With the unveiling of its first tablet, the Kindle Fire, Amazon has done more than just deal a serious blow to Apple dominance in the market. It has also guaranteed itself new Amazon Instant Video customers. Lots and lots of them.
Amazon Kindle Fire
Amazon today unveiled a host of new Kindles, one of which is more than just an eBook reader. The Kindle Fire is an Android tablet boasting a 7″ touchscreen, a brand new Web browser, access to the app store, and unlimited cloud storage for Amazon content. And all for the low, low price of $199 – $300 cheaper than the base model Apple iPad.
It is estimated that Apple will lose $50 on each Kindle Fire sold, but that’s OK, it really is, because Amazon is going to make its money elsewhere. This is a classic case of offer up the hardware at a loss in order to win big further down the line. Very similar to how the video games business works.
Content Is King
Amazon is primarily a retailer which makes money selling content, with hardware only recently being factored into the equation. That includes digital content, including movies and television shows, sold, rented, and offered for free via Amazon Prime.
The Kindle Fire will mean rentals and sales of digital content will increase by a huge margin, especially if the tablet sells in as big numbers as have been estimated.
Add to that the fact that the Kindle Fire comes with a 30-day free subscription to Amazon Prime, as noted by NewTeeVee. Even if just a small percentage of Fire owners decide to pay for Prime after their free trial ends it will be a huge deal, adding funds for Amazon to ink deals for new content to add to the 11,000 titles it already boasts.
I expect the Kindle Fire to sell exceptionally well, and for Amazon to do exceptionally well in terms of selling more digital content as a result. I’m guessing Netflix will be very worried at this point. After all, this surge by Amazon couldn’t have come at a worse time for Reed Hastings and co.