The Amazon Tablet's iPad Challenge: Price

kindleAlmost half of the folks surveyed recently said they'd be tempted into buying an Amazon tablet PC if it were priced below $300. That's a very tricky price point to reach. Meanwhile, all we really know about Amazon's tablet are rumors, hints, and suggestions—but this is typical of the company, and the data is adding up fast, suggesting it's really on its way soon. And now recent information reveals Amazon may actually be battling to make the Kindle Tablet, to guess its name, competitive on one main front: Price.

In a detailed survey of over a thousand U.S. consumers, analysis firm Retrevo attempted to gauge how hungry the market is for a full-featured color-screen version of the Kindle. Assuming Amazon will go for a Fall launch (to mop up holiday season purchases and be out of sync—we assume—with landmark Apple upgrade cycles for the iPad) it's time to ask this question.

According to Retrevo, 31% of respondees would consider buying an Amazon tablet if it were priced below $400, and 48% would be tempted if it were below $300. But a whopping 79% said they'd think about it if it cost less than $250. You may dismiss this as obvious, but you'd be missing the point: $250 is a key price target because it's almost exactly half that of the entry level iPad—the device that's defined this entire market. If Amazon could attain this price, with a cheeky PR campaign along the lines of "For $500 why not buy two, and give one to your husband?" (cue: a blurry shot of an iPad in the distance behind Amazon's gleaming new product) then it really could capture significant sales. Amazon knows this, and it's been driving the price of its e-ink e-reader down—possibly inciting a race-to-the-bottom in its marketspace—almost continually, most recently slicing dollars off by selling ad-supported editions.

As context to these data, Retrevo also asked if the consumers were actually planning to buy a tablet PC this year and found that pretty much everyone said yes, in a stunning proof of the viability of the market. But 50% said they planned to buy an iPad, while only 21% said they wanted an Android unit. And when asked what was the most important feature of the tablet they'd buy, 48% said "low price" (compared to 20% who prefered better features).

This sets a very tricky bar for Amazon to scoot under. But a recent snippet of data from Eastern display makers, who are ramping up production to service Apple, Google, and the other tablet PC pretenders, suggests Amazon may be trying to build a less than full-featured tablet—with one big saving being a touchscreen that's only capable of detecting two finger touches. That's a world away from Apple's sophisticated multi-fingered gestures which enable you to control the iPad's interactivity, and which also allows some very complex touch-based game play. But two fingers is enough to allow a scrolling gesture, pinch to zoom, context-dependent pop-up menus at a click and so on.

And when you consider that such a simple touchscreen would only allow limited numbers of full-featured tablet apps to work properly, then you realize that Amazon could cut costs elsewhere too. A powerful processer? Not needed. A sophisticated graphics unit? Not necessary. Full intertial sensor suite with electronic compass? Not particularly high on the list (but don't rule it out). The result would be a tablet that's low on specifications, but also low on price—and while you may think specs are king, the average Joe Public doesn't necessarily agree (as an example, Apple's been pushing to make detailed specs irrelevant, and do you know what clock speed the current Kindle tablets run at?).

If Amazon delivered a limited function tablet, with compatible apps coralled into a special area of its own Android marketplace, and put its own ad-supported Android-based UI on the top, then sold it all for somewhere around $250, it really could have a hit on its hands. That would be a disinct offering in an increasingly crowded market—and distinct from Apple's full-on iPad experience.

[Image: Flickr user edans]

Chat about this news with Kit Eaton on Twitter and Fast Company too.

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