Following a story on TechCrunch yesterday saying that Amazon has a new $99 Kindle Fire HD tablet in production Amazon has responded with a short statement saying “It's not happening”. Yesterday’s story was put together with info from industry insiders and supported by various analysts who said the $99 Kindle Fire HD tab is in production, will be a good move and entirely possible for Amazon to achieve.
So what’s happening? TechCrunch still insists it has got it right and that Amazon’s denial is simply that the current version of the Kindle Fire HD 7-inch will not be made available for $99, it will be a new SKU. The current Kindle Fire HD sells for $199 on Amazon’s US site so $99 is a huge discount on something that is already priced “at break-even”. The key here is that TechCrunch says that while the new Kindle Fire HD SKU will share the range’s TI processor choice and the HD 1280x800 resolution of the $199 unit, savings will be made in other areas.
Amazon’s denial of the rumour was as follows “It's not happening--we are already at the lowest price points possible for that hardware.” Please note the phrase “for that hardware”, Amazon doesn’t deny that a new Kindle Fire HD SKU is in production.
How will the new SKU compare?
No-brand Chinese made tablets with “HD” screens can be produced for the around $100 market so why not an Amazon made one? IDC Research Director told TechCrunch that “The infrastructure is definitely in place for Amazon to go even lower. If they can sell the product at roughly what it costs to build, that fits their long-term vision to make money selling you content on that device. It’s entirely possible – physically possible – to create a device that costs $99, particularly at the scale that Amazon would do it.” It is believed that Amazon actually loses money, is below break-even, on selling each Kindle Fire tablet but it benefits in the longer run by customers becoming woven more tightly into its online stores.
Sometimes companies don’t like customers to know about newer improved and cheaper comparable products coming out, especially if they have a considerable amount of stock of the previous models left to shift. Is this the case with this TechCrunch and Amazon story?
