The arrival of Amazon’s Kindle Fire, a $199 tablet, in a market dominated by $500 models looks like an obvious case of price disruption.
Not so fast, says Horace Dediu, an analyst at Asymco: Amazon’s margins are too thin to allow it to compete on the tablet’s core technology. It’s an interesting counterpoint to the arguments that most observers have made in the wake of the Kindle Fire’s launch.
The Kindle Fire, announced earlier this week and shipping November 15, costs just under $200. For that, you get a dual-core processor, a 7-inch LCD screen, a modified Android operating system, and some enticing cloud-based features that let you access your books, music, movies and more via an internet connection. There’s even a promising-sounding browser, called Silk, which uses Amazon’s cloud infrastructure to speed up browsing by pre-fetching and cacheing pages you are likely to click on.
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