Competitors are feeling the heat this week as Amazon's new Kindle Fire wowed consumers and undercut other tablets - in some cases, by hundreds of dollars. The Fire's low price point appears to be forcing down those of other tablets as well, with the HTC Flyer the second slated such product to be discounted at Best Buy this week.
The retailer currently has the 16GB Flyer priced at $499.99 but will begin selling the 7-inch Android tablet for $299.99 in Best Buy stores across the United States starting Saturday, October 1st and will maintain the reduced price indefinitely. Best Buy also steeply discounted Research In Motion's BlackBerry PlayBook last week, knocking $200 off the price of each of the three storage sizes. The promotional prices on the PlayBook are temporary and will run through Oct. 8 in the U.S., where the new prices for the 16GB, 32GB, and 64GB will be $299, $399 and $499, respectively. Best Buy will also be taking $100 off each version of the PlayBook in Canada, where the promotion will run through Oct. 6. Other retailers are also racing to lower prices; both Staples and Office Depot have shaved $100 off each of the three versions of the 7-inch tablet, with an additional $100 mail-in rebate thrown in.
Even with the $200 price reduction, the cheapest PlayBook is still $100 more than the Kindle Fire, which takes a competitive lead at $199 per unit.
The Fire's remarkably low price point has led experts to look at speculate that Amazon is selling the tablet at a loss in order to ensure a wider initial distribution. According to Reuters, IHS iSuppli estimates that the Fire costs $209.63 to produce, meaning that Amazon is taking a loss of nearly $10 on each unit sold. Amazon has not commented on the estimate as of Friday afternoon.
Wayne Lam, an analyst at IHS iSuppli, believes that Amazon is hoping a wide distribution will offset any initial losses by encouraging increased digital content sales. Amazon's strategy appears to be prioritizing quantity over quality and, for the moment, it seems to be working. According to eDataSource, the Fire pre-sold 95,000 units on its debut day on Amazon's website. Though shy of the 120,000 iPads estimated to have been sold on the Apple product's first day in the marketplace, the Fire's initial performance has been impressive.
But is it enough? The landscape of the tablet marketplace has so far been fairly bleak for competitors looking to challenge the iPad. In August, the HP TouchPad was abruptly pulled from the shelves and discontinued after six weeks of dismal initial sales and RIM was rumored to be likewise considering closing down its PlayBook division for the same reasons. RIM flatly denied the rumor, but it is hard to ignore the fact that competing tablets have struggled to gain any ground on the iPad.
Now, in the Kindle Fire, many see the real possibility of an 'iPad killer.' If Amazon can recoup the losses it is currently taking with these early sales, it may indeed stand some chance of overtaking the lordly iPad. Even if such a coup becomes possible, however, it may be too late for the struggling Flyer and PlayBook.