Can an Android newcomer like Amazon become the top seller of Google-powered tablets? Other companies like Samsung have a year’s head start, but Amazon might zoom past them if they play their cards right. One area that Amazon might be able to dominate the competition is in price and Creative Strategies analyst Tim Bajarin speculates their mysterious device might debut around $249.
How could Amazon price their Android tablet so low? Tim thinks they will sell it at a loss and recoup their losses with the sale of digital books, videos, music, apps, and physical goods through their online marketplaces. “By my guestimates, Amazon would make back that loss within six months and reap a profit of anywhere from 10 to 30 percent on the tablet over the last 18 months of the device’s accounting period,” Tim explained.
Current guesstimates suggest Amazon might ship 3 million tablets this year. Mr. Bajarin calculates that the material cost for each tablet to be around $300 and Amazon would lose $50 on the sale of each device if they price it at $249. That means Amazon could lose up to $150 million if they move all their units, but that risk could be a wise investment if tablet sales skyrocket next year.
Android tablet sales are forecast to increase from 19-20 million units in 2011 to 44-45 million units in 2012. If Amazon takes the lead with their first Android tablet, they will have an advantage moving into next year when they might release an entire family of devices.
Even though we could see the Amazon tablet as soon as October, we still don’t know the exact specifications. Rumors have suggested we might see a 7 or 10 inch display, with a multi-core processor from either NVIDIA or Texas Instruments. Hardware specs are interesting, but it’s the software experience that I’m most interested in learning about. These devices will surely feature Amazon’s own Appstore, but I’m curious if all the core Google apps and official Android Market will be along for the ride.
I’m already an Amazon Prime customer, so I’m eagerly waiting for them to release the full details of this device. If the price is right and they include all the Google apps, then I’ll likely pre-order one.
What do you think Amazon’s chances of success are with becoming the top tablet supplier? Would a full-featured tablet priced at only $249 make you pull the trigger? Is the removal of Google’s apps a deal-breaker for you?