Late last year Amazon launched a 7 inch tablet called the “Kindle Fire” that runs a highly customized version of Android Gingerbread. We don’t know exactly how many Amazon has sold, but some analysts speculate that around 6 million Fire tablets ended up in consumer’s hands during the fourth quarter of last year. For the sake of reference, Apple shipped 15.4 million iPads during the same quarter, though it should be noted that the Kindle Fire is only on sale in the United States, whereas the iPad is pretty much everywhere. Anyway, what makes the Kindle Fire special is that it costs just $200. That’s less than half the price of Apple’s lowest end iPad. Amazon can afford to offer the Fire at such an amazing price because they make so much money on everything else they sell. Similar to how buying an iPad forces you to buy apps and games from the App Store, owning a Kindle Fire makes you want to buy more stuff from Amazon.
Using that price point to their advantage, Amazon made an ad that shows a mother of two relaxing by a swimming pool when all of a sudden an iPad owner strolls by and notices the mom using an eInk based Kindle. The mom says it’s great for reading outdoors, so the iPad owner retorts by saying that he can watch movies on his iPad. Mommy points to her two kids, each with a Kindle Fire, and says that those two Fire tablets, plus her Kindle, cost less than an iPad. At this point the iPad owner looks like he just found out his mother died, so he leaves the scene.
It’s 30 seconds long, it’s a bit corny, but it gets the message across. The bigger question is of course what’s Apple going to do to combat this? Rumors suggest that a 7.85 inch iPad is due to come out this year. We’ll just have to wait and see.