It's A Jungle And Amazon's In The Thick Of It

Amazon’s challenge to the iPad became “a little more serious” yesterday as CEO Jeff Bezos bumped the number of its available Kindles to seven from three, “ranging from a basic $70 black-and-white-screen e-reader to a $600 color tablet,” Nick Bilton reports in the New York Times

The Wall Street Journal’s Greg Bensinger says Amazon has “kindled a price war in the tablet-computer market, unveiling a new slate of the devices that pack in more features at lower prices the iPad.” 

And Gartner analyst Michael Gartenbergtells Bloomberg’s Danielle Kucera: “This wasn’t a product announcement as much as it was a declaration of war. It’s clear that Amazon is going to go after Apple customers.”



But while Bezos “continually compared the Kindle Fire HD with Apple’s iPad, talking about both the features of his tablet and its price” during the press event in a private airplane hanger in Santa Monica, Calif., he later proposed in an interview with Bilton that the e-reader world was big enough for the two companies. And more: “My view: these are huge, huge markets, with room for lots of winners.”

The entry-level Kindle Fire went to $159 from $199 -- $300 cheaper than the least-expensive newest iPad. Bezos also announced three versions of high-definition Kindle Fires that will cost between $199 and $599. 

Another new device, Kindle Paperwhite, will be Amazon's first self-illuminating e-ink reader when it ships Oct. 1. It is the company’s only remaining touch-screen model, replacing its previous flagship e-reader, the Kindle Touch, according to CNET’s Rich Brown, who has compiled a top-level rundown of all of the products.

The rumors of an ad-supported model turned out to be just that --  rumors. But the Wall Street Journal, which broke the story, points out “the new high-definition Kindle Fires are priced lower than competing tablets in part because of support from advertising.”

All of the products can be preordered but they will be available to ship on dates ranging from Sept. 14 to Nov. 20.

“Last year there were more than two dozen Android tablets launched into the marketplace and nobody bought them,” Bezos said. “People don’t want gadgets anymore. They want services. Kindle Fire is a service. It greets you by name, it comes out of the box with your content preloaded, it makes recommendations for you.”

Bilton points out that Amazon and Apple operate on different business models, with the former relying on its content and the latter on its hardware to make a buck. 

“Amazon’s services are the core of its devices, and the devices enhance Amazon’s service: a virtuous cycle where Amazon gains an increasing share of consumers’ wallets,” as Forrester Research analyst Sarah Rotman Epps blogged yesterday.

Those services include Prime, Instant Video, Cloud Drive, and a data plan announced for the new 4G Fire--- “a very disruptive move that puts pressure on carriers to offer their own lower-price plans, and sets the stage for an expected Amazon smartphone launch next year,” according to Rotman Epps.

“If we made our money when people bought the device, we’d be rolling out programs left and right to try to get you to upgrade,” Bezos said. “We want to make money when people use our devices, not when they buy our devices.”

Bezos also highlighted Kindle Direct Publishing, “which allows individual authors to upload their books to the Kindle catalog—sans publisher—and keep 70% of the revenue, and Kindle Singles, a format for individually published mega-magazine articles,” reports Brad Stone in Bloomberg Businessweek. Plus, Kindle Serials will allow consumers to buy installments of books as chapters are completed for a one-time fee of $1.99. “I’m thinking it’s a whole new genre,” Bezos said.

Whether or not a smartphone would be a smart direction for Amazon “depends on quite a few factors,” writes Julianne Pepitone  of CNNMoneyTech, as the market is “risky, expensive and full of formidable rivals.” It all boils down to the fact that it’s a huge and growing market but “companies with much more hardware experience than Amazon have struggled against current bigwigs like Apple.” But Amazon didn’t have any experience with tablets, either, and, at one point, had as much as 14% of the market. 

Apple, meanwhile, is reportedly talking to record labels about licensing music for a custom-radio service similar to Pandora, sources tell the Wall Street Journal’s Ethan Smith and Jessica E. Vascellaro. Apple had no comment on the rumored service or anything else, as is its wont, but it presumably will have plenty to say next week.

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