Aug 13 AT 8:14 PM Taylor Wimberly 52 Comments

Amazon prepared to buy their spot atop the Android tablet ladder with a $249 device?

Amazon tablets

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?

Taylor is the founder of Android and Me. He resides in Dallas and carries the Samsung Galaxy S 4 and HTC One as his daily devices. Ask him a question on Twitter or Google+ and he is likely to respond. | Ethics statement

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  • Eric Weiss

    This makes perfect sense. It wouldn’t take long for Amazon to make the money back via Kindle books, Amazon app store sales, accessory sales, etc. I can’t wait to get one!

    • CTown

      But so couldn’t Apple (with their app, video, music and e-book services)? So, why does an iPad cost much more than this thing? I mean, isn’t this thing supposed to be running the Tegra 2 like the expensive Xoom and Tab 10.1?

      • Tommy

        Amazon is doing so to catch up to the other already-late entry to the tablet competition, and making it different so that people can differentiate this from other honeycomb tablets (or at least it is a lot cheaper). Apple doesn’t need to lower their prices for people to buy them; they just need to change a few things, like add two crappy cameras on an iPad and make it a bit better, and people will go all out camping for days just to get it on launch day. I agree this is a great strategy Amazon is pulling here, and they most likely will succeed!

  • Mustin

    Guesstimates? Really? Regardless, I’m interested.

  • Steve

    This looks quite interesting. The price is very appealing as well. Like you stated, if all of the Google apps and Market are integrated this is a definite buy for me. Amazon has been very good to me lately! ;)

  • Eric Weiss

    Oh, and from what I’ve heard, Google employees not involved directly with Android have seen these devices. That makes me think that Google is involved to some extent and that they will be Google experience devices. Just me speculating though.

  • M3rc Nate

    This is really interesting. I think they would be SO smart to do this. First off, for $250 i would buy one for myself and one for my mom, my sister would buy one and maybe even my other sister. So right there they have multiple customers that they wouldn’t have ever had because of Tablets such high price point. And its SO true that they would recoup their money, because everyone i just listed (and everyone i know) got a Amazon Android tablet, they would SO be inclined to buy books and music (i already buy amazon’s music, cheaper) and they have a great App market. So they would definitely make their money back easy.

    Like always however, there are “must haves” on tablets for me personally. For example, it better have the official Android market or i wont get it. It does need to be a legit Android tablet.
    The other “Must have’s” are a usb port, SD (of some size) port, i wouldnt want a 7 inch screen, 10 seems perfect. Besides that id say a at least “good” screen res, a “good” back and front camera and most definitely a future with Android, meaning it will get future updates.

    But if they have all that for $250, consider essentially everyone in my family and probably even some of my friends, pre order customers.

    • John D

      they downvoted you because they hatin on your money

  • Shawna

    No thanks, im waiting for iPad 3!

    • hello

      I think you’re at the wrong website.

      • tariq

        You see that’s the thing with these iphone zombies, they just don’t have a clue about anything, or maybe its because they don’t have any sites like this to go to

  • Interpol91

    Sounds interesting. An Android tablet would definitely be a steal at $249 and depending on its specifications I might be inclined to get it. For price conscious consumers this tablet will definitely be on top of their list if the price rumors are true. It is interesting however that they would risk losing money at first to possibly gain it back in other sales. Smart and risky move if it’s true!!

  • Ken

    The NookColor costs $249. Sounds like Amazon is going after exactly the same market with a similar device.

    • Shane

      The new Nook is more around a sharing e-reader now, and less like the tablet/e-reader combo the dev community loved so much. Amazon is looking to go right at the Nook with that price point, but they are offering a wider experience and the connectivity to their store, where I’m sure there will be some sort of discounts or special offers when on the Amazon tablet.

  • debusk

    I would buy a full feature tablet backed by Amazing at $299. If the specs are top-notch and they do not cut ANY corners, the $50 would be worth it. Head to head vs. iPad, Amazon needs the best HW and user experience they can give customers if they want to compete. Not that I want to spend more $$$, but just say’n. Am I alone here in wanting the best I can get?

    • M3rc Nate

      I agree, as long as the price raise is reasonable in terms of improvements-to-cost, i would happily pay more for high end features…i.e. a high res screen, 3mp front camera/8mp back camera, fast dual core processor, fast GPU, pretty thin, pretty light, all the ports (SD,USB,HDMI out) etc. Hell no tablet has all those features, not the ipad 2, not any android tablet or anything. Hence i dont own a tablet yet.

