Easy to swallow: Amazon launches ultra-cheap US$50 tablet, available in six-packs
Amazon has unveiled a major home electronics push, led by a US$50 tablet computer and other devices aimed at budget-conscious, gadget-hungry consumers.
The low-cost, seven-inch (18cm) Fire tablet is part of an upgraded line being launched by the online retail giant, along with updated Fire TV streaming media devices and a new game controller box.
Amazon, which appeared to stop sales of its Fire Phone earlier this month after a lacklustre response, is making an aggressive push into the living room at the low end of the electronics market as rival Apple launches its high-end tablets and phones.
“Today, we’re taking another step in our mission to deliver premium products at non-premium prices,” Amazon founder and chief executive Jeff Bezos said in unveiling the new tablet.
The low-cost tablet, which will operate on the newest version of the Fire OS operating system based on Android, “sets a new bar for what customers should expect from a low cost tablet.”
Amazon has built a reputation for selling at low profit margins to build customer loyalty, and getting consumers into its ecosystem for shopping, music, online video and other services.
The new budget tablet will be available starting September 30, with an option to buy a “six pack” of the devices at US$250, with one free.
Amazon is also launching a new 8.1-inch Fire HD tablet at US$149 and a 10-inch device at US$229 - less than half the price of Apple’s latest comparably sized iPads.
Analysts said Amazon is unlikely to make a profit on the US$50 tablet, and may even lose money on the device, but will use it to lure more consumers into the Amazon orbit.
“It does appear this falls into the philosophy of getting people onto the Amazon platform to make money selling them music and movies and books,” said Avi Greengart, analyst at the research firm Current Analysis.
Greengart said Amazon, which has never been among the leaders in hardware, still has a gap in its lineup now that the Fire phone appears to be dead. Amazon made no formal announcement about the phone, but it has been out of stock, with no indication it will be available again.
“The phone is the one object that everyone needs,” he said. “Everything else is less of a necessity and more of an amenity.”
Still, Greengart added that he liked the new tablets.
“They have a low price point and could get people to be more likely to use Amazon services,” he said.
Tim Bajarin at the consulting firm Creative Strategies said in a blog post that “these three models can drive a lot of sales of tablets for Amazon and, if the US$50 model has strong demand, it could even drive the overall market for tablets up by as much as 10 to 15 per cent from where it is today.”
Bob O’Donnell at the research firm Technalysis was more cautious.
He said the new tablets “are fine, but they are not going to change the world.”
Global tablet sales are sputtering because many markets are saturated and low prices may not spark a turnaround, O’Donnell said.
“There have been low-cost tablets from other players for a couple of years and it hasn’t dramatically changed the arc of the tablet market,” he said.
Roger Kay of Endpoint Technologies Associates said the product push is part of the longtime strategy by Bezos of building a customer base.
“He just wants to get the tablet in your hands,” Kay said.
“Every unit is a bit of advertising, another way to enhance the brand, it can help in a number of ways.”
But Kay said Amazon has yet to prove it can leverage its customer base to deliver the kind of profit that Apple has.
“They get a lot of points for being innovative,” he said, but noted that “the strategy only works if they can turn all that revenue into some kind of profit, and they haven’t done it consistently.”