Combining an account from someone who has actually had the tablet in his hands with other rumors and reports, we can make some educated guesses about Amazon's tablet strategy, at least for the next few months.
MG Siegler of TechCrunch got access to a development unit, which he reports has a 7" display and looks similar to a BlackBerry Playbook. In fact it's apparently made by the same manufacturer and based directly on the same design.
That would seem to suggest Amazon plans to continue focusing on the e-reader market rather than competing head to head with Apple. So does the rumored price of $250, which would make it competitive with Barnes & Noble's Nook Color, another Android-based e-reader.
Unlike Apple, which basically uses services and software to sell hardware, Amazon sells hardware to promote their services. Selling the tablet at cost, or even a sleight loss, makes some sense for them.
But while they may not want to compete with the iPad, they do appear to be taking a page from Apple's playbook, albeit with a distintively Amazon twist. The Kindle Fire is said to run a fork of Android that integrates various Amazon services all the way down to the Amazon AppStore replacing Google's Android Market as the default app store.
Amazon's apparent plan comes with some risk. If they aren't going to make a profit on the hardware, Amazon needs buyers to also purchase their services to consider it a success.
That may help explain the apparent lack of a larger 10" model, which was rumored to be launching at the same time. The smaller form facter will likely limit its appeal to consumers looking to buy an e-reader.
Unlike their other services, Amazon's Kindle Store is a market leader. Someone buying a 7" Kindle Fire is almost certainly planning to use it as an e-reader, and will almost certainly be buying e-books from Amazon.
On the flip side, Amazon is betting a lot on Amazon Prime, a subscription service which in turn relies heavily on the value of streaming video. Some rumors have Amazon Prime bundled their tablets, while others suggest it might be offered to Kindle Fire owners at a discounted price.
Unfortunately for Amazon, a smaller display isn't particularly well suited for video. If they decide to release a 10" version in the future that would be an improvement. If successful, it would also potentially make them another target for Apple patent lawsuits.
Amazon would like to add a subscription e-book offering to Amazon Prime, but that deal may be a long way from getting done.
For now Amazon seems likely to stick with a smaller tablet and concentrate on the e-reader market. We should know more after tomorrow's announcement.
Written by: Rich Fiscus @ 27 Sep 2011 12:37