Amazon’s Kindle Fire Tablet profitable at $200

So last week Amazon announced their new Kindle line of products which included the anticipated Kindle Fire. The Kindle Fire is a light tablet that makes use of a touch screen, Silk Browser, Amazon unique user interface, Amazon Cloud Services, and a ton of media content including movies, games, and books. Amazon’s announcement got a huge response from the media, which Mobility Digest’s Rama wrote a nice article here on how it will fit into the marketplace against the tablet juggernaut iPad.

It wasn’t the press that was excited about the Kindle Fire either, analysts later speculated that the Kindle Fire could sell more that 95,000 units during the first few days after launch. But Amazon isn’t Google, who gives their software away free which is supported by Ads, so how could Amazon sell the Kindle Fire so cheap? We know that HP took a bath when they blew out the Touchpads when it was concluded the market wasn’t interested in them at full price. Well, in all honesty, no one I know who bought one was that interested in them after they bought it for $100 and $150 dollars for the two versions. So Amazon can’t be making any money and this is a recipe for disaster right? Wrong. As it turns out, Amazon, selling the Kindle Fire for $200 will still be making $50 dollars per unit. Couple that with all of their services they are betting you are going to use of theirs, and the Kindle Fire is more than a brilliant idea, but a profitable one too.

TechInsights.com created a cool little graph comparing the Kindle Fire to the BB Playbook and the iPad 2. Granted when looking at the Kindle Fire there is some noticeable missing hardware, but I still have never used my iPad’s rear facing camera and have only on occasion used the front facing. For me this is hardware that could be excluded from the iPad and and less expensive version created. I am not looking for this to happen, as I think it hurts Apple to create a low cost tablet which would devalue the iPad’s premium mystique, but I think we will start seeing some Android Tablets take a page from the Kindle Fire Playbook and scale down the specs and create some cost pointed Tablets from major OE Manufacturers like Samsung, Dell, and perhaps Motorola. We already know the success the XOOM had at the same or even a slightly higher price than the iPad with better specs, so this is a great way for Android to move more volumes of tablets.

It has been said that 2011 is the year of the tablet, and that tablets are just a toy and a passing fad, but 2012 does not look like the fad will go away, but only get stronger. 

[UBM TechInsights via Light Reading]