like inferior screen quality, durability or battery life in comparison to more expensive tablets like Amazon’s larger Fire tablets and industry-leading devices like Apple iPad. For instance, the $US50 device will have a mono speaker, rather than stereo, one of the people said.
The $US50 device is part of a slate Amazon is planning to release this year that will also include tablets with 8-inch and 10-inch screens, according to the people familiar.
Amazon has long sought to undercut its hardware competitors, in part by eschewing profits on the devices themselves. Rather, chief executive Jeff Bezos has said, the company prefers to make money by selling services that work with the devices, like e-books and video rentals.
Mr Bezos had set an internal goal of the $US50 price tag for versions of both the Fire tablet and Kindle e-reader, viewing the rock-bottom prices as a crucial lure for a more cost-conscious group of buyers, the people said. But the e-reader screen technology from its vendors ultimately proved too expensive to drop the retail price, the people said. Amazon’s cheapest Kindle sells for $US79.
“Will people tolerate a potentially inferior experience just because a tablet is $US50?” said Frank Gillett, a Forrester Research analyst. “Amazon has to be very careful about what they’re giving up to get to that low price point.”
An Amazon spokeswoman declined to comment.
Amazon faces potential new challenges, as Apple may introduce new versions of its popular iPad and iPad Mini tablets as soon as tomorrow, along with new iPhones.
Critics blasted Amazon for pricing its Fire smartphone equal to the iPhone last year, despite throwing in a free year of the otherwise $US99 Prime membership. The handset’s sales fizzled, and steep price cuts couldn’t boost sales. In October, Amazon said it would take a $US170 million writedown primarily for unsold inventory.
After the Fire phone flop, Amazon reorganised its Silicon Valley-based hardware-development centre known as Lab126 and laid off dozens of engineers who worked on the device, according to people familiar with the matter. The division has developed Fire tablets, Kindle e-readers, the Fire TV set-top box and other devices.
Amazon has curtailed some of its more ambitious projects like a projector device, a smart stylus and 14-inch tablet, as The Wall Street Journal reported last month. It is still working to develop a high-end computer for the kitchen codenamed Kabinet, a tablet with a 3-D screen and an e-reader battery that can last two-years on a single charge, people familiar with the matter said.
To lower costs for the new 6-inch tablet, Amazon outsourced much of the development to overseas firms including Shanghai Huaqin Telecom Technology and Taiwan’s Compal Communications, rankling some at its Lab126 unit, two of the people said. Compal has previously worked with Apple and Hewlett-Packard Co., among others. Representatives of Shanghai Huaqin and Compal didn’t respond to requests for comment.
The 10-inch tablet would be bigger than Amazon’s existing Fire HDX tablet, which touts an 8.9-inch screen and tops out at about $US600.
Amazon’s cheapest current Fire tablet has a 6-inch screen and sells for $US99, including advertisements that appear as screen savers, or $US114 without the ads. It isn’t clear whether the $US50 price for the newest tablet includes ads.
The coming 6-inch tablet is just half an inch bigger — measured diagonally across the screen — than Apple’s iPhone 6 Plus smartphone and is smaller than some large-screen smartphones known as phablets. Amazon’s device isn’t expected to have phone capabilities.
Wal-Mart Stores Inc. and Amazon sell several 7-inch tablets for around $US50, including from brands unfamiliar to many Americans like RCA, Ematic and Ares.
But Amazon has failed to win over many consumers with its tablet slate.
As of the second quarter, Apple and Samsung Electronics alone commanded 42 per cent of the U.S. tablet market, while Amazon held less than 1 per cent, according to research firm IDC, which doesn’t include 6-inch tablets in its count.
-acc to Wall street journal