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Amazon.com's (AMZN) "very real" 7-inch Kindle Tablet will arrive in November for $250, MG...

Amazon.com's (AMZN) "very real" 7-inch Kindle Tablet will arrive in November for $250, MG Siegler writes - a price point just half that of the entry-level iPad (AAPL). Meanwhile, Lenovo's (LNVGY.PK) IdeaPad A1 tablet is pricing at $199. Looks like the mini-frenzy over $99 TouchPads (HPQ) - now back in limited production - may be re-setting the price bar, as Apple works toward a spring upgrade for its $499 iPad 2.
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Comments (19)
  • kmi
    , contributor
    Comments (4527) | Send Message
     
    Amazon's has no issue doing what other tablet manufacturer's didn't want to, or could not, do: partially subsidize sales of its tablet to lower its upfront cost to create momentum and pick up 'long tail' returns.

     

    This is a tried and true strategy that may really move momentum towards tablets in a way no one else was able to. Sony did it with Playstation, MSFT with Xbox, we saw it done with Blue-Ray etc.

     

    HP's firesale underlined what the 'real' consumer price point was for a 'cheap' commodity tablet was - something muc less than what Apple is selling for.

     

    And now with component prices coming down those 'commodity' devices will start to flood the market.
    3 Sep 2011, 08:39 AM Reply Like
  • wyostocks
    , contributor
    Comments (8852) | Send Message
     
    What's the impact on Apple stock price?
    3 Sep 2011, 09:08 AM Reply Like
  • Tack
    , contributor
    Comments (14308) | Send Message
     
    With the iPhone as proliferated as it is already and under assault from Android, iPad price points about to have the rug pulled out, and the Jobs era ending (cannot be overestimated, despite reassurances), one really has to wonder why it would be so attractive to be an Apple shareholder with the price near the recent apogee of it orbit.
    3 Sep 2011, 09:23 AM Reply Like
  • wyostocks
    , contributor
    Comments (8852) | Send Message
     
    Kinda what I was thinking. I wouldn't short it though.
    3 Sep 2011, 09:30 AM Reply Like
  • kmi
    , contributor
    Comments (4527) | Send Message
     
    I felt it was overpriced at $320 and watched it lick $400 but didn't want in on either side, and still don't, since I think AAPL has at least a couple of quarters left in it on the long side.

     

    I believe market dynamics will inevitably eat into Apple's growth revenue, and marketshare, and it will end up being blamed on Jobs' departure, but that will hardly be the case.
    3 Sep 2011, 09:44 AM Reply Like
  • Tack
    , contributor
    Comments (14308) | Send Message
     
    kmi:

     

    I'm not even an Apple user, but I lived and worked in Silicon Valley throughout much of the Apple saga (1981-2000), and, at least in my own opinion, Steve Jobs was/is an iconoclastic visionary of incomparable talent, something that cannot even remotely be replaced or even sustained within a corporate culture. His single-minded, Patton-like determination and control is the major reason behind all of the vision, development and execution of the Apple products. One can argue with various aspects, if one wishes, but Apple's products lack the unmistakable "horse designed by a committee" compromises that make so much of today's product world lackluster and/or forgettable.

     

    I'll never forget that famous quote he made, when he was trying to seduce John Sculley (a big mistake, as it turned out, as he turned out to be precisely the typical corporate hack that Jobs isn't) from Pepsi to Apple. He said to Sculley, "You can continue to sell sugar water to kids, or you can change the world." Sculley, of course, being a mere mortal, and an archetypal corporate executive, was better suited to selling sugar water, but Jobs wasn't mortal (in either vision or business sense), and he proved it. He did change the world.

     

    We won't see his like again soon. Certainly, Apple won't.
    3 Sep 2011, 10:02 AM Reply Like
  • kmi
    , contributor
    Comments (4527) | Send Message
     
    Meh, I've watched Apple's rise to prominence closely are don't feel anything near what you do for the guy. Sure he was good but the fawning over him is exaggerated.

     

    I've discussed it elsewhere at length but the road taken by iPhone and iOS isn't as impressive once you know a little bit about more about it than just revenue and marketshare.

