Amazon Knows What Microsoft Does Not

Amazon.com (NASDAQ: AMZN  ) is raising the bar -- again -- by lowering the bar, again.

The leading online retailer is lowering the price of the Kindle Fire HD to just $139. The popular Android-fueled tablet that was trading at $199 earlier this year was being sold for as little as $159 recently. The speculation at the time was that Amazon was clearing them out ahead of an update.

Well, we did get an update today in the rollout of the Kindle Fire HDX, but that didn't stop Amazon from not only continuing to promote the HD alongside the HDX but also slashing its price down to the ridiculously attractive $139 mark.

The new HDX offers an improved display, double the memory, longer battery life, and other upgrades including free live Mayday tech support. The tablets start at $229 for the 7-inch model and $379 for the 8.9-inch unit. They will ship next month.

We can compare this with Microsoft's (NASDAQ: MSFT  ) revamped Surface line that was updated on Monday. In both cases, folks can pre-order a tablet now that won't be available for nearly a month. That's a fail on both companies for creating hype for a product that can't be satisfied right away.

However, unlike Amazon's decision to slash the Kindle Fire HD all the way down to $139 -- making sure that it would be a hot seller -- Microsoft chose to keep around last year's Surface RT at the $349 price that will likely sink the prospects of both last year's tablet and next month's $449 Surface 2 update.

Microsoft's decision to gun for Apple instead of the lower end of the market has been a failure. Microsoft has just 4% of the tablet market, and it had to take a $900 million accounting hit on excess inventory of its soft-selling tablets. Even Apple has struggled with its market share taking a big hit over the past year. Despite the growing tablet market, Apple sold fewer iPads in its latest quarter than it did a year earlier.

Yes, the Surface is larger than the Kindle Fire HD, so it may not be fair to compare last year's Kindle Fire HD at $139 with the Surface RT at $349. However, between Amazon, Apple, and Microsoft there appears to be just one company willing to sell devices at cutthroat prices in the hopes of making that back through its ecosystem. 

Amazon getting cheaper will make it more relevant. There are plenty of 7-inch Android tablets out there selling for less than $139, but Amazon continues to be the brand name in that niche with the vibrant ecosystem to make it a worthwhile purchase.

Once again, Amazon gets it right.

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  • Report this Comment On September 25, 2013, at 5:32 PM, GameBot wrote:

    they are both targeting different markets...

    Or perhaps you simply did not understand that?

    MSFT is trying to support the workplace, Amazon retail.

    Come on Fools, get it together.

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