SAN FRANCISCO (Reuters) - Amazon.com Inc is expected to launch a new tablet on Thursday, the latest salvo in a battle for control of mobile access to the Internet.
Amazon is expected to announce at least one new version of its 7-inch Kindle Fire at a press conference near Los Angeles. A larger tablet may also be unveiled, along with an update of the company's popular Kindle e-reader.
"The swing factor in the expectation on the upcoming Kindle Fire could be on how much lower pricing can go," said So Young Lee, an analyst at SunTrust Robinson Humphrey.
Amazon is willing to make little or no money selling tablets and e-readers because it wants to get the devices into as many hands as possible, then sell higher-margin digital content, such as e-books, video, games, apps and music, to a more connected and engaged customer base.
More broadly, Amazon is fighting with Apple Inc, Google Inc and other technology giants for a foothold in the booming tablet market because these devices are fast becoming the preferred tool to access the Internet. As the world's largest Internet retailer, it is essential for Amazon to have a major presence in this new sector.
"A successful tablet is much more important for Amazon than Google," said Chad Bartley, an analyst at Pacific Crest Securities.
Amazon is one of the leading sellers of physical books, CDs, DVDs and video games. But these products are going digital, so the company is moving quickly to make sure it keeps its share of this evolving market.
"Amazon has to have devices that let customers purchase and consume digital content," Bartley said.
Last year, Amazon surprised investors and rivals by pricing its first tablet at $199, well below Apple's iPad and less than most other tablets at the time. Despite lukewarm reviews, the device sold well, giving Amazon more than a fifth of the U.S. tablet market.
Since then, Google started selling its 7-inch Nexus 7 tablet for $199 with better specifications, while Barnes & Noble cut the price of one of its Nook tablets to $179. Microsoft Corp's up-coming Surface tablet may also be priced at $199.
"Introducing a tablet below the $150 mark could be compelling and another game changer in the industry where the $199 price point is no longer unique," Lee said.
The cost to make the Kindle Fire has fallen since the tablet was launched last year, giving the company room to cut the price aggressively.
Google's Nexus 7 has a more powerful processor, more memory and a higher resolution screen than the current Kindle Fire. It also has a camera, which the Fire lacks.
"I expect the new Fire to look a lot like the Nexus 7 for the same $199 price," said Colin Sebastian, an analyst at R.W. Baird. "If it falls short, that could be a problem. If they go beyond that for the same price that would be good."
Amazon may cut the price of the new Kindle Fire further by offering an ad-supported version, SunTrust's Lee said.
The company already does this with some of its e-readers. The cheapest Kindle costs $79 with ads, while the same version without ads is $109, according to Amazon's website.
"Ad-supported Kindle Fires mean cheaper devices and therefore a wider audience," said Maria Alegre, CEO of Chartboost, which helps game developers make money through mobile devices including Amazon's tablet.
Game and app developers are keen on the Kindle platform because Amazon customers are used to paying for content and the company's one-click payment system makes purchasing easy.
What's missing is the massive audiences accumulated by Apple, through its iPhone and iPad, and Google, through its Android mobile operating system, Alegre said.
"Volume is the number one thing Kindle Fire needs right now," she added.
(Reporting By Alistair Barr; Editing by Bernard Orr)
Our 2024 Coverage Needs You
It's Another Trump-Biden Showdown — And We Need Your Help
The Future Of Democracy Is At Stake
Our 2024 Coverage Needs You
Your Loyalty Means The World To Us
As Americans head to the polls in 2024, the very future of our country is at stake. At HuffPost, we believe that a free press is critical to creating well-informed voters. That's why our journalism is free for everyone, even though other newsrooms retreat behind expensive paywalls.
Our journalists will continue to cover the twists and turns during this historic presidential election. With your help, we'll bring you hard-hitting investigations, well-researched analysis and timely takes you can't find elsewhere. Reporting in this current political climate is a responsibility we do not take lightly, and we thank you for your support.
Contribute as little as $2 to keep our news free for all.
Can't afford to donate? Support HuffPost by creating a free account and log in while you read.
The 2024 election is heating up, and women's rights, health care, voting rights, and the very future of democracy are all at stake. Donald Trump will face Joe Biden in the most consequential vote of our time. And HuffPost will be there, covering every twist and turn. America's future hangs in the balance. Would you consider contributing to support our journalism and keep it free for all during this critical season?
HuffPost believes news should be accessible to everyone, regardless of their ability to pay for it. We rely on readers like you to help fund our work. Any contribution you can make — even as little as $2 — goes directly toward supporting the impactful journalism that we will continue to produce this year. Thank you for being part of our story.
Can't afford to donate? Support HuffPost by creating a free account and log in while you read.
It's official: Donald Trump will face Joe Biden this fall in the presidential election. As we face the most consequential presidential election of our time, HuffPost is committed to bringing you up-to-date, accurate news about the 2024 race. While other outlets have retreated behind paywalls, you can trust our news will stay free.
But we can't do it without your help. Reader funding is one of the key ways we support our newsroom. Would you consider making a donation to help fund our news during this critical time? Your contributions are vital to supporting a free press.
Contribute as little as $2 to keep our journalism free and accessible to all.
Can't afford to donate? Support HuffPost by creating a free account and log in while you read.
As Americans head to the polls in 2024, the very future of our country is at stake. At HuffPost, we believe that a free press is critical to creating well-informed voters. That's why our journalism is free for everyone, even though other newsrooms retreat behind expensive paywalls.
Our journalists will continue to cover the twists and turns during this historic presidential election. With your help, we'll bring you hard-hitting investigations, well-researched analysis and timely takes you can't find elsewhere. Reporting in this current political climate is a responsibility we do not take lightly, and we thank you for your support.
Contribute as little as $2 to keep our news free for all.
Can't afford to donate? Support HuffPost by creating a free account and log in while you read.
Dear HuffPost Reader
Thank you for your past contribution to HuffPost. We are sincerely grateful for readers like you who help us ensure that we can keep our journalism free for everyone.
The stakes are high this year, and our 2024 coverage could use continued support. Would you consider becoming a regular HuffPost contributor?
Dear HuffPost Reader
Thank you for your past contribution to HuffPost. We are sincerely grateful for readers like you who help us ensure that we can keep our journalism free for everyone.
The stakes are high this year, and our 2024 coverage could use continued support. If circumstances have changed since you last contributed, we hope you'll consider contributing to HuffPost once more.
Support HuffPostAlready contributed? Log in to hide these messages.