     

    By the way, in case it wasn't clear above, I am saying Apple will inevitably decline, and that I think it's not in the too distant future because there are a lot of headwinds before it, and it will not be because of Jobs' departure, it will just be the market doing what it does, and it would do it whether Jobs is there or not, but lots of folks will say it was because Jobs left.
    3 Sep 2011, 10:09 AM Reply Like
  • Tack
    , contributor
    Comments (14308) | Send Message
     
    kmi:

     

    We concur on Apple's economic challenges, but, the difference is that it takes a Jobs-like character to come up with the next Macintosh, iPod, iPhone, iPad, not some tyical corporate committee. That's why Apple has risen to where it is, now, not by some accident of fate that saw Apple develop, corporately, differently than myriad other corporations that haven't hatched those repeated successes.
    3 Sep 2011, 10:16 AM Reply Like
  • wyostocks
    , contributor
    Comments (8852) | Send Message
     
    Tack, your points are well taken.
    I just compare the last ten years of APPL and HP.
    3 Sep 2011, 10:38 AM Reply Like
  • MarketMaker74
    , contributor
    Comment (1) | Send Message
     
    I guess the one question I have is the gross margin on the ipad? I appreciate that HP is dumping their touchpad's at $99, but I believe I read somewhere that it costs them $328 to manufacture each one.

     

    Anyone know what it costs AAPL to make an ipad?
    3 Sep 2011, 03:32 PM Reply Like
  • Omega321
    , contributor
    Comments (81) | Send Message
     
    It is an area AMZN is not familiar with, When things become too cheap, it lost buyer's confidence. The branding and ecosystem is more important then pricing. Remember eMachine?!?!
    4 Sep 2011, 11:25 PM Reply Like
  • Herr Hansa
    , contributor
    Comments (3085) | Send Message
     
    The Lenovov IdeaPad at that pricing might be near a loss leader, or very low profit. However, it might bring enough attention to Lenovo to spur some sales of their higher profit laptops and desktop computers.

     

    Amazon are involved in so many different realms that I don't see the Kindle Tablet alone as a significant contributor to revenue. They are taking a page out of the Apple playbook by connecting the Amazon store with the tablet, and that may be where the revenue will be generated. I like the move they are making in this, though I consider the current share price slightly too high, and I would prefer to see a few quarters of reports to see if this strategy works.

     

    If the Lenovo and Amazon tablet strategies do work, then the headline making "market share" in tablets at Apple will decline. However, tablets are an expanding market, so I expect volumes to continue to grow overall. The bigger part of these counter-strategies is that they concede that the high end of tablets is not worth competing in, but they acknowledge that price conscious consumers might dive into the market at the right entry point.
    3 Sep 2011, 03:58 PM Reply Like
  • Yokyok
    , contributor
    Comments (330) | Send Message
     
    seems likely Apple will cut the price on the original ipad and keep the high price on the new version.. like they did with iphone.

     

    nevertheless android will gain share and eventually overtake ipad in tablet sales, probably by this time next year... the same way it did in smartphones.
    3 Sep 2011, 07:44 PM Reply Like
  • mike8599
    , contributor
    Comments (596) | Send Message
     
    Overall I'd rather go long on AMZN rather than APPL for the near future. I see AMZN threatening major institutions, and doing it successfully - I don't think APPL is a threat to AMZN as much as AMZN is a threat to APPL.
    3 Sep 2011, 08:20 PM Reply Like
  • David Urban
    , contributor
    Comments (1036) | Send Message
     
    Amazon's tablet will work in the way Apple's tablet works. It is a medium to push content out to users.

     

    HP and others will have a difficult time making these price points because the do not have content to absorb losses from tablet sales.
    5 Sep 2011, 11:35 AM Reply Like
  • Forkypine
    , contributor
    Comments (30) | Send Message
     
    Investing in AAPL's stock is about the ecosystem now more than the hardware profitability. The apps and itunes are where the legacy of AAPL now lies.
    6 Sep 2011, 05:27 AM Reply Like
  • bkpark
    , contributor
    Comments (325) | Send Message
     
    In other words, "vendor lock-in"? That worked for MSFT only up to a point ...
    6 Sep 2011, 08:40 AM Reply Like
  • David Urban
    , contributor
    Comments (1036) | Send Message
     
    True but we are early in this cycle and with the ability to publish the same apps on Android and Apple devices the lock in may not be that big of an issue.
    6 Sep 2011, 08:44 AM Reply Like
  • tiger8896
    , contributor
    Comments (666) | Send Message
     
    Amazon's $250 for a 7" color tablet is not a game changer, the analysts that say it will be are full of crap. It doesn't have a camera, only has a 6gb of storage with no additional SD card slot, it only has a capacitive LCD screen and not IPS and it completely reworks Android to be compatible with Amazon Market and not Google. The Nook sells for that price, has similar features and has not threatened Apple in the tablet wars.

     

    I also think Steve Jobs got it right when he said consumers would prefer a 10" tablet and not a 7". I have tried 7" tablets and the screen resolution really is not as good.

     

    These analysts forget why people buy things from Amazon, they want the best deal so unless Amazon comes up with a tablet that can match the specs of an iPad for a cheaper price than they don't have a serious threat to the iPad imo.
    6 Sep 2011, 03:29 PM Reply Like
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