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New Kindle Fire HD 4G LTE tablet priced like $499 iPad, surprising analysts

September 6, 2012 04:33 PM ET

The value to Amazon has been in online goods and services such as its Prime membership for $79 a year that allows borrowing of e-books, instant streaming of movie and TV shows and free shipping of products sold via Amazon.com.

While Bezos announced the higher-priced $499 Kindle Fire HD with 4G LTE at the Thursday event, he also called attention to the Amazon's focus on selling services to customers, not just hardware. "We want to make money when people USE our devices, not when they BUY our devices," said a slide posted behind him as he spoke.

Bezos clearly had Apple in its sites with the $499 device, especially with his claim that a first-year cost of the device, plus a $49.99 service plan, would be $549, compared to his estimate that the iPad 3's first-year cost with 4G service is $959.

Amazon also notes that it's selling devices at a variety of price ranges and sizes.

The all-new Kindle Fire HD 7-in. Model will sell for $199 over Wi-Fi, while the Kindle Fire HD 8.9-in. Over Wi-Fi will start at $299. Meanwhile, a new-generation Kindle Fire with a faster processor and twice the memory of the first one will sell for $159.

Jack Gold, an analyst at J. Gold Associates, said buyers of the LTE-ready Fire will be forced to manage their usage carefully if they want to stream video over LTE, since they are limited to 250MB.

Many users will want to use the LTE for short tasks and stream videos over Wi-Fi, while some will pay for the higher data amounts from AT&T, he predicted.

"LTE is becoming a "must have" for a bigger group of consumers, so it may be more about Amazon addressing market desires than really having LTE as a feature set." Gold said.

"The vast majority of users only deploy tablets over WiFi anyway. If you're going to build a 'Cadillac' device, then HD, LTE and great sound are required by market pressures," he added.

Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at Twitter@matthamblen, or subscribe to Matt's RSS feed Hamblen RSS. His e-mail address is mhamblen@computerworld.com.

Read more about Tablets in Computerworld's Tablets Topic Center.



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