Amazon's Kindle Fire Could Ignite Tablet Media Consumption

At Less than Half the Price of iPad, New Device Pulls Down Barriers to Entry

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A newsstand for digital editions of magazines and newspapers is prominently displayed on the Kindle Fire.
A newsstand for digital editions of magazines and newspapers is prominently displayed on the Kindle Fire.

By pricing its new Kindle Fire tablet at less than half the cost of an Apple iPad, Amazon is setting up tablet consumption of media to spread more widely and quickly than was previously possible.

Introduced by Amazon CEO Jeff Bezos at an event today in New York, the $199 Kindle Fire is a full-color touchscreen tablet designed to make buying and consuming content easier -- including watching movies and TV, listening to music, browsing the web, playing games and reading digital editions of magazines and newspapers.

The Kindle Fire, which ships Nov. 15, will come out of the box begging consumers to dive into its content capabilities, arriving with a free 30-day subscription to the Amazon Prime streaming video service and free three-month subscriptions to digital editions of Conde Nast magazines including Vanity Fair, GQ and Glamour.

Despite the low price and Amazon's marketing muscle, however, Apple has a big lead on the newcomer. After the event today, Forrester is projecting 3 million in Fire sales during the fourth-quarter, downgrading previous estimates because of its late shipping date. While online preorders start now, the new tablets won't be at big-box stores such as Best Buy until fairly late in the shopping season, so Amazon will miss some sales there, said Forrester senior analyst Sarah Rotman Epps. Even priced at $500 and up, Apple's iPad created the tablet in the U.S. last spring and sold nearly 29 million devices through May 2011.

Magazine publishers already distribute digital editions on devices like the iPad and Barnes & Noble's Nook, but Kindle Fire arrives with one feature that 's been lacking on Apple's dominant device so far: a newsstand.

"We are especially excited about the newsstand [on Kindle Fire] -- it's easy to navigate and that 's not been the case with iPad," said John Loughlin, exec VP and general manager at Hearst Magazines, after Amazon introduced the Kindle Fire today.

Martha Stewart Living on the Kindle Fire
Martha Stewart Living on the Kindle Fire

"We need a place to show off the content," said Monica Ray, exec VP-consumer marketing at Conde Nast, adding that she's also looking forward to Apple's upcoming newsstand. Apple will try to show off magazines and newspapers better in its forthcoming iOS 5 operating system for the iPad and iPhone.

Even without that feature on the iPad and before the Kindle Fire arrived, Conde Nast now sees 500,000 digital downloads across nine titles on various devices and platforms, Ms. Ray said. Hearst said yesterday that its brands sell more than 300,000 digital copies monthly, between subscriptions and single copy sales, across devices and platforms.

Amazon has also partnered with Fox, CBS and NBC Universal to stream 100,000 movies and TV shows through Amazon Prime. Amazon's library of 17 million songs, starting at $0.69 per download, will also be available on Fire.

With a growing portfolio of content, Amazon could transform digital consumption of media much as it has for books.

At the press conference today in Manhattan, Mr. Bezos showed off how the launch of the original Kindle, the e-ink reading device, accelerated Amazon's e-books sales so drastically that they have now surpassed Amazon's physical book sales. That took four years; Amazon has been selling physical books through its web store for more than 15 years.

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