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Amazon Will Sell Android Tablets For $249
Amazon is set to release an Android tablet that would cost $249. It wants to take on Apple’s iPad by undercutting the price by half. Creative Strategies analyst Tim Bajarin said that it would cost Amazon $300 to manufacture and would subsidize it by $51 to attract consumers. Amazon might expect to make up for the subsidy through music downloads, movie rentals, Kindle book sales and other purchases.
The Amazon Android Appstore has a one-click buying method that would make it easy for customers to make purchases. Amazon is expected to recover the $51 difference wituin six months and would profit from 10 to 30 percent.
Amazon could endanger the business of other Android tablet makers that can’t follow with its business model of selling the tablet under cost with the goal of trying to make up for the difference through services, apps and advertising. Other Android vendors will have a hard time to compete against the online retailer.
But even with this business plan, Amazon couldn’t overtake Apple’s iPad, which has sold 30 million units in less than 18 months. It is speculated that Apple could retain its lead in the tablet market by cutting its price as well and sell the iCloud service to the consumers.