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Digitimes Research: Amazon changes strategy for 3rd-generation Kindle Fire
Jim Hsiao, DIGITIMES Research, Taipei [Tuesday 8 October 2013]

Amazon recently announced three third-generation Kindle Fire tablets, one 8.9-inch and two 7-inch models. In addition to new hardware, Amazon also updated many of its apps and services, seeking to raise the tablets' overall value through richer content and services. Amazon is no long pushing price drops and is instead maintaining its core market through integrating appropriate hardware specifications with applications.

Amazon's re-designed 7-inch Kindle Fire HD is selling for US$139, targeting the 7-inch entry-level tablet market. Although the tablet has no advantages against other similar-specification or white-box products in terms of hardware, Amazon's services will still allow it to see good demand.

Amazon's 7-inch Kindle Fire HDX, which features a price point and specifications similar to the second-generation Nexus 7, and 8.9-inch Kindle Fire HDX 8.9, targeting to compete against iPad, are both meant to enhance the user experience, and are not for price competition.

Compared to other similar-specification tablets from competitors, Amazon's new Kindle Fire tablets enjoy about US$20-30 additional value. Amazon's decision to halt the production of its previous-generation Kindle Fire instead of offering a price cut is partly due to the possibility that the old tablet does not support the new operating system. The decision also shows that Amazon has not interest in the sub-US$100 tablet market.

Digitimes Research expects Amazon's Mayday service to become a tool that provides simple supporting services to average users in the short term and will expand to become an online customer service in the long term. Amazon has also been addressing complaints such as lack of apps and lack of differentiated digital content.

Compared to its low-price strategy in the past few years, Amazon is no longer competing against other brand vendors directly over hardware, and is instead focusing on improving specifications and strengthening services to differentiate from others and increase its value. Although the new strategy is unlikely to help expand Amazon's user base in the short term, customer satisfaction is expected to bring long-term benefits to the brand vendor.

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