BREAKINGVIEWS - Amazon and Apple's historic paths collide

Thu Sep 29, 2011 1:36am IST

Amazon CEO Jeff Bezos holds up the new Kindle Fire at a news conference during the launch of Amazon's new tablets in New York, September 28, 2011. REUTERS/Shannon Stapleton

Amazon CEO Jeff Bezos holds up the new Kindle Fire at a news conference during the launch of Amazon's new tablets in New York, September 28, 2011.

Credit: Reuters/Shannon Stapleton

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(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)

By Robert Cyran

NEW YORK (Reuters Breakingviews) - The recent histories of technology giants Amazon and Apple are colliding. The online retailer's cheap new Kindle Fire tablet reflects the company's roots -- it's a tool for the sale of content. Apple, by contrast, used music and movies to hook customers into buying its gadgets. The two currents are now clashing, and survival requires strength in both.

Amazon knows that movies and books are going digital. If it can get Kindles into people's hands, they will buy lots of digital content from Amazon. In keeping with its role as a device for delivering content, the Kindle Fire -- the company's first device that gets anywhere near the functionality of Apple's iPad -- is cheap. It debuts at $199, against the basic iPad at $499, and given Amazon's history of price-cutting the price tag could sink further in a matter of months. Tablets are already popular, and Apple has sold about 30 million iPads. But Amazon's pricing could seriously rev up sales. Buyers flocked to Hewlett-Packard's unpopular tablet when the company recently cut its price to $99 from $399 in anticipation of discontinuing it.

Apple's history is almost the opposite. It established the iTunes store and ran it on a break-even basis as a means to sell its pricey iPods, iPhones and iPads. It's telling that the iPad has useful features such as a camera, microphone and 3G wireless that the Kindle Fire lacks -- and that the iPad's price tag is more than twice as much.

Which tack will be more successful isn't clear. Indeed, both strategies could win from the convergence of content and hardware. After all, the tablet market pioneered by Apple isn't even two years old, and people are still figuring out plenty of new uses for the devices, and new ways to use content.

The losers could be companies that lack strength in one stream or the other. Dozens of manufacturers have jumped into the tablet market, but only Amazon, Apple and perhaps Google -- after its purchase of Motorola Mobility -- look as if they have sufficient access to content, desirable (or potentially desirable) hardware and enough cash to see them through the shakeout.

CONTEXT NEWS

-- Amazon unveiled its new tablet on Sept. 28 along with three new versions of its e-book readers. The Kindle Fire tablet will cost $199, has a seven-inch color screen, uses Google's Android as its operating system, offers free cloud data storage and has a new Web browser called Silk. Unlike Apple's iPad, it does not have a camera, a microphone or the option of 3G wireless capability.

-- Amazon's basic Kindle will now sell for $79. A touch-screen version of the e-reader will sell for $99, and a touch-screen version with 3G connectivity will cost $149. All three have black and white, E Ink screens.

(Editing by Richard Beales and Martin Langfield)

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