Kindle Fire $199.99
Kindle (With Special Offers) $79
Kindle Touch (With Special Offers) $99
Kindle Touch 3G $149
According to Bezos, he's rather comfortable with slim profit margins and is banking on the sales of apps, music, movies, and books to offset those loses. A smart move, for sure. Amazon must've been taking detailed notes as they watched other tablet makers fail miserably. (I also, for some reason, can picture Bezos barking out laughter and rubbing his fingers together manically.)
Will these "non-premium prices" make that much of a difference? Probably. At $199, the Fire is a borderline impulse buy, and it will certainly spur a lot of interest from non-techies and families looking to buy their children tablets without having to drop Apple Bucks for an iPad. But I don't think the Fire will compete much against the iPad, though. The iPad is still a superior device, and people have come to rely on and fully embrace Apple's technology. Amazon has a rather spotty track record with hardware--1st gen Kindle, anyone? I do, however, believe the Fire will put a big dent in iPod sales, which has traditionally been Apple's gateway drug. If you're gonna drop $229 for an iPod, why not spend a little less for a Fire?
Of course, Amazon's main beef is not with Apple but with Barnes & Noble. Why go for the fast gazelle when you've got a perfectly good wounded elk close by? Fortunately for B&N--and I say this with loads of sarcasm--Amazon has been kicking B&N's ass for many years now. It's nothing new for B&N to play the wounded-animal role to the Amazonian Huntress.
Still, I think there's a lot of overreacting going on here, especially for devices that haven't even shipped yet. Everything looks great in a presentation, but how will the devices perform in the real world? Not to mention, once the nostalgia of The New dies down--and with technology that number's measured in nanoseconds--the Fire is just another tablet in an already crowded space. For that matter, the Kindle Touch is just another keeping-up-with-the-Joneses device, too, since it's essentially no different than what B&N, Sony and Kobo already offer. Sure, it's less expensive, but that brings me to my final point: vendor lock-in.
If you're not familiar with the term, here's a bit on it from Wikipedia. Bottom line, if you've already purchased all these apps, movies, books, etc. that are tied to a specific device, it might not matter how low Amazon prices their Kindles. In part, vendor lock-in is why the Apple iPad dominates the tablet market. Not because it's the best device out there or the least expensive, but because people have already invested heavily in apps, movies, and music for their iPhones and iPod Touches. You buy a dozen or so movies, a handful of iBooks, and some of them fancy shoot-'em-up games for your iPhone, you pretty much just justified the price difference between a Fire and an iPad.
There does seem to be growing movement for demand in vendor neutral services like Netflix and Pandora and so forth, and I imagine that trend isn't going to change, but for now, most people are tethered to their existing devices, and introducing more devices with their own propriety content just doesn't seem to be a game changer.
Either way, it's gonna be interesting to watch all this play out.