I wasn’t planning to blog about the Kindle Fire. There’s tons of coverage already and the last thing we need is yet another blog post touting its features.
But there are a few things that seem to be confusing lots of people, so I’d like to focus on those.
First, while both Amazon (AMZN) and Apple (AAPL) want to “own” the delivery of media to consumers, their strategies are completely opposite of one another. Apple makes its money on hardware. Music, books and video are simply a means to sell more devices. Amazon, meanwhile, makes its money selling media. Devices are simply a means to sell more books, music and video content. So, when you see hundreds of tweets that Amazon is losing $50 on each Kindle Fire, that’s by design. It’s a razor and razor blade strategy designed to establish Amazon as the clear #2 in the tablet market so that they can sell more content.
The second issue is about whether the Kindle Fire will slow the sale of the iPad. While I’m sure that there are some who, considering an iPad, will instead choose the Fire, I don’t think that’s where their biggest impact will be. In fact, for Apple I think the bigger impact will be on the iPod Touch.