Amazon Tablet Forecasted to Cost $249
Aug
17

Amazon Tablet Forecasted to Cost $249

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amazon tablet

Tech analyst Tim Bajarin claims that Amazon will be selling its upcoming tablet for less then it costs to make. The company plans to adhere to its common business practice by undercutting the competition and making long-term revenue.

Tim Bajarin wrote a piece last week in PC WORLD where he mentioned the cost to develop and manufacture the tablet would be more than what the company would sell it for. The company would in-fact take a loss on the hardware but make up the revenue via its services. “By my guestimates, Amazon would make back that lost $51 within six months and reap a profit of anywhere from 10 to 30 percent on the tablet over the last 18 months of the device’s accounting period,” wrote Bajarin.

Amazon’s practice of taking a loss to make up in longer gain financial gains to eliminate its competition has been the company’s mandate from day one. Its entire ebook business was substantiated by charging less then its competition and dominating the market. This prompted many publishers to adopt the agency method of setting prices. This prevented Amazon from setting its own prices and allowed the publishers to do it instead. This was done in the spirit of fostering more competition and allowing for more stores to be competitive. Many tablet companies would be hard-pressed to take a loss on the hardware because they do not own their content distribution channels.

Speaking of content, Amazon has been focused on a string of new projects and developments that will find its way into the new tablet computers they are developing. They have their Cloud Music Locker, Android App Store, Textbook Rental System, Cloud Reader, Music Store, Audio books, and the massive Kindle eBook Library. Not to mention you can lend and borrow the books to your friends and have a strong social media element to everything you do within the system. The company is far beyond others and poised to integrate its entire content distribution system into a tablet.

The tablet sphere is very competitive and is currently dominated by the Apple iPad. Many companies are slashing prices on their devices just to make back their money.

The upcoming Amazon tablet, in order to be successful in the marketplace, has to cost less then the Barnes and Noble Nook Color in order to stay competitive.

Michael Kozlowski (4524 Posts)

Michael Kozlowski is the Editor in Chief of Good e-Reader. He has been writing about electronic readers and technology for the last four years. His articles have been picked up by major and local news sources and websites such as the Huffington Post, CNET and more. Michael frequently travels to international events such as IFA, Computex, CES, Book Expo and a myriad of others. If you have any questions about any of his articles, please send an email to michael@goodereader.com


  • http://twitter.com/Jason_Matthews Jason_Matthews

    Go Amazon!

  • http://www.picantecreative.com/slideshows/portfolio/magazines/magazine-design-portfolio.html Magazine Design

    Amazon obviously knows what it’s doing with its business model (charging less now and making more later), given the success it has seen with Amazon Prime. I think if Apple had done something similar with the iPad — and even more specifically, with the 30 percent commission it charges magazine publishers — it would be much better positioned for future dominance of the digital magazine market. Apple may dominate now, but I think in five years the tablet market will look very different. Kudos to Amazon for taking the smart approach.

  • Michael

     I agree. Amazon did the smart play by not quickly rushing out a device to compete and instead built up a massive ecosystem that a tablet can tap into.

  • Gratespellur

    I hate when writers use “then” when they mean “than.” it happens twice in this article.