Kindle Fire: Amazon’s Heated Battle for Tablet Market

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Kindle Fire: Amazon’s Heated Battle for Tablet Market Executive Summary Amazon has created a value product that resolves around services over the device itself, known as the Kindle Fire. With the emergence of e- readers, various competitors immediately offered iterations of the Amazon Kindle Fire tablet. The CEO of Amazon, Jeff Bezos, must decide and define its most promising target segments and positioning of the Kindle Fire against competing products in the market. Based on the initial sales of the Kindle Fire, it is recommended that Amazon move forward in positioning with Apple’s iPad and targeting its consumer segment to “media junkies”. An extensive financial analysis was then conducted to have found that a pricing strategy at…show more content…
Many of the problems the Kindle Fire faces are weaknesses within the tablet industry in general (Exhibit 1). Criticisms of the device focused on its sometimes lagging display, shorter- than- advertised battery life, and a number of smaller feature- set complaints. Although, a firmware update would resolve the first two of these problems, the feature- set complaints would have to wait until a new version of the Kindle Fire was released, as would the iPad or Android Tablet when faced with such remarks. Amazon’s traditional low margins were a model that has succeeded for the company in the past. However, it is unclear whether the revenue streams from the Kindle Fire would be sufficient to meet the considerable costs (Exhibit 1). At $199 the Kindle Fire was selling at cost as the components and labor were slated to be near $200. It was questionable whether it was possible for Amazon to offer the Kindle Fire for $149, $99 or even free, in return for customers signing up for an enhanced version of its Amazon Prime subscription service. A clear pricing strategy is crucial to maximize profitability and undercut the tablets currently on the market. Following the emergence of e-readers, new entrants offered variations similar to the Kindle Fire (Exhibit 1). Apple’s iPad was a major success and dominated the tablet market for its multipurpose and feature rich device. Both Amazon and Apple had

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