This is hardly a surprise, but DealNews is reporting that Amazon’s Kindle Fire will experience a price drop to $169 after the new Kindle Fire 2 launches later this year. Amazon has a history of keeping older kindles around, at lower price points, when newer ones are released. According to DealNews, the Kindle Fire 2 will slide into the $199 price point.
This tactic is similar to how Apple positions its older iPads and iPhones when new versions come out. The strategy allows one manufacturer to cover multiple price levels, increasing their potential audience.
Of course, Amazon is now forced to compete with Google’s popular Nexus 7 tablet, which is leaps and bounds ahead of the original Kindle Fire spec-wise but still costs just $199. Sales forecasts for the original Fire have already been cut due to the Nexus 7′s success. Reducing the original Fire to $169 and launching the Fire 2 at $199 would essentially allow Amazon to compete with the Nexus 7 on two fronts.
Looks like the era of low-cost and genuinely usable tablets is here, folks. This is the kind of competition that helps drive innovation. Even big bully and litigious Apple will be getting in the smaller tablet game with their rumored iPad Mini, but I doubt theirs will be under two bills.