Amazon To Reduce Price Of Kindle Fire – Google Nexus Effect?

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As per reports, US online retail giant is considering seriously to reduce price of its Kindle Fire tablet, which was launched last year and this tablet was roaring success because of its price of $ 199. This tablet was instant hit with those buyers who could not afford Apple’s iPad, which starts from $499. The reason being given for reducing the price is that cost of components which are required for assembling this tablet has come down.

According to IHS iSuppli, which track technology suppy chain, current cost of making Kindle Fire is approx. $133.80 compared to $ 185.80, when it was launched in November, 2011. The cost of manufacturing this tablet has come down to 28 percent. Another reason for reduction in price of manufacturing is logistics of scale. Kindle Fire is still being sold worldwide like hot cakes and it is close to its life cycle as new model of Kindle Fire is  being planned. Amazon is expected to launch new version of Kindle Fire close to holiday season of this year.

Besides above reasons, the arrival of Google Nexus tablet must have jolted Amazon, which is also priced $ 199 for 8GB version, has been received very well in US and UK. Its overwhelming success can be gauged from the fact that since its arrival on retail shelves in physical and online stores, this tablet has been sold out and the Google is not accepting further orders for the time being. Google has advised its prospective buyers to leave their e-mail id on its online shop and the company will intimate them when the tablet is available. Even Google did not expect this response from the buyers.

In such a scenario, Amazon has to rethink about its marketing strategies for Kindle Fire as Nexus tablet is its direct competitor. Our estimate that Amazon will reduce the price of Kindle Fire by $ 30 to 40. We will see more interesting strategies being adopted by Amazon and Google in the months to come!

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