At just US$50, the Amazon Fire tablet is expected to stoke the flames in a highly-competitive tablet market, according to ABI Research.
The Fire’s price is significantly lower than the average vendor selling price of US$323. It is a calculated risk that Amazon can afford to take as the company shifts its revenue focus away from solely hardware and toward recurring digital content sales.
Sporting a seven-inch screen, the tablet comes with 8MB of built-in memory, quad-core 1.3GHz processor, dual camera, and battery life good for up to seven hours of reading, web surfing, video watching, and music listening.
“Unlike other tablet manufacturers, Amazon views hardware as a commodity and emphasises focus on its recurring digital content revenue stream, generated from selling digital books, music, TV, and video programming to owners of its devices. The incredibly low pricing of the Fire tablet is a smart and strategic move, as few others can afford to accept a lower margin on their tablet devices in favour of driving a surplus of content-related revenues,” said Jeff Orr, Research Director of ABI Research.
ABI Research estimates that Amazon sold five million of its various tablet models during the final three months of 2015. At this figure, Amazon ranks #3 overall for branded tablet shipments for that quarter and #5 for the full 2015 calendar year.
“Most tablet vendors continue to take a wait-and-see approach to Amazon’s Fire tablet release. It’s a path only few can follow, as vendors without content distribution rights and value-added services can only rely on the transaction price of their hardware to stay in business. For instance, LeEco, formerly LeTV, in China is attempting a similar model. Conversely, content owners may find value in broadening their ecosystems by striking relationships with tablet vendors to get their programming in front of more users,” said Orr.