There was quite a good comment by a reader in the Grauniad:
Some of the media are making this out to be a battle between Apple and Amazon, when in reality it is nothing of the sort. They are using diametrically opposed business models and releasing tablets that could hardly be more different.
Apple sell iPad hardware at a healthy profit and sell content to support the hardware sales, but Apple don’t make much profit from the content. Amazon is selling the Fire at either a very low margin, or possibly at a small loss, but relying on selling content to make the profits. In effect, they’re giving away the razor in order to sell the blades, or a more recent example would be giving away the printer in order to sell ink cartridges.
The products themselves are totally different. The Fire has half the screen area of an iPad and is stripped down to just the absolute essentials. But the big attraction is that it is half the price of an iPad.
iPads represent the quality end of the tablet spectrum, while Fires look like they could dominate the low end of the tablet spectrum. I don’t think that Apple will be concerned about the Fire as those who will only spend $200 on a tablet were never going to buy iPads. The people who must be losing sleep tonight are those manufacturers who are hoping to sell other tablets. There are now just two price points for tablets , <$200 cheap and cheerful, or >$500 for a quality one. Google might not be that happy either as the Android operating system is being used in a way that greatly diminishes Google’s opportunities to extract money from it.
Rivals will now have to make tablets cheaper than $200 and still make a profit, or else match the sophistication of the iPad together with a comprehensive ecosystem and still match the $500 price tag. Either task is quite a formidable challenge.
Can the Fire match the iPad ? Of course not, but it was never intended to. It’s a different concept aimed at a different type of customer.
http://www.guardian.co.uk/discussion/comment-permalink/12606108