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Friday, Oct. 24, 2014

Amazon tablet plans fuel speculation

Wednesday, August 31, 2011

I've written in the past about the difference between full-featured tablets like the iPad and dedicated e-book readers like Amazon's Kindle.

Amazon, the leader of the e-reader market, is reportedly planning on entering the tablet market as well at some point in the future. There's now a lot of speculation about whether Amazon might take a lesson from the recent Hewlett-Packard tablet sell-off and price its tablet low, perhaps even at a loss.

When HP decided this month to change its emphasis and get out of certain types of hardware production, it slashed the prices of its TouchPad tablet to an unbelievably-low $99 in order to clear out inventory. They cleared out inventory, all right, as customers flocked to retailers to snatch up the tablets at a bargain price. Analysts say this proves that there's a market for tablets but that prices are still too high for some consumers.

Meanwhile, Amazon has had success offering its Kindle e-book readers in both regular and advertiser-supported flavors. You can get a Kindle for less if you get it "with special offers" -- meaning that ads for Amazon products pop up when you turn on the device or when you leave it idle for a period of time. The company obviously believes it will make up the difference from the additional products it sells by way of advertising.

The idea of selling a razor for a bargain price, and then making up for it by selling your proprietary brand of razor blades to the customer from that point forward, is often attributed to King Camp Gillette. But a paper by Randal C. Picker of the University of Chicago Law School says this is a myth; Gillette's first razors were expensive for their time, writes Picker, and it was competitors who forced Gillette into the cheap-razor, expensive-blade model as Gillette's patents were expiring.

Whoever created it, the cheap-razor model is now the standard in several businesses, such as home inkjet printers.

Grocery stores do something similar by offering "loss leader" sales on specific items, hoping that shoppers will go ahead and do their weekly grocery buying once they've been brought through the door by one or two amazing low prices.

Tech commentators speculating on Amazon's tablet plans wonder if Amazon might use a variation on the cheap-razor, loss-leader model similar to the one it's tried with Kindle -- selling tablets for a price less than $250, or even $200, but building in advertising or e-commerce features that would drive traffic to the Amazon site, resulting in additional revenue for the company going forward.

The Wall Street Journal says the company could have a tablet for sale as soon as October, in time for the holiday shopping season. Amazon still hasn't even confirmed the tablet as an actual device, much less revealed anything about pricing or content.

The announcement, assuming there there will be one, is being anxiously awaited.

--John I. Carney is city editor of the Times-Gazette and covers county government. He is also the author of the self-published novel "Soapstone." His personal web site is http://lakeneuron.com.



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John I. Carney
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John I. Carney is city editor of the Times-Gazette.