Amazon Tablet PC Heralds Seismic Market Shift

      September 30, 2011 10:59

      The world's biggest Internet bookstore Amazon is challenging the global tablet PC market with a low price and a huge volume of content. It sells about 1 million e-books, 100,000 movies and TV programs, and 17 million music CDs and files online.

      Amazon CEO Jeff Bezos introduced the Kindle Fire tablet PC with a 7-inch screen in New York on Wednesday. The gadget has 8 GB of storage and Wi-Fi function and costs only $199. There is no built-in camera, but this is half the price of the cheapest iPad 2 from Apple, and much cheaper than Samsung's Galaxy Tab.

      Amazon CEO Jeff Bezos holds up the new Kindle Fire at a news conference during the launch of Amazon's new tablets in New York, on Wednesday. /Reuters-Newsis

      ◆ Low Price

      Bezos surprised the publishing industry by releasing the e-book reader Kindle at the end of 2007 and selling more than 20 million units. Amazon was able to introduce a cheap tablet due to its massive content of e-books, music, movies and TV shows, which is much greater than Apple's. Apple's iTunes and App Store stock some 200,000 e-books, 10,000 movies, 50,000 TV shows and 18 million music files.

      Besides, Apple is a distributor and gets about 30 percent of the profit from sales, while Amazon directly sells its content. Amazon’s strategy is to provide tablet PCs at a low price and maximize the profit from content.        

      ◆ 3-Way Battle

      Forbes magazine predicted the mid-price market will simply disappear as Amazon and Apple dominate the low and high end respectively. Other tablet PC makers like HP, Sharp and RIM will vanish. In fact, HP has already announced it is giving up its TouchPad project, and Sharp halted the sale of two of three recently released models, while RIM sold less than 500,000 tablet PCs in the second quarter of this year, and there is a rumor that it, too, will give up production.

      Industry insiders say the battle is now on between Apple, Samsung and Amazon. Since Apple released the iPad in April last year, a lot of companies jumped into the tablet market. That resulted in a 70 percent market share for Apple and the collapse of other companies. Samsung put up a relatively good fight with hardware technology alone and no content, selling over 7 million tablets this year.

      But now Samsung is under pressure to reduce the price. Because Amazon released a cheap tablet PC, Samsung will try to lower the price of the Galaxy Tab 10.1 but will not be able to afford it, Reuters wrote. The international press predicts Amazon will become one of three leading tablet PC makers, selling 300-500 million units in the second half of the year.

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