Amazon can no longer compete with only annual updates

At its press conference, Amazon emphasized the unique nature of its business model – “We want to make money when people use our devices, not when they buy our devices” – by announcing a flurry of new valued-priced products and updates to its growing line of tablets and e-readers.

Updating its flagship Kindle Fire tablet, Amazon revealed four new versions of the tablet including three Kindle Fire HD versions in two format sizes (7-inch for $199 and 8.9-inch for $299, $499 with LTE) along with an updated base version of the Kindle Fire. The new tablets have received substantial improvements in screen resolution and anti-glare capabilities, speedier OMAP processors from Texas Instruments, faster dual-band MIMO wifi design, and a new front-facing camera among other updates, all with competitive price points. In keeping with the latest connectivity standards, the $499 top 8.9-inch model also includes LTE connectivity through AT&T with a subsidized 250MB/month plan costing only $50 per year. While that plan’s data limitations will force heavy users to take advantage of the faster Wi-Fi capabilities for video content, it does offer a substantial discount over similar plans offered directly from AT&T.

The new Kindle Fire HD lineup, which runs on Android 4.0, will provide Amazon with a much needed boost for its device sales, but faces an increasingly competitive field, especially from Google’s Nexus 7 and Samsung’s top tablet models. Amazon’s combination of an expanded hardware offering and well-integrated and robust media services are well positioned for the short-term, but the online innovator will no longer be able to compete with only annual updates to its devices portfolio.

Even with the improved quality and continued value pricing, Amazon will need to issue semi-annual updates and include the most recent version of Android (Jelly Bean) in order to fend off Android competitors in the coming months. For faithful Amazon customers, the new line-up offers excellent improvements and better engagement with Amazon’s expanding media and applications offering. However, Amazon’s value proposition leadership will be increasingly challenged by the likes of Google’s $250 Nexus 7, making it more difficult to convert users of other Android tablets to the Amazon family of services.

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