Amazon is set to reinvent retail again, with the launch of the Kindle Fire 2. With a price tag of £159 for a 7-inch device that undercuts the Google Nexus and iPad rivals, Amazon is attempting to sell a service as much as it is selling a tablet.
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Amazon has introduced several cloud-based features to make it possible to access and synchronise Kindle content across several devices. The Amazon Kindle Fire 2 uses a 1280x800 anti-glare HD display, stereo sound and offers 11 hours of battery life, according to the company.
But Amazon has done more than introduce a tablet.
Patrick O'Brien, lead retail analyst at Verdict Research, said: “I think it is a very interesting move by Amazon to include its own promo ads and recommendations in the new tablet lock screen/screen saver.”
O’Brien predicted the heavy integration of Amazon services into its customised Android operating system (OS) would mean Amazon could pick up most of the entertainment spend on the device, as well as becoming the first port of call for all e-retail browsing and searches.
“Rakuten-owned Kobo (which operates Play.com in the UK) is likely to attempt a similar approach, but there is not much that other retailers who do not have the might to introduce their own devices can do, beyond ensuring that their websites and apps for tablets are as intuitive and well marketed as possible,” O’Brien said.
If the Kindle Fire HD tablet is successful in taking a significant chunk of the tablet market, O’Brien expected large retailers like Tesco to enter partnerships with tablet manufacturers to get their brand integrated into the device, perhaps enabling the manufacturer to sell the device at a lower price.
At the launch of the Amazon Kindle Fire 2, CEO Jeff Bezos said he wanted to make money when people used the device, rather when people bought the device.
“The Amazon Kindle Fire HD is not only the most advanced hardware, it’s also a service. When combined with our enormous content ecosystem, unmatched cross-platform interoperability and standard-setting customer service, we hope people will agree that Kindle Fire HD is the best high-end tablet anywhere, at any price.”
However, while the company with be pushing digital media such as LoveFilm, for streaming on-demand video, the Kindle bookstore, the Amazon Appstore and its MP3 music library, Amazon’s biggest growth areas is in electronics and general merchandise.
Amazon's electronics and merchandise business made $9.7bn in the US for the first six months of 2012, almost 70% more than last year. For comparison, the six-month revenue from digital media products was $4.0bn compared to $3.5bn last year. Internationally, Amazon is looking to replicate its success in North America.
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The low price-point means the Amazon Kindle Fire 2 is effectively competing with low-end Android tablets. But the Kindle Fire HD offers high-end features, although the screen is just seven inches wide on the base model. So it is effectively competing with Apple and Samsung. Microsoft too should be worried, because the Amazon Kindle Fire 2 represents another option for consumers holding out for the launch of Windows 8 RT-based tablets.
But Amazon CEO Jeff Bezos is not only going after the tablet market. His aim is clearly to make Amazon the retailer of choice wherever users shop.