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The tablet PC world is on fire as Amazon (NASDAQ:AMZN) unveiled its answer to Apple’s (NASDAQ:AAPL) successful iPad, the Kindle Fire. “The Kindle Fire will have a 7-inch display and sell for $199, compared with $499 for Apple’s cheapest iPad, Amazon executives said. The device, a souped-up version of the Kindle electronic-book reader, will run on Google Inc.’s (NASDAQ:GOOG) Android software.” The Kindle Fire, which will be released November 15th, is just one piece of the puzzle to reshape the tablet world.
The popularity of Apple’s iPad has brought attention to the tablet market, but other companies have had a hard time converting iUsers. Last month, Hewlett-Packard (NYSE:HPQ) announced it was canceling its TouchPad tablet after only six weeks on the market. HP flew its white flag as it explained it would abandon personal computing needs altogether, and focus solely on business and government computing needs. The TouchPad was only able to generate a buzz after slashing its price to $99.
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Amazon (NASDAQ:AMZN), the world’s largest online retailer, is hoping to challenge Apple by launching several new lower priced products in addition to the Kindle Fire. CEO Jeff Bezos also unveiled the Kindle Touch, which is an e-reader with a touch screen priced at $99, along with one that has cellular network access for $149, and a basic Kindle e-reader at a new price of $79.
However, the main focus of the day is the Kindle Fire. At a price of $199, it could present a real challenge to the iPad, something that past companies such as Motorola (NYSE:MMI) and Research in Motion (NASDAQ:RIMM) have been unable to do. Microsoft (NASDAQ:MSFT) is also preparing to re-enter the tablet market (after past failures) with its Windows 8 in the near future.
Analysts were expecting a price of about $250 for the Kindle Fire. At a price of $199, analysts are now expecting Amazon to subsidize the low price tag. However, Amazon has an advantage that past tablet challengers were lacking, a massive library of digital and physical goods. The Kindle Fire will make it easier to buy Amazon’s products, including everything from books and movies to sports equipment.
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Along with the Kindle Fire, Amazon (NASDAQ:AMZN) is launching Amazon Silk, which is a cloud-accelerated browser that uses a split browser architecture to leverage the computing speed and power of the Amazon Web Services cloud. Forrester analyst, Sarah Epps explained, “Amazon’s willingness to sell hardware at a loss, combined with the strength of its brand, content, cloud infrastructure, and commerce assets, makes it the only credible iPad competitor in the market.” Analyst estimates that Amazon can sell between 2 million to 5 million tablets in the fourth quarter. In comparison, Apple sold over 9 million iPads in the second quarter of this year, and nearly 29 million iPads from April 2010 to June 2011.
Amazon’s large online presence and lower price tag gives it a real shot to compete with Apple. Unit sales estimates easily outnumber RIM’s (NASDAQ:RIMM) 500k shipped Playbooks, and Motorola’s 690k shipped XOOM tablets. Investors also appear to be predicting success as Amazon shares jumped nearly 4% on the new tablet announcement, while Apple shares were mostly flat. At the least, Amazon looks to gain a larger share of the e-reader book market. Shares of Barnes & Noble (NYSE:BKS), the maker of the NOOK, fell more than 6% on Wednesday.
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