Business | September 12, 2012

Amazon again sets low price record for 7'' tablets

Currently consumers can get a 7'' tablet at an advantageous price of $199 thanks to the first generation of Kindle Fire released by Amazon last year.
In the near future consumer can even buy a 7'' tablet of upgraded version at only $159, and this is thanks to Amazon again. Kindle Fire SD priced at $159, 20% cheaper than its peers, sets a new record for low-priced tablets, according to WitsView, the display research division of TrendForce.

As indicated by Eric Chiou, research director of WitsView, Amazon has launched several models at one time, among which 7 inch products coming out with most appealing prices. Although the upgraded Kindle Fire SD’s 1024x600 resolution feature shows no amazements, it is leading the way in the tablet market with a competitive price of $159. That is extremely appealing to price-oriented buyers and consumers who hesitated to purchase tablets amid the high prices.

As for 7'' Kindle Fire HD, compared to its biggest rival Google Nexus 7, both use the WXGA(1280x800) and direct bonding allowing less reflection and better transparency, leading to comparable outside standards. From the views of cost, Kindle Fire HD applies the traditional GG structure for the touch module with at least a higher cost of $3-$4 compared to Nexus 7’s one glass solution (OGS), 16G of storage is obviously twice as large as Nexus.

Amazon chooses to absorb the cost and tag 7'' Kindle Fire at the same price of $199 to regain the market share lost due to Nexus 7’s releasing. The competitive price indicates Amazon’s conviction to ensure the position in both low-priced and mainstream segments of 7'' market as iPad mini is expected to come out in 4th quarter, which is comparable in size.

Based on WitsView’s observations, it is quiet common for operating system developers such as Google and content providers such as Amazon to lower tablet price with subsidy. Tablet brands which only make profit on hardware have lost competitive edge in the 7” market. Once the same pattern is duplicated to 10.1'' and 10'.6'' markets, the room for hardware manufacturers to survive would be further suppressed.

8.9” Kindle Fire HD features full HD(1920x1200), which is not the mainstream choice among its peers. Chiou said that the basic models of 10.1'' and 9.7'' have been priced below $400 and the price could further drop to $350 range due to promotions in 4th quarter.

Although Kindle Fire HD is equipped with the highest resolutions among the peers but the active area is only 77% of 10.1''. The relatively small price gap of $50 shows less popularity than 7''. The sale performance is estimated to be suppressed by mainstream products such as 10.1'' and 9.7”.

According to WitsView, although Amazon Kindle Fire showed weak sales for the first 3 quarters of this year amid the absence of newly released models, this year Amazon’s tablet shipments are projected to reach 7 million to 7.5 million with the showcase of Kindle Fire HD.

On the other hand, tablet prices will become more and more consumer-friendly. The phenomenon that all school kids and senior citizens are in possession of tablets can be expected. Affordable tablet trend would also be an important factor to boost tablet sales, the shipment is projected to grow 37% YoY in 2013 and climb above 130 million units.


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