SInce entering the tablet market Amazon's (NASDAQ:AMZN) principle strategy has been to market high-function, low-cost alternatives to the market leaders.
That has led to the online retailer's creation of a line that's a mix of decent low-end models at rock-bottom prices and rivals to top-tier tablets priced well below the going rate for an iPad or a Galaxy. The company has elected to stay with that strategy with its newest Fire tablets, laying down the gauntlet when it comes to price along with features for the money.
If anything, Amazon has bet even more strongly that the best way to build market share is to lower prices. That strategy has not worked so far. According to IDC, the company did not crack the top four companies shipping tablets in the second quarter of 2015, meaning it has less than the 3.6% share held by the fourth-place finisher.
Still, the company has at least sold enough tablets to stick at it, and its latest models may finally be cheap enough to lure in mass sampling.
That's really cheap
When it was first launched, the Fire line started at $99, which made it very appealing because at the time, the only sub-$100 tablets were very off-brand Android models. That price tag very quickly became less impressive, though, as name makers began releasing Android devices in the same range, which were joined last holiday season by $99 (or less) tablets running Windows 8.
To answer that, Amazon has made its newest entry-level Fire Tablet $50, or even less since it also sells a six-pack of the 7" device for just under $250. And while the new tablet won't rival the latest top-tier models, it has decent specs, including a quad-core 1.3GHZ processor, 7" IPS display, front- and rear-facing cameras, up to 128GB of expandable storage, and access to a variety of exclusive content from the retailer.
Amazon bragged about the new $50 Fire in a press release, taking the following shots at some of its rivals:
- Unlike other low-cost tablets that use TN displays, Fire's 7" IPS display offers a great viewing experience with vivid and accurate color reproduction that can be seen at all angles.
- Two times more processing power than Samsung Galaxy Tab 3 Lite at less than half the price; quickly and easily switch between apps, stream movies, and browse the web without waiting for your tablet to catch up.
- As measured in tumble tests, Fire is almost 2 times more durable than the latest generation of the iPad Air.
The retailer makes lots of other boasts about its new device and its content ecosystem, but it's probably fair to say that the company has set a new standard for pricing. I have a second-generation Kindle Fire, which has a slower processor and less on-board memory than the new $50 fourth-generation model and it performs just fine. That makes it a very safe bet that the $50 Fire will be a good value, which should bring the company some new customers.
Higher-end models are cheap, too
In addition to going after entry-level users, Amazon has also refreshed its Fire tablet line with some higher-end models with better specs at comparatively low prices. The company has two new models -- one with an 8.1" widescreen display and the other with a 10.1" widescreen -- both of which boast beefed-up processors, cameras, and storage from the discount models.
Both tablets are the company's thinnest ever, at 7.7mm, and both have improved HD displays with over 1 million pixels and a 16:10 widescreen aspect ratio. "Fire HD 8 offers 15% more HD video viewing area and Fire HD 10 offers 22% more HD video viewing area than similarly sized tablets with a 4:3 aspect ratio," the company said in a press release.
Fire HD 8, which ships September 30, comes in 8GB or 16GB versions starting at $149.99. It comes in four color options: black, magenta, blue, and tangerine. Fire HD 10 is sold in 16GB or 32GB configurations starting at $229.99. It is available in two color options: black starts shipping September 30, and white starts shipping in the coming weeks.
Amazon is playing this well
While the higher-end models are unlikely to do much better than their predecessors, the $50 model has he potential to be a game-changer. Though it comes with sacrifices in screen and audio quality, the cheap Fire offers good enough specs for a dirt-cheap price. At $50 it makes sense to buy one as an extra machine, for a child, or just on a lark.
Amazon is essentially betting that its original low price was not actually low enough. That probably means the company is losing money on the sale of each $50 tablet, but that's irrelevant when you consider that each one operates as a mini in-home Amazon.com, unlocking considerable possible revenue over its lifetime.
This is a bold play by the company that will either grow its tablet audience this holiday season or signal that unless it simply gives them away, a mass audience does not want an Amazon tablet. I'd bet the former and assume that a lot of people are going to get Fire tablets under the tree, in their stockings, or however else they receive gifts.
Daniel Kline has no position in any stocks mentioned. He will almost certainly buy a $50 Fire even though he has a bunch of tablets already. The Motley Fool owns and recommends Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.