The new Kindle Fire HDX costs $229 to $479 and comes in two display sizes, 7-inch and 8.9-inch, Amazon said in a statement Tuesday. While the prices are lower than Apple Inc.’s latest iPads and iPad minis, which start at $329, they are more expensive than the older Kindle Fire HD that started at $199. The HDX tablets have higher-resolution screens, faster processors, weigh less than their predecessors, and have 4G wireless capability.
Amazon is battling Apple and Google Inc. in the tablet market, where it remains a smaller player. While Amazon’s devices have done well in the holiday season, sales have dropped off after the rush. The company was No. 3 after Apple and Samsung Electronics Co., with 12 percent share in the fourth quarter of 2012, according to researcher IDC, and slipped to No. 4 with 3.7 percent share in the first quarter.
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New 7-inch Amazon Kindle HDX tablet (AP-Yonhap News) |
Amazon takes a different business approach with its tablets than its rivals. While Apple makes money on an iPad each time a tablet is sold, Amazon offers its devices at cost. The Seattle-based company instead aims to profit off the movies, books and music consumed on each Kindle Fire, Chief Executive Officer Jeff Bezos said in an interview.
“We want to make money when people use our devices, not when they buy our devices,” Bezos said. “We think that’s good customer alignment. No one has to be on the upgrade trend.”
The company has a history of offering some products and services at cost or at a loss in order to drive consumer engagement. Amazon charges just $79 a year for its Prime fast-shipping service, and members of the program tend to be some of the heaviest buyers of goods through its website.
Amazon has been spending to improve its Kindles, squeezing profit margins and contributing to a $39 million loss last year. Earlier this month, the company updated its Kindle Paperwhite e-reader, adding a sharper screen, faster processor and new features.
In total, the tablet market is projected to increase three-fold to $125 billion by 2017 based on units shipped, according to IDC.
Amazon shares are up 25 percent so far this year, compared with a 19 percent gain in the Standard & Poor’s 500 Index, as Bezos pours money into fulfillment, cloud technology and Kindles. (Bloomberg)
