With new Kindles, Amazon shakes up tablet game

September 7, 2012

Amazon introduced four new Kindle tablets Thursday at a news event in California. The Post’s Hayley Tsukayama reports :

Amazon sent a shot across Apple’s bow Thursday with the introduction of a 4G tablet that’s hundreds of dollars cheaper than the iPad.

Actually, the company introduced four tablets and a new e-reader: the light-up Kindle Paperwhite e-ink reader, a new version of the Kindle Fire and three versions of an enhanced tablet called the Kindle Fire HD.

The announcement included a 4G LTE-enabled, 8.9-inch, 32GB tablet for $599, which Amazon compared directly with the equivalent iPad in a chart onstage, according to ABC News. A 32GB iPad with a 4G connection costs $729.

There are key differences between the two tablets, of course. The iPad is bigger with a 9.7-inch screen and comes with iCloud storage and a larger variety of applications than the Kindle Fire HD. And, while Amazon is offering a $50 per year data plan for its tablet, the plan comes with just 250 MB of data. Yes, it costs more to have the same amount of data on the iPad (AT&T’s plan is $14.99 per month for the same amount), but Amazon customers won’t be able to do much on the cellular network besides some light e-mail and Web surfing.

Even with those limitations, however, Amazon has pulled off a pricing coup that chief executive Jeff Bezos touted in his remarks to the crowd.

He said that hardware should be simply one part of the services that companies offer to their consumers. “We want to make money when people use our devices, not when they buy our devices,” Bezos told the crowd in California, according to a report from Ars Technica.

So, what does Amazon’s Kindle Fire HD line mean for Apple? Bloomberg reports :

Chief Executive Officer Jeff Bezos, who unveiled the devices in Santa Monica, California, is retooling the tablets as consumers face a widening array of choices, including new entries from Google Inc. and Microsoft Corp. At stake is a piece of a market that may reach $66.4 billion this year, according to research firm DisplaySearch.

“This wasn’t a product announcement as much as it was a declaration of war,” said Michael Gartenberg, an analyst at market research firm Gartner Inc. “It’s clear that Amazon is going to go after Apple customers. Amazon at this point is not a company Apple can ignore as a competitor.”

Amazon gained 2.1 percent to close at $251.38 in New York, a record high. The stock is up 45 percent this year and trades at 181 times estimated earnings over the next year. That compares with a price to earnings ratio of 14 for Apple and 15 for Google.

To woo users from Apple, Amazon relies on the Kindle to help sell digital movies, books and music — an effort that may be bolstered by the revamped device. Still, the company will soon face increased competition from Apple, which will introduce a smaller, cheaper iPad by year-end, two people with knowledge of the plans said in July.

The Associated Press takes a look at how the new Kindle Fire HD compares with the original Fire tablet:

Amazon’s new Kindle Fire HD boasts a much more vibrant screen than the original tablet that came out about a year ago. That makes buying movies and TV shows to watch on the device a lot more appealing.

The screen is such a major improvement that I can’t see why you would purchase the upgraded non-HD older model, even if it means saving $40. The new offering brings the new Kindle Fire HD into closer competition with Apple’s market-leading iPad, which introduced a higher resolution screen earlier this year.

By the numbers, the difference between screens on the new and older model doesn’t seem that big. The smaller Kindle Fire HD, with a screen measuring 7 inches diagonally has a screen resolution of 1280 x 800. Last year’s 7-inch model, and the upgraded version with better innards unveiled Thursday, has a screen with 1024 x 600 pixels.

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