But the social network’s advertising revenue grew 18.4% during the quarter.
The retailer’s first tablet is a “digital vending machine,” one expert says.
Amazon.com Inc.’s Kindle Fire tablet began shipping today, one day ahead of the previously announced Nov. 15 shipping date, as the e-retailer embarks on a strategy of offering a multitude of digital products via the mobile device.
Priced at $199, the Kindle Fire undercuts Apple Inc.’s iPad2, which starts at $499. Barnes & Noble Inc. is expected to launch its Nook Tablet for $249 Friday. Both the Kindle Fire and Nook Tablet have 7-inch color screens and use a version of the Android mobile operating system. The iPad has a 9.7-inch color screen and uses Apple’s iOS operating system.
The Kindle Fire stands out from the iPad in Amazon’s approach to content and price, says Avi Greengart, research director of consumer devices at Current Analysis Inc. “The price and size are much lower and the emphasis is much greater on content and services,” Greengart says about Amazon’s tablet strategy. Consumers may choose a Kindle Fire because of its ability to tap Amazon’s deep inventory of e-books, movies and televisions shows, he says. Greengart likens the Kindle Fire to a “digital vending machine,” while he considers the iPad a general computing device.
The Fire is pre-loaded with an Amazon.com Android shopping app on the home screen, an app tailored to fit the 7-inch screen. The app enables consumers to shop Amazon’s entire catalog of products, physical and digital. The Fire also comes with a one-month free trial of the Amazon Prime two-day free shipping service and loyalty program that offers free streaming of 13,000 movies and TV shows and free access to a lending library of e-books for Amazon’s Kindle.
Amazon is expert at selling e-readers from its experience with the Kindle, and it knows consumers are price-sensitive, Greengart says. It lowered the price in September of the Kindle to $79 with advertising that displays on the screen and to $109 without advertising. “Amazon has shown that consumers will buy even more Kindles when they dropped the price $25 and added advertising,” he says.
The combination of a lower price and the tablet format could be a powerful incentive for consumers, says Nikki Baird, managing partner at Retail Systems Research LLC. “The more capability you can get at a lower price the more consumers can spend on books,” Baird says.
Neither Baird nor Greengart view the Kindle Fire as aimed at iPad buyers, though there is some competition for content sales. “People buying iPads are looking for something different,” Baird says. The Kindle Fire competes at some level against the iPad, but it is not a direct competitor, Greengart says. “A household may want both,” he notes.
Tablets are big business for retailers as worldwide annual tablet shipments are expected to top 120 million units in 2015, says ABI Research.