Pulling out the stops
The failure of HP in the mobile device space has taught us two main things. Firstly it's hard to compete with Apple - especially in tablets - and secondly people stop caring about the platform below a certain price point. What else can explain the stampede for TouchPads one the price was axed?
Apple's decision to price the iPad at around double the bill of materials (BOM) - a small mark-up by Apple's standards - was a competitive masterstroke. The tablet was a new category, so we had no basis for comparison from which to conclude Apple had gone down-market, but the price was so low the competition has struggled to beat it.
While $100 proved an irresistible price point for the TouchPad, people are generally not prepared to pay $500 upwards for any tablet other than the iPad. It's generally accepted that you need to be aiming at around $250 is you want to use price to lure people away from Apple in the tablet market.
According to MG Siegler of TechCrunch, who claims to have played with one, Amazon is aiming to launch its take on the Android tablet around the end of November, and the price will be $250. To get the BOM well below the estimated $250 the iPad costs Apple, Amazon is going for a seven inch device that apparently looks quite like the BlackBerry Playbook.
It will have a backlit touch screen, and so is much more like a conventional tablet than an e-reader. That's a bit of a shame; we were hoping Qualcomm might have persuaded Amazon to go with Mirasol, but that doesn't seem to be the case, for now at least. Component price considerations will have been paramount, with a BOM of under $200 probably needed to make this price-point sustainable.
The version of Android Amazon is going with looks like being heavily customised, with both the look and UI different. The most important thing for Amazon, however, is the degree of integration of its various services. Just as Google seeks to make money from Android users, rather than from selling the software itself, so Amazon will be looking to sell the Kindle tablet at cost in order to encourage its users to buy their stuff on Amazon.
Siegler insists that this marks a complete fork from the main Android roadmap. There are no Google products, such as Maps or the Android Market, on this Kindle Tablet - only links to things like the Amazon cloud player, app store and kindle app.
There are other Android tablets available at around this price-point, so it's not immediately obvious why the Amazon one will sale in much larger quantities. The differentiators will have to be revolve around e-commerce - Amazon's strength. It will be positioned as the place to go if you want to buy electronic media, but not from Apple. On top of that Amazon is in a position to incentivise Amazon customers with special deals and membership.
Amazon has done a good job of shifting a lot of Kindle's, thanks in part to the advantage it has in already being the world's biggest electronic marketplace. It will need to combine all its advantages with a low price in order to take a decent chunk of the tablet market.