The $199 price point for the Kindle Fire is so aggressive that it's just one way the tablet is distancing itself from the iPad. Of course it hopes to steal sales from the iPad, but that will be somewhat harder than poaching from Google's (Nasdaq: GOOG ) Android brethren. No other Android tablet offering can come close to the value proposition that Amazon CEO Jeff Bezos has just put up.
The Kindle Fire lacks some notable features because of its price tag. For example, there's no camera, microphone, or 3G connectivity. AllThingsD is reporting that Amazon could lose roughly $50 per unit, but I have little doubt that the company will make that up in no time with content sales and Amazon Prime subscriptions, since the Kindle Fire comes with a free one-month test-drive of the service.
The tablet's heavy integration with Amazon's myriad of other services is something no other Android tablet maker can replicate. Its 8 GB of onboard storage seems paltry, but all Amazon content gets free cloud storage.
The traditional Kindle offerings have also seen their prices notched down alongside refreshed hardware, with the entry model starting at a nearly irresistible $79. The Kindle Touch will cost you an extra $20, and the Kindle Touch 3G can be yours for $149. Barnes & Noble (NYSE: BKS ) shareholders are shaking in their boots, with shares dropping by as much as 14% today on the unveiling as investors feared that the upcoming Nook Color 2 won't stand up.
Android tablet makers including Sony (NYSE: SNE ) , Samsung, Motorola Mobility (NYSE: MMI ) , and HTC are now dead in the water with their gadgets. None of them can compete on this level, either on price, content integration and availability, or service.
These are areas where Apple excels, and this is why Apple will be able to play solid defense against the Kindle Fire, even with more than double the entry-level price. Sure, the Kindle Fire may be able to make a dent in iPad sales, but it will absolutely incinerate Galaxy Tab, Xoom, and Flyer sales.
The Android tablet market now belongs to Amazon.