Amazon plans to revert back to its cost cutting business model for tablets, after failing to win over new customers with the more expensive Fire HDX tablets last year. A new 6-inch tablet will launch later this month, costing $50, according to The Wall Street Journal.
The goal of the $50 tablet is to win over price conscious customers, unhappy with the current options in the tablet market. Amazon also wants to compete with no-name brands from China, stealing a lot of the thunder from Google, Samsung, and other providers.
To reach the $50 price tag, Amazon will add a mono speaker and lower resolution display to the 6-inch tablet. Internally, the specifications are still unknown, although we expect low-end Qualcomm units to be added to lower costs.
Amazon is still expected to take a hit on every unit they sell. It hopes to recuperate those losses with Prime subscriptions and shopping sales.
New 8-inch and 10-inch tablets will be available alongside the 6-inch model. The prices for the other two tablets are unknown. We expect Amazon will make these more premium models for customers that want a more functional and comfortable experience.
Jeff Bezos, the CEO of Amazon, reportedly pushed for a $50 tablet and e-reader. Ultimately, the e-reader was out of the question, due to the costs of the display technology. Amazon will work with Shanghai Huaqin Telecom Technology and Taiwan’s Compal Communications to lower the costs of manufacturing.
Price has become a major talking point at Amazon, following the failure of the Fire phone. Amazon had to take a $170 million (£110 million) write off due to unsold inventory in the second half of 2014, which led to layoffs at Amazon’s hardware division Lab124.
Such a rash price reduction might cause the Federal Trade Commission or similar authorities in the European Union to investigate for predatory pricing, especially if the $50 tablet manages to win over millions of customers.
This is something Amazon has struggled with throughout its 20 years in the industry, but a big change in pricing to push competitors out of the market could result in an early ban from sale.
The report did not detail when these tablets will launch.