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Switched On: Low flame


Each week Ross Rubin contributes Switched On, a column about consumer technology.

For many products -- TVs and the iPod, for example -- the leap to color displays represented an evolutionary change. But color was just part of the big leap that Amazon made with the Kindle Fire, moving from a reading appliance to a converged device. There was no couching it as "a reader's tablet", the positioning Barnes & Noble had sought with the Nook, even though Amazon now claims that it has the "best content ecosystem." Still, as discussed two weeks ago in Switched On, Amazon still managed to fly well under Apple's radar with an inexpensive, smaller tablet, one that broke a "magic" price point of $200.

As Amazon has pushed up into more expensive Kindles, there's been much talk about its willingness to emerge from behind that curtain of price leadership. The Amazon press release touting its most advanced tablets notes that the company "takes on the high-end" with the products. But as it has fleshed out the Kindle Fire line, much of the appeal is still driven by price -- from the new baseline of $159 for the entry-level Fire to the sub-$300 level of the WiFi-only 9-inch Kindle Fire HD.

On the website that has served as the engine for Kindle sales, Amazon describes its LTE-equipped Kindle Fire HD 8.9" 4G as "not just the best tablet for the price, [but] the best tablet." As we look at Amazon's true high-end, at least from a pricing perspective, the price leadership certainly starts to fade -- or at least it transitions to a value message. For one, while Amazon charges a comparable increase to Apple ($130) for LTE capability on a Kindle Fire with 32 GB of RAM, it does not offer a 4G-equipped model with 16 GB, and so customers may need to add an extra $200 to gain access to LTE. That's also more than three times what Amazon itself charges for cellular capability in the Kindle Paperwhite 3G (although, of course, that is a far less expensive radio being used to receive lightweight text-based products).

While many prefer the 9-inch form factor to the nearly 10-inch and higher of the iPad and Galaxy Note 10.1, the Kindle Fire is, of course, a bit smaller than those tablets. Jeff Bezos was able to hold it aloft with one hand, a difficult feat to achieve with an unadorned iPad, at least for those who do not play in the NBA. And then there is the Kindle Fire HD 8.9" 4G's defining characteristic -- its cellular capabilities offered at a groundbreaking $50 for one year (there's that price leadership again) for 250MB per month. It's a great adjunct for getting periodic access to e-mail or a website when outside a WiFi hotspot. However, it certainly won't get you through many of those Prime Instant Video movies. And the price is a promotional one for the first year, so the case for a potential 67 percent device price premium for LTE capability is not as strong.

There's a lot more to the Kindle Fire story than the number on the receipt -- Dolby audio, dual-band WiFi and -- most importantly beyond price -- services led by Prime Instant Video. But these are not inherent differentiators. Acer Android tablets also boast Dolby audio and Amazon has made Prime Instant Video available for the iPad. With its new tablet line, Amazon continues its position of offering strong, well-thought-out products at an aggressive price, but its most ambitious addition seems to stretch too far.

Ross Rubin (@rossrubin) is principal analyst at Reticle Research, an advisory firm focused on consumer technology. Views expressed in Switched On are his own.

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