  • SliestDragon

    If the specs are right, I might actually consider an Amazon tablet. If it’s quad-core, I’m not sure that I would hesitate, though I’m guessing it wouldn’t have a processor like that for the price…

  • riknos

    At that price I don’t really care if they include g-apps or not. Just root that mother-lover and you’ve found the new (potentially) best value tablet.

  • Dave

    If it has a FFC (Front facing camera), it will be a win for me. If not, I guess I’ll be getting my Archos G9 80 tablet in September.

  • Bryan

    If it has Netflix and updates I might consider one. The price would be hard to ignore but I’d really like a Google Nexus tablet. I was at my local best buy and got to play with a few android tablets and have to admit that I like the OS and the 7 inch formfactor but I’ve been burned by Androids lack of updates more than once.

  • Shiv Thrice

    As long as they don’t neglect the screen.

  • Ray

    Yes for 250, and yes, no Google apps would be a deal breaker…. Period

  • jared

    The blocking of Google apps is a 100% dealbreaker for me

  • Charbax

    Manufacturing price is well below $200 for a good 7″ capacitive tablet. Archos 70 Internet Tablet is for sale at $199 now and the Nook Color is cheap too. Those are not sold at a loss.

    The truth is Apple makes a ton of profit per the iPad, not as much at all as on the iPhone though. Apple makes about 100% profit on the iPad, it costs them less than $250 to manufacture average sale price something like $580. Apple makes 300% profit on the iPhone, it costs them less than $150 to manufacture and they sell them at an average of $600 through carriers subsidizing.

    That crooking type of massive profit making machine has inspired big Android brands such as Samsung, LG, Dell, Acer, Motorola, HTC, etc. Those guys also want to make 100% profit on their Android tablets, so they don’t care for now to sell like Archos and Barnes and Noble at around 25% profit margin or less.

    Android tablets have taken 40% of the daily tablet sales already away from Apple. Sure enough it’s technically not taking away sales from Apple as both camps have increasing sales, but clearly, the Android tablets are putting a big slow down onto Apple’s prospects for growth, exactly the same problem Apple now has with the iPhone. And the iPad was meant as none other than a magic backup plan for the rapidly disrupted Smart phone market, where good capacitive Android phones can now be bought below $100 unlocked without a contract.

  • j

    If it has good specs I’ll get one. I don’t care about the software, I need my Android devices rooted and with a custom rom.

  • Raptor

    “…device might debut around $249. How could Amazon price their Android tablet so low?”

    How netbooks can cost $249 while castrated and circumcised tablets not?

  • josé cerveza

    I would consider Tor buy such an Tabletten Ort even 2 or three for the whole family.

  • Usman Ansari

    ..and if doesn’t get Google’s Market? That’s going to be a problem. If it’s running Amazon Appstore, I wouldn’t expect Google to allow it to have the Market.

  • JayMonster

    If we are looking at a tablet on that price range, there will be compromises. The only question becomes if they cut the right corners to provide a tablet that not only is at a mass consumer friendly price, but also is still acceptable enough that price isn’t the ONLY selling point (like the nook)

  • longhairbilly

    I don’t see a need for a tablet. My phone and laptop get me through any situation I have.

    That said if the $250 price is real, I’m all over it.

  • Haggie

    I would expect Amazon ‘Prime’ customers to be target of marketing efforts and be given a substantial price discount since they are Amazon’s most loyal and frequent customers.

  • Tal

    No Google market apps is a deal breaker. Well for 250$ we can buy and convert to standard vanilla flavor within no time I guess.
    Going to be the same as with the color Nook. Its their lose if they go that silly path.

  • wes

    Definitely in for 1, I would likely give my iPad 2 to my wife and pick up one of these. That Ivan interesting strategy, but with amazon being as big as they are in sales of ebooks and other goods, they just might pull it off.

  • Al Fleagle

    If Amazon doesn’t try to strip the Android experience or hide it behind some proprietary user interface, they might have a chance. If they strip the tablet to software comparable to a hacked Kindle, then not so much. If the full Android experience with front and rear facing cameras, video conferencing software such as Skype, and an easy upgrade path for the Android OS is shipped with the tablet for $250, they won’t be able to make enough of them.

  • Philip

    If they hit $250 with 7″ 1280×800 and a tegra 2 or equal TI processor, a GB of ram and 4GB onboard with a SD slot, and a 2MP front camera (I dont care about a rear camera, I would NEVER use a tablet to take a picture, Ill always have my phone on me.) I will buy 2 without hesitation, for my wife and I, If they leave the google apps in place, I dont even need to android market, but i want everything else to be there.

    • RX-78-7

      Thats a winner.

  • jdanielcook

    Most of the sources say it will not have a camera. I don’t really care as much about the apps, I just want a good browser and battery life. It is interesting they have not really pushed for tablet apps on the Amazon App Store. I want a tablet but do not want to pay a decent laptop price for one ($500).

  • Franz

    Money talks.

    If this is a 10″ tablet, I’ll buy like 3 in a heartbeat, if it’s a 7″ tablet (which it most likely will be, because they wouldn’t lose as much money). I’ll still buy it.

  • UserX

    If they have a huge rise in Android tablets, you think they’ll do any thing to change the way they treat developers for their Android apps? I hope so..

  • keridel

    If this comes out inthe UK i would probably get my parents involved even at £250 it would be good.

  • Kiril

    Yes, and yes. I remember saving up in high school to buy the iPod Touch for $250. Now that I have converted to Android (and actually have a use for these products), I don’t see why I wouldn’t buy one for $250. I am really hoping for a 7-inch screen option–I think it would be fun. And yes, if Google apps are inaccessible from the tablet (I don’t mind sideloading the market app), I will definitely not get it — unless, of course, it is easily rooted and we get stock Android for it.

  • hazydave

    Amazon is virtually certain to release just such a tablet. They have their own hardware design branch, they already have not just the Amazon Appstore, but books and videos and music… everything Apple offers. And they’ve seen their competitor, Barnes & Noble, release just such a device.

    Price is not the big issue. Apple’s optimizing for profit, not volume… “because they can”. Apple’s managed to portray themselves as a premium brand. Since the 70s, they’ve charged much more for the same basic thing: Apple II vs. Commodore and Atari, Mac vs. Amiga and IBM PC, etc. Even today, when Macs are just bog standard PCs, Apple’s charging twice as much at retail, and making about 5x the profit per unit versus a company like HP or Dell. The iPad only seemed low priced because the rumor mill had it as high as $1000… and because most people don’t understand what goes into a tablet. The cost of parts in an iPad is easily under $250, and more likely under $200 in Apple’s volumes.

    Amazon, on the other hand, has shown itself ready to “give away the razor to sell blades”, at least to an extent, with the $110 and $130 Kindles. And they’re not selling a substandard device there.. the Kindle is an excellent eBook reader. They would have a built-in market for an Android tablet done just as well.

    Even more interesting.. the tablet really needs to meet the eBook half-way on display technology. Most tablets, the iPad included, are all but useless in bright sunlight. But these are devices meant to be used everywhere. Amazon and a few other eBook reader companies has pushed the envelope on the eInk technology, and Amazon’s certainly in a position to jump-start some some kind of color daylight-readable tech. Not that they necessarily will, but that could change this from “yet another Android tablet” to “Amazon leads the pack”.

  • Optimaximal

    Of course, it all depends on whether Apple litigate it out of the market, like they’re doing with the Android tabs.

    That and Amazon *still* haven’t made their app-store available outside the US, which sucks.

  • zedthegreat

    amazon prime & appstore are only for the US at the moment. i don’t see how a company can hope to overtake Apple selling in only one country (a large country, but just one).

  • Noel

    The price is a good attraction, but no Google apps is a NO GO for me.

  • Matt

    :Even though I own a transformer, this would be very tempting to me. Especially if they make a way to instantly watch the amazon prime library on the tablet.

  • Galen20K

    That’s Awesome, good. I want to buy my Mom a tablet and she doesn’t necessarily need such a fancy one as my Galaxy tab 10.1, just a solid well build fast one. Not flashy

  • Hacknet07

    What’s next? An eBay tab?

    Is there anyone out there that understand the meaning of innovation, not competition?

  • MonsterSports

    I’ve wanted a Android Tablet for a while, but I’ve never though they were worth $500+. If they give me the same experience like a Zoom or Galaxy Tab 10.1 then its well worth the $249. They would recuperate the loses super fast if the table is amazing. Although if it doesn’t have the core Google apps & experience then I would defiantly would not buy it.

  • antfelici

    can’t wait to see what’s going on with this tablet. i want to know what is actually missing that the other tablets aren’t missing.

  • Zarathustra

    Well…… Gee whiz, this looks just like the Samsung 7.7 Galaxy Tab… How come Rotten-Apple isn’t trying to block the sale of this one????