Amazon Goes After Apple with $199 Tablet

Published on

Amazon, the ubiquitous Web retailer, took aim Wednesday at Apple's white-hot successby offering a tablet computer at less than half the price of the iPad.

Armed with a massive retailing operation and a vast catalogue of movies, books and music, Amazon, with its $199 Kindle Fire, may pose the most significant challenge to one of Apple's signature products by making its multimedia device far less expensive to consumers, analysts said.

A tablet war between the Web's biggest retailer and Apple, the world's most valuable company, would be about far more than which company can make the best device. These corporate titans are vying to become the gateway through which consumers meet all their multimedia needs.

Apple's deals with Hollywood, the music industry and software developers, and its ability to seamlessly integrate that content into gadgets, has so far given it a defining edge over pure hardware makers.

But Amazon is different from other Apple rivals, because it has a similarly expansive library. And now it offers a device that is $300 less than the cheapest iPad.

Since its founding as an Internet bookstore, Amazon has methodically added products and services to its virtual shelves, disrupting mom-and-pop stores and big-box chains such as Borders. It now competes directly with the likes of Wal-Mart, Netflix, eBay and Google.

Amazon's latest move puts the company in a crowded race, with an array of corporate giants competing to capture consumer attention.

Last week, Facebook saidit would allow users to share music and shows with their social network. Traditional cable companies have responded with their own video streaming. Dish Network, fresh off its purchase of Blockbuster, is now offering a Netflix-like service for its customers.

And Apple is set to unveil a revamped lineup, including a new iPhone, next week.

The battles among these companies at times have been intense.

Apple has not been shy about suing competitors who have mimicked its tablet. And some analysts said Apple and other companies could complain more loudly about Amazon's long-held advantage – its customers don't have to pay taxes at the time of purchase.

Eventually, if Amazon gains more dominance in consumers' lives, federal lawmakers and regulators may take a closer look at the company, other experts said. These officials are already probing Google, Facebook and Apple over whether the companies are becoming too monopolistic or violating the privacy rights of consumers.

Amazon's massive footprint fits the profile of these tech titans. Google Chairman Eric Schmidt has called Google, Facebook, Apple and Amazon "the gang of four," saying they will define the Internet economy of the future.

"Google, and Facebook and maybe Amazon with this tablet announcement are becoming too ubiquitous, and that may be limiting for consumers," said Carmen Balber, the Washington director of the public interest group Consumer Watchdog.

The tablet is a relatively new device, but sales have been brisk.IDC Research projects 34 million tablets will be sold this year, and 130 million in 2015.

Lee Wiker has been waiting for the device to get cheaper.

The LaGrange, Ga., mother of four bought two Kindle Fires minutes after Amazon started taking orders early Wednesday. She is a fan of the Kindle e-book reader and says it has fed her love of reading. She's hoping for the same effect on her 13-year-old son.

So she bought two tablets – as early Christmas presents – one for him and one for herself.

"My husband loves the price . . . and I told him it's a lot cheaper than diamonds and gold," Wiker said.

Analysts noted that Amazon's Fire lacks many of the amenities that has allowed the iPad to be a suitable replacement for laptops.

Rather than a full-fledged computer, some analysts see it as an upgraded e-reader designed to capture consumer attention and keep them coming back to Amazon for all their needs, be it diapers or blockbuster flicks.

"They could give it away and still make money," said Carl Howe, head of consumer research for Yankee Group.

The Fire and a lineup of new e-readers were unveiled by chief executive Jeff Bezos in an Apple-style presentation at the Stage 37 event hall in New York.

The Seattle retailer announced upgrades to the Kindle that will start at $79 for a basic e-reader, $100 for an e-reader with a touch screen and a third one priced at $149 that offers a 3G wireless connection with no monthly charges.

The company also touted a new browser, called Silk, that Amazon said would speed browsing by predicting where users will go on the Web.

The Fire tablet, which weighs 14.6 ounces and has a seven-inch screen, will begin shipping Nov. 15.

"We're building premium products at non-premium prices," Bezos said.

Contact the author at: [email protected]

Staff writer Hayley Tsukayama contributed to this report.

Latest Videos

Latest Releases

In The News

Latest Report

Support Consumer Watchdog

Subscribe to our newsletter

To be updated with all the latest news, press releases and special reports.

More Releases