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Amazon Bets New Kindles Plus Content Can Beat Apple


Amazon (AMZN) is laying down a direct challenge to Apple and its dominance of the tablet market.

At a press conference on Thursday—at the unusual location of a private airport in Santa Monica—the rapidly growing online retailer put a fleet of new devices on the runway, including a new 7-inch and nearly iPad-size 8.9-inch Kindle Fire, plus new e-ink Kindles. It also made a bevy of content and technology announcements and tried to position itself as the most inventive of the high-tech companies that are unveiling new hardware this fall in a race to dominate the next wave of mobile computing.

With the announcements, Amazon is doubling down on the hypercompetitive hardware business, which it entered five years ago with the first Kindle. In a reversal of strategy that characterized the launch of the original Kindle Fire last year, which was bare-bones in its functionality, the company is packing high-end features such as dual-band Wi-Fi into what it calls the Kindle Fire HD. The new tablet will have 16 gigabytes of memory and access to 100,000 audio books from Amazon’s Audible subsidiary. A new WhisperSync for Voice feature will allow readers to listen to an audio book and then pick up that book in the exact same place to start reading.

The new 7-inch Kindle Fire HD will cost $199 and be available next week. The slightly larger version will cost $299 and ship on Nov. 20, and yet another version, with 4G LTE wireless, will cost $499 with a $49.99-per-year data plan. “A year ago we were content to have the best tablet at this price,” Bezos said. “This year we want to have the best tablet at any price.”

Amazon is updating its Kindle Fire at a moment of furious competition in the tablet market. Over the summer, Google (GOOG) started selling the Nexus 7, with some of the same features and functionality as the new Fire, and Barnes & Noble (BKS) is reportedly set to update its Nook Tablet this fall. Apple (AAPL) will soon update its iPad and may be preparing to sell a miniature version of the device. It’s holding an event next Wednesday in San Francisco.

Bezos’s pitch is that Amazon’s devices offer the best services—a gateway to its e-book lending library, its catalog of free videos for Prime users, its audiobooks, and the collection of games in its app store. “Last year there were more than two dozen Android tablets, and nobody bought them. Why? Because they are gadgets,” Bezos said. “People want services.”

Bezos also updated the company’s selection of e-ink black-and-white reading devices. The New Kindle Paperwhite introduces a new type of display with an onboard light source, to make it easier to read in bed at night or outdoors. The device will match the Nook Simple Touch with Glowlight, which Barnes & Noble has been selling since the spring. Bezos highlighted a patented system he said directs light toward the text and called it “the opposite of LCD. Its exactly like ambient light.” The Paperwhite Kindle with Wi-Fi access costs $119. A version with free 3G costs $179, and Amazon dropped the price of the bare-bones Kindle, without a touch screen or the light source, to $69.

Bezos also highlighted his big bet on content: Kindle Direct Publishing, which allows individual authors to upload their books to the Kindle catalog—sans publisher—and keep 70 percent of the revenue, and Kindle Singles, a format for individually published mega-magazine articles. A new program, Kindle Serials, allows consumers to buy installments of books for $199 that authors can spool out in the manner of old Charles Dickens serials. “I’m thinking it’s a whole new genre,” Bezos said.

Wrapping up the event, which spanned nearly 90 minutes, Bezos juxtaposed Amazon to Apple. “We want to make money when people use our devices, not when they buy our devices,” he said.

Stone_190
Stone is a senior writer for Bloomberg Businessweek in San Francisco. He is the author of The Everything Store: Jeff Bezos and the Age of Amazon (Little, Brown; October 2013). Follow him on Twitter @BradStone.

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Companies Mentioned

  • AMZN
    (Amazon.com Inc)
    • $319.25 USD
    • -3.26
    • -1.02%
  • GOOG
    (Google Inc)
    • $581.3 USD
    • -6.12
    • -1.05%
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