With its cheap $199 pricepoint, Amazon isn’t making too much money with every Kindle Fire unit they sell. But that’s not the point, really. Amazon is playing catchup in the tablet space and if they can flood the market with cheap Kindles then all the better.
Now Amazon’s Kindle Fire is based on Android, though you wouldn’t know it looking at the UI. Further, the Kindle Fire leverages Amazon’s expertise in content delivery of all types of media content, not to mention a dedicated app store wholly independent of the Android Marketplace.
Some pundits have been quick to argue that the Kindle Fire is well positioned to challenge the iPad. Apple executives, however, aren’t worried at all.
BusinessInsider relays a note from Barclays analyst Ben Reitzes explaining why Apple CEO Tim Cook and CFO Peter Oppenheimer aren’t concerned about their latest tablet competitor.
While the pricing at $199 looks disruptive for what seems to be the iPad’s most important rising challenge, the Amazon Fire – it is important to note that it could fuel further fragmentation in the tablet market—given it represents yet another platform. While compatible with Android, the Apps work with Amazon products. The more fragmentation, the better, says Apple, since that could drive more consumers to the stable Apple platform. We believe that Apple will get more aggressive on price with the iPad eventually but not compromise the product quality and experience.