Amazon challenges Apple with ‘Fire’

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The new Amazon tablet called the Kindle Fire is displayed on September 28, 2011 in New York City. The Fire, which will be priced at $199, is an expanded version of the company?s Kindle e-reader that has 8GB of storage and WiFi. In addition to the Fire, Bezos introduced four new Kindles including a Kindle touch model. Photo - Spencer Platt/Getty Images

Amazon.com chief executive Jeff Bezos unveiled the Kindle Fire tablet on Wednesday at New York’s Hell’s Kitchen, marking the most high-profile challenge yet to Apple’s iPad, which has beaten back other rival brands such as Blackberry Playbook and Samsung Galaxy Tab.

The Kindle Fire tablet has a 7-inch screen and can access Amazon’s app store, streaming movies and TV shows. The device, set to be introduced in the US market on 15 November, will cost $199 – well below the iPad’s $499 price tag. Bezos said all the content on the Fire will be backed up remotely on Amazon’s servers at no cost to the consumer.

“We asked ourselves, ‘Is there some way we can bring all of these things together [web, movies, apps, books and games] into a remarkable product offering customers would love?'” Amazon.com CEO said at the launch event. “Yes, the answer is Amazon Kindle Fire.”

Still, the Amazon device faces an uphill battle against the iPad. Unlike the Apple tablet, the Fire doesn’t have a camera or microphone, and it doesn’t offer cellular connection, working only with Wi-Fi. It also has fewer apps.

“While we don’t believe the Fire offers the same level of features as the iPad or existing Android tablets, we do believe Amazon’s broad content portfolio (books, video, music) and the very low price will help Fire take material share,” wrote Hudson Square’s Daniel Ernst in a research note.

BLURRING LINES

The online retailer is gambling with its tablet where several other giants, includingHewlett-Packard and Research In Motion have so far failed. Unlike those companies, Amazon already has a vast library of digital content to sell and tens of millions of credit-card numbers.

The move highlights how the battle lines are blurring in retail, media and technology. Apple, once known as a computer company, is now the world’s biggest music retailer and a leading phone maker. Amazon has morphed from a discount retailer of physical books to a digital department store that streams movies and sells its own gadgets.

While Amazon has had some success in new marketsit claims its Kindle e-book reader outsells other goods it offers on its website, for instancethe Kindle Fire puts the company into a fast-growing but competitive field.

B&N HEAT

The competition is likely to heat up further, withBarnes & Noble expected to introduce its own tablet next month. The bookseller already has a tablet-like device in the Nook Color. The new tablet is expected to provide faster access to the web, a broader array of apps, and better video-playback capabilities.

Barnes & Noblehas asked investors to be patient with its e-book initiatives, butAmazons Firehas turned up the heat.

Sarah Rotman Epps, senior analyst at Forrester Research, is among those who believe B&N will soon cut the prices on both Nook products because it has no other choice. At that point, she says, B&N will have one advantage over Amazon: a big presence for Nook in its brick-and-mortar stores. Otherwise, a customers preference for Nook is likely to hinge on loyalty to the B&N brand, if anything.

Of course, B&N could also offer an out-of-left-field upgrade for Nook that could be a game-changer. So far, the only rumors that have surfaced on that topic are about a higher-end Nook Colorcalled Acclaimthat would sell for $349 in October.

FIRE SERVICE

The Kindle Fire is Amazon’s second foray into the hardware business, after selling the Kindle reader for four years. And though their CEO said in an interview that Amazon engineers drove the design of the gadget, people familiar with the device say the company outsourced some of the design and manufacturing to an Asian manufacturer.

Bezos said his tablet strategy was about more than selling gadgets. “Well, you can call it a tablet if you want. I call it a service,” he insisted. A piece of that service is this hardware, and “the service is that deep integration with that content and that media,” Amazon.com CEO added.

Amazon didn’t let reporters test or touch the Kindle Fire at Wednesday’s event, having company handlers show them off instead. The Kindle Fire has a smaller screen and less storage capacity than the iPad and runsGoogleInc.’s Android operating system.

Analysts have hailed the Amazon Kindle Fire as the first tablet able to challenge the dominance of Apple’s iPad.

Sources: Wsj, Channelweb, Mashable